When a Hundred Percent is Just Not Good Enough
So all your life you have been striving to do everything you can to ultimately achieve the 100% level, correct? Well that’s certainly an admirable goal…unless you’re an insurance company! Years ago when interest rates were at record highs, and carriers could invest in funds that brought double digit returns, being at a 100% combined loss ratio wasn’t that terrible. However, that’s not necessarily true anymore. According to the Insurance Information Institute Inc., with interest rates at lows that some in this thing of ours have never experienced, carriers are having to place a much greater emphasis on underwriting, in order to have a much more favorable bottom line. President Robert P. Hartwig explained during the sixth annual Entrepreneurial Insurance Symposium in Dallas, TX. The symposium, established by electronic insurance exchange MarketScout in 2007, was created to profile innovation in the insurance industry. Mr. Hartwig said that “…no current insurance management team in the world has ever operated in an environment where interest rates are as low as they are now. Not only are interest rates low, they will remain so, forcing insurers to make up for investment income through underwriting and pricing discipline.”
Mr. Hartwig went on to say, “That’s particularly true for workers compensation. Workers comp needs to turn hard and needs to remain hard. We saw comp premiums written fall off a cliff in 2006 due in part to a soft market. Now the workers comp exposure is “higher than it was before the plunge.” For property/casualty insurance in general, pricing is all moving in a positive direction. In addition, tort costs have leveled off and tort reforms of the prior decade have had a positive effect and helped make the United States more competitive in the global marketplace.”
In addition, Mr. Hartwig said that industries that will need insurance solutions in the next 10 years include health care, health sciences and energy, both traditional and alternative. For the economy in general, “…things aren’t as much of a disaster in the United States as we might think,” he added. “Consumer sentiment is up, and there has been a dramatic reduction in business bankruptcy filings.
However, during a question-and-answer period after his presentation, Mr. Hartwig said that “…consumers are mending their household balance sheets, and that it will probably be the middle of the decade before people feel better. That’s a lost decade.” He continued on saying, “The best way to reduce government debt is for the economy to grow while spending holds steady. But holding the line on spending is one of the tests for any administration.”Mr. Hartwig also shared his thoughts on presidential politics and its effect on the property and casualty insurance industry’s return on equity, and whether the industry will be better off under a Democrat or Republican president. According to Mr. Hartwig, “The president’s party affiliation has a marginal bearing on the profitability on the property casualty industry.” He then added, “Hurricanes and earthquakes don’t care who is in the Oval Office.” So true, Mr. Hartwig…maybe we need to have a conversation with a hurricane via an empty chair.☺
For quite some time we have been chatting in this column about the pros and cons of offering live quotes via an agency website. Also for quite some time, there was a strong sentiment from many agents that they “… did not want that type of business”, which prompted me to write many a column on agency “NIMBYS”, and why agents who were of that opinion were leaving quite a few dollars on the table. I’m certain that many of you who have followed this column for the past four and a half years remember these conversations, and maybe you were one of those who were hit by a stone that I threw! I hope it did the trick! Well, for those of you who have opted to include consumer rating on your agency website and Facebook page, congratulations! I am sure that it has proven to be a successful project for you and your business, and please continue to offer it, as now there are some other exciting options being offered through a leading insurance technology provider that will prove to assist agents and enhance what you have already begun as you continue to battle the direct writers.
EZLynx, (with whom as you most likely know I am intimately familiar with), has recently announced its release of the Carrier Consumer Portal (CCP) to a number of leading insurance carriers who distribution channel is the independent agent, enhancing the ability of the independent agent to compete with the captive and direct writers. The premise behind it is simple: armed with the knowledge that 80% of those consumers who are interested in buying a personal lines insurance policy will shop for insurance via the internet, and that only 20% of that same cohort will actually purchase a policy over the internet, CCP is a tool that a carrier may implement from their consumer facing website, allowing a prospective insured the ability to securely enter their personal lines risk information directly into the carrier site. The risk is then underwritten by the carrier adherent to their specific guidelines, and immediately returns a real-time quote indication to the prospect.
