They Don’t Make ‘em Like They Used To

[ON THE LEVEL] By N. Stephen Ruchman, CPA

They Don’t Make ‘em Like They Used To

If you stick around long enough, you acquire expertise, skills, loyalties and valuable relationships. These are what make a career; they are the dividends of time well invested.

I’ve been around a while. And I’ve developed such relationships with people I know to be experts. One good friend of mine, whom I respect and with whom I have worked for decades, is Bob Shapiro of Global Facilities. Bob began his career as an underwriter 57 years ago. We both started out working in New York City’s Financial District down in Manhattan, and we have some good memories. Whenever we get together, we inevitably talk about the good ol’ days.

Recently, Bob and I were driving together from Long Island up to the Professional Insurance Agents of New York headquarters near Albany. Since we had a few hours, we began to talk about the business and how things have changed. The conversation was worth sharing.

We recalled how we could walk down Maiden Lane in Downtown New York and it would take us half an hour to make it down the block, because everybody knew each other and we could discuss business right there on the street. …The street is almost unrecognizable now. What used to be a financial hub with offices from all the big insurance companies is now lined with condos. There just aren’t many national companies left; perhaps just a handful, where there used to be dozens. I’m not sure if I would know many, if any, of the pedestrians on the street anymore. What’s disappointing about this is that it represents the industry’s move away from community; away from familiarity; and the loss of expertise one gains from having been around awhile.

This led us to talk about the investment carriers can make in their employees, and specifically, we started talking about how underwriters are different now than they were in the past. Nowadays, young underwriters come out of college and move quickly from carrier to carrier. In the old days, underwriters stayed around and they learned the business. This develops long and trusted relationships among mutually respected professionals. These trusted relationships benefited agents, carriers and our clients. But now, the industry is not run by career insurance people; rather, financial people who move around to move up—not make a career with one firm. Carriers are beholden to stockholders, not their customers. College-trained MBAs are not real underwriters.

Back in the day, Bob and I commiserated, a policy could be bound on a napkin. This wasn’t out of sloppiness, but out of a confidence in the people with whom we worked. When agents and underwriters maintained close, personal relationships, a good agent’s word was valuable. That would be unimaginable now.

The Downtown exodus is symptomatic of a centralization that has underwriters working from across the country. They don’t know the nuances of a client’s location; they don’t trust their agent and they don’t know their own company’s coverages. Carriers don’t want underwriters dialoguing with their brokers—they see it as inefficient. All correspondence takes place via email now. While this is efficient, it doesn’t build relationships or rapport; nor does it help employees develop instinct and communication skills.

Underwriters are not receiving the same training they used to get either. For years and years, Bob and I noted during our conversation, carriers built their underwriters through training. Nowadays, that takes too long—so where do you get a good underwriter? You don’t train them; you steal them from another company. This is a problem. For that matter, what about agents? Where does a newbie licensed broker get his or her training? Carriers and agents used to work together in training programs. I remember when my daughter came into the business. I worked with Stan Landberg, general manager of the New York City office of General Accident. They had a program to help train children of the agents that was renowned for its excellence. My daughter learned how to underwrite and work claims until she became a true underwriter. That training program helped solidify the relationship between my office and the insurance company. Ultimately it was good for our mutual clients.

Many years ago, I was on the producers panel of TransAmerica, which had moved their claims operations to the Bethlehem, Penn. office. Many agents complained that the adjusters no longer had any clue as to what was going on in our local Long Island and New York Metro area, so we (the agent and carrier together) developed a program where two new claims people would come to my office for several days. They would sit at the phones and handle claims as if they were employees of the agency, so they could relate to agents and learn how to build the relationship with their clients. Training is important; investing in staff is important. It also helps to attract new people to our industry, a problem we never seem to overcome. Becoming an independent agent is a great opportunity; there’s always a need for agents and brokers in their own communities. New ethnic communities continue to grow in our country where people trust their own people, and these communities are underserved. Unfortunately, these agents also are underserved. The agency system needs to promote the great entrepreneurial opportunity it offers, but also provide mentorship to new people coming in. There aren’t many agents or carriers willing to be mentors anymore. And yet, the best I’ve found have the least amount of time; they are busy, but they still find time to give back.

Of course, personal responsibility is another factor that can’t be overlooked. Individuals need to invest time, effort and yes, even money to improve themselves. In this era of commoditization of our products, agents and their carriers need to stress that they offer their clients something more: knowledge. Small store-front brokers selling price, not knowledge, will not be around more than a few years. Not when clients can buy insurance online at 3 a.m. And, while we know they don’t shop and compare coverages, only prices (at their own peril), they don’t recognize the danger this presents. Agents need to focus on letting their communities know that they are experts, with important knowledge to help their clients protect themselves. “How do we do this?” Bob and I asked ourselves on our way to PIA. “How do we help agents build their expertise—the differentiating characteristic between us and the 3 a.m. online shop carriers now publicize?” We can start with education. Agents always have to be learning, acquiring more knowledge.

As carriers have moved away from providing training, our association has stepped in to fill this need. As an association, PIA has an obligation to impart knowledge to its members: about sales and marketing; about coverages; and about laws and regulations to which our industry is bound. If nothing else it’s an E&O defense for an agent’s own protection.

But again, there’s an element here regarding personal responsibility. Agents know they need continuing education credits. However, they need to make sure that they, and their employees, are getting value out of their education, not garbage. Just like the coverage we sell to our clients, agents need to recognize that when it comes to education, price should not be their primary concern. How can you help your customers if all you are selling is price? Never mind the embarrassment and black eye, how about the E&O claim?

Speaking of expertise and lessons learned from a long career, I want to conclude with a nod to John Gallagher, one of my best and long-time friends, who announced his retirement this month. I’ve known John since he was a marketing rep with TransAmerica and through his career as he moved up as marketing manager and vice president there. He built the best agent base I’ve ever seen—the agents with whom he worked on the company’s behalf were competitors, who became a great group of friends and resources for each other through their association with John. He was the catalyst for building one of TransAmerica’s best regions ever. After TransAmerica closed, John came to work for me for seven years. He ran my internal operations and built a cohesive agency for me. His insight to the workings of insurance carriers helped my agency immensely, but John, the ultimate company man, moved back to the carrier side. He worked for various companies including Kemper, Empire Mutual and several others until he came to his present job at Utica First. John was the ultimate marketing rep. He would fight for his agents, help them with underwriting problems and give them valuable advice. He knew how to appoint agents and his track record with companies has always shown it! Today’s marketing reps can’t hold a candle to John—he was a perfectionist like you rarely see today. He started when a marketing rep was an integral part of an insurance company and agency relationship. Boy, do we agents miss those days. I’m going to miss John tremendously. He is a true gentleman in every aspect of life, as demonstrated by his exquisite handwriting. I wish him, and his wife Barbara, a long and happy life in retirement.