IIABA Prez Sees Signs Of Price Softening

By Mark E. Ruquet

NU Online News Service, Sept. 23, 4:26 p.m. EDT, LasVegas?While insurance company executives insist thatpremium prices will continue to rise, one high-ranking member of anindependent agent's association said he has seen signs of carriercompetition that could precede another soft market cycle.

W. Cloyce Anders, president of the Alexandria, Va.-basedIndependent Insurance Agents & Brokers of America, said thatthe biggest challenge the industry faces is whether carriers havethe discipline to continue profitable underwriting or will soon goback to competitive pricing.

Speaking during a panel discussion during the IIABA annualconvention here, Mr. Anders, who is president of VFIS of NorthCarolina and Anders, Ireland, & Marshall, Inc., both inRaleigh, N.C., said he recently reviewed some quotes on an accountwhere one carrier was giving a quote substantially "below marketprice" on the line.

His thought, he said, was, "here we go again." He also worriedthat some carriers may "go back and drive a line [of business] backinto the ground."

While Mr. Anders stressed the need for strong partnershipsbetween agents and companies, he also said that agents need stableinsurance markets so they can feel confident about the future.

His comments were part of a wide ranging discussion on insuranceissues held on Sunday, Sept. 21, during the Young Agents Conferencepart of the IIABA's InfoXchange held Sept. 21 to 24.

The presidents panel discussion also featured Mike Davidson,vice president and senior officer, independent agent organizationsfor MetLife Auto and Home based in New York; Mhayse Samalya,president of Hanover Insurance in Atlanta, Ga.; and Tom Van Berkel,president and chief executive officer for Main Street AmericaGroup.

For his part, when asked about commercial premiums, Mr. Samalyasaid he believes prices will continue to increase, but theincreases will not be as "extreme as in the past."

When it comes to agents partnering with companies, theexecutives said there is plenty of opportunity for young agents inthe future.

"We are looking for diversity in agency, personal and casualtylines, and financial services" said Mr. Davidson. That diversityalso goes to the workforce, he said. MetLife is seeking moreAfrican-American, Hispanic, women, and other ethnic groups tobroaden the company's reach.

He noted that while an agency selling personal lines businesscan expect an average customer retention of around seven years inauto and homeowner policies, the retention rates for life andfinancial services products are significantly longer.

"[Agents] miss the boat if they are not in financial services,"he said.

Main Street America's Mr. Van Berkel said the choice of what anagency sells needs to be based on the needs of the community theagency is dealing in. The expansion of product lines is a "natural"expansion of the community's needs.

Hanover Insurance's Mr. Samalya said that if agents look attheir clients "from a needs perspective," then that approach willlead them to sell more insurance in their customers' lives.

All the executives said that they are proponents of single entrytechnology and that their companies are working with others to getthere. Mr. Van Berkel said he did not believe that any onetechnology would dominate, but that it would be a number ofdifferent forms of technology that would achieve the single entryformat.

Mr. Samalya said his only concern with the direction technologyis currently going in is that the single entry formats would notallow for carriers to ask the questions they need to in order toshow what "differentiates" them from others. He also said he fearedthat the whole issue would come down to a question of price,forgetting about the quality of product.

Mr. Anders said agents are not simply looking for price, butthat they want to find quality products for their clients and tooffer the proper types of coverage according to client needs. Andagents will continue to do that, he said.

He worried that while companies may be on the verge of enablingsingle entry technology, some agents may not be in a positiontechnologically to take advantage of it. Mr. Anders said agentshave got to get ready for the future in their offices.

On the issue of attracting new talent, Mr. Samalya said that theindustry has to able to tell its story--that it is in the businessof solving people's problems nad meeting their needs, rather thanjust selling insurance.

Mr. Van Berkel noted that the industry has failed to sell itselfto the public and to get people interested in the business.

"Insurance is about rebuilding people's lives in the face ofdisaster," he said.

Noting what the industry has done to help rebuild after 9/11,the industry has done a poor job of getting its story told abouthow it has contributed to the rebuilding.

"We do a pretty noble job and we do not get the word out," heobserved.

The biggest problem right now, said Mr. Anders, is the industryis not recruiting new people, but simply recycling people alreadyin the business. He said IIABA is pushing the future with itsInVEST program to educate young people about the business and raisetheir interest.

Mr. Davidson noted: "No one here thought of growing up to be inthe insurance business."

For its part, he said, MetLife does have recruiting programs andis continually looking for new faces to bring into thebusiness.

"There is not enough selling about what we do," he said.