What makes this program so appealing to all three parties: the carrier, consumer, and independent agent, is that CCP will then immediately and electronically pass the prospect information along to one of the carrier’s independent agents based on a predetermined set of specific criteria (and programmed within the CCP system) that may include demographic information such as zip code location, line of business, or other carrier devised rules.
The goal of this program is twofold: facilitate those consumers who prefer to research the cost of, and coverage available, at their convenience 24/7/365; and second, to provide the prospective insured with the experience, knowledge and expertise of a licensed professional independent insurance agent who is familiar with their geographic location and other demographics pertinent to the risk. In other words, the insured, carrier, and agent all reap the benefits of “the best of both worlds.”
With CCP constructed to emulate the carrier site with its branding, colors and logo, the consumer has the comfort of knowing that they are always interacting directly with the carrier they prefer…and ultimately with a licensed professional insurance agent with whom they can trust. From a business standpoint, carriers who implement CCP within their organization take advantage of a proven, accurate realtime rating system, and when combined with the economies of scale by not having to construct and maintain their own internal consumer facing program, may now offer what many consumers have come to expect – their insurance products to the general public via an electronic (and cost saving) mechanism. Further, implementing CCP across their personal lines product offerings allows the carrier to minimize distribution expenses without sacrificing the value of a true, independent insurance agent that the consumer has an educated expectation and understanding of. If you would like any additional information on this product, or how consumer quoting via your agency website may be of help to your agency, give me a call.
Around the neighborhoods, The Big I has installed a new national leadership team. Robert “Bobby” Bramlett has been inaugurated as the new chairman of the Independent Insurance Agents & Brokers of America (IIABA or the Big “I” ), with Tom Minkler as chairman-elect, David Walker as vice chairman and Vaughn Graham as an at-large executive committee member. The new officers began their terms at the conclusion of the board meeting held in conjunction with the Big “I” Fall Leadership Conference this past weekend in Atlanta, GA.
“The Big ‘I’ is excited that such distinguished professionals will be among its leaders,” says Robert Rusbuldt, Big “I” president & CEO. “Bobby Bramlett, Tom Minkler, David Walker and Vaughn Graham, along with the rest of the executive committee and officers, are a remarkable team of industry leaders, and we are positioned well for a productive year.”
Bobby Bramlett is president & CEO of the Bramlett Agency in Ardmore, Okla. Tom Minkler is president of the Clark- Mortenson Agency in Keene, N.H. Mr. Minkler is a past chairman of the New Hampshire Association of Insurance Agents , past New Hampshire director on the Big “I” national board and past president of the Massachusetts Association of Insurance Agents .
David Walker , CIC, AAI, LIC, is president of Hartland Insurance Agency in Hartland, Mich. Vaughn Graham is president of Rich & Cartmill, Inc. headquartered in Tulsa, Okla. He is a past chairman of the IIAO and has served on the Big “I” national board of directors. The 2011-2012 Big “I” chairman, Mike Donohoe , who will serve on the committee as immediate past chair for one year, is principal of the James R. Weir Insurance Agency in Mankato, Minn. Recently, PIA of NY and The NY Young Insurance Professionals elected their new officers for 2012-2013: for PIA, Mike Skeele of The Skeele Agency was elected President, and Alan Plafker of Member Brokerage Services LLC , was elected President-Elect. For the YIP s, Gino Orrino of Orrino Capital Services in Corona, NY was elected President, and Jen DeCristofaro of D.C. White Agency was elected President Elect. Dina Bruno of MetLife Auto and Home was elected Vice President; Jason Bartow of Eugene A. Bartow Insurance Agency in Deer Park, N.Y. was elected treasurer; Adam Rostkowski , AAI, CPIA, of ProActive Brokerage in West Babylon, N.Y. was elected secretary; and Michael Plafker , of Member Brokerage Service LLC in Briarwood, N.Y., will serve as immediate past president.
I personally am extremely proud of you all, and honored to have you as my friends. I wish you the very best in your tenure as officers of these wonderful organizations and I know you will do everything within your power to bring not only the organization but our entire industry to a higher level.
Well that’s what’s been happening around town, and until next time when we will be talking about a few new events as fall sets in here in the northeast. Ciao for now!
