One-On-One With NAPSLOs President

It may be reminiscent of the mascot for the Princeton Universityfootball team, but the fact that wholesale brokerage Princeton RiskManagers uses the image of a tiger as its logo has nothing to dowith the alma mater of the firms founder.

No, says James Griffith, he didnt attend the university or playfor the schools Princeton Tigers football teaman admission thatbelies his commanding presence. The fact that his firm is locatedin the New Jersey college town just made the image seem like anatural fit 30 years ago when he started up the business, hesays.

“There was an article [in another publication] that suggested I wasa Princeton grad. But I did not go there. I had a cup of coffeethere with some friends once. Thats about it,” he jokes.

Just as forthrightly, Mr. Griffith, the president of theNational Association of Professional Surplus Lines Offices, Ltd.responded to NUs questions earlier this month from his NewJersey office, a week before the associations mid-year educationconference. Some excerpts of our interview are included below:

Q: What prompted you to become a wholesalerbroker in 1974, after working as an independent retailer for morethan a decade?

A: “I had friends that were in wholesale.” Inaddition, there was “some frustration with the fact that I couldntestablish a partnership in the agency I was with at the time.Having that entrepreneurial spiritfeeling that I wanted to be in myown operation”prompted the move, he said.

A final push in the direction of brokering hard-to-placespecialty lines came from the market itself, according to Mr.Griffith. “I had been bothered considerably by what I saw were darkclouds on the horizonand what I perceived to be a hard marketcoming on,” he said.

Q: Can you describe that market?

A: “Writing insurance for contractors, as it istoday, was becoming more difficultas was products liability.[Likewise], hospital professional liability was in a crisisstage.”

Q: Why “Princeton Risk Managers”instead of “ Princeton E&S” or Princeton Wholesalers?

A: “Risk manager, at that time, was a popularway of accounting for what you did. Its a misnomer because a riskmanager is usually someone whos with Betty Crocker or Quaker Oatsor [another] major corporate environment. But I used the termfeeling that it would be an attractive term. Risk management, afterall, was something we were trying to domanage it or at leasttransfer it.”

Q: We usually ask wholesalers what theyspecialize in. But it seems as if every surplus lines product islisted on your Web site.

A: “Were generalists. We freely admit to that.There was a time when that was not thought to be a good ideathatyou should specialize, get into a niche.We would enjoy, certainly,opening up a specialty division to serve a particular niche andhave a program. But at this point, we dont see an opportunity tojump in and do that.”

Q: As with the products, the number of E&Scompanies you represent is overwhelming.

A: “There are some companies that we dontrepresent that wed probably love to represent. But thats thedifference between the various wholesalers.

“Among wholesalers, youll find an 85 percent overlap in thecompanies represented. Its that 15 percent that sets them apart andsets us apart from them. That is why retailers should deal with twoor three wholesalers, not just one.

“There are always occasions where we just cant deal with thatone risk situation. But if we know someone that will, we referretailers to that other market, hoping, of course, that theyll comeback when they have their next problem.”

Q: What is your relationship with BollingeraShort Hills, N.J.-based financial services firm?

A: Bollinger purchased us two-and-a-half yearsago. At the time, I regarded them as a large retail operation, andthey are that. What I didnt realize, completelywas that over 50percent of their business comes from other insurance agents thatcome to Bollinger for programsa golf and country club program,ambulance program, volunteer fire. They also have programs foremployee benefits, group life. [And] they are very active in theyouth sports area.”

“They were really up on IT, and thats something that, obviously,smaller agenciesretail, wholesalestruggle with because of the costfactors and having the kind of people that can handle sophisticatedtechnology.”

Q: Is that what prompted you to sellthe cost ofbecoming more technologically proficient?

A: “It was one of the factors. Other factors[included] where I was in life. My wife was talking about retiring[and] I realized I had better start thinking about what I would bedoing. It seemed to fit in pretty well with our life plans and howlong I would commit myself to continuing with Princeton RiskManagers.”

Q: What sets Princeton Risk Managers apart fromother wholesalers?

A: “I think were very caring. We have to beselective today because as much as we care and want to helpeveryone, it is becoming more difficult given the volume ofactivity that this hard market generates.

“So weve had to make tough decisions in order to service thoseclients that have been true to us over the years. But we certainlywill create relationships with retailers that we havent dealt withpreviously.

“We try to explain our capabilities and make sure theres a goodmatch between their needs and our abilitiesand then well try tomove forward with someone new.”

Q: What are your goals as NAPSLO president?

A: One of them is partnering with otherassociations, including the Independent Insurance Agents &Brokers [of America], on key issues. The issue that concerns usmost is the matter of whos going to be regulating in thefuturewhether the federal government will suddenly create adepartment or whether it will continue to be the individualstates.

“Our preference is for the individual states to continue to[regulate], but we want them to get up to speed in terms of howthey regulate, because they vary so much. Issues include speed tomarket in terms of forms approval. Thats of great interest to theBig I and the [National Association of] Professional InsuranceAgents. Its of some interest to us as well, although in surpluslines, typically, you have freedom of form. We want to protect ourinterest in that respect.

“The state system just needs to be retooled. So, in thatconnection, we have been working with the Big I, as well as carrierorganizations.

“But my concept of partnering goes beyond that tooit goes intoeducation And we do currently work with both the Big I national andthe AAMGA, partnering in the technology area.”

Mr. Griffith described several education initiatives, includingNAPLSOs internship programa program that invites selected studentsmajoring in insurance or risk management to spend a part of asummer with a NAPSLO member insurance company and the remainderwith a NAPSLO wholesaler.

Q: For young people considering insurancecareers, what would you say are the most rewarding aspects?

A: In an insurance career you feel yourehelping someone out, youre helping an organization outand I get agood feeling from that. I care about people, and I feel at the endof the day if youve done a good job in arranging an insuranceplacement, that youve helped.

“The other thing is that those insurance placements, at least insurplus lines, vary day to day. No two days are quite alike. Almosteverything you see is unique.”

Q: This interview wouldnt be complete withoutasking your view of the market.

A: “Submission activity for us is actuallygrowing. That may be because were doing some things right and someproducers are coming to us more often. [And] to some degree, weveexpanded the number of production sources we have, [though] not toan alarming extent.”

Otherwise, “the markets become more competitive. Were losingbusiness back to standard companies. Weve seen that just in thelast two or three months. Some of our 1/1 business went standardagain.

“Its tough to lose it, but [in surplus lines] you have tounderstand that youve performed your rolefor a couple of years,youve had a piece of business that the standards werent interestedin. When it goes back there, you cant be terribly upset. You justmove on.”

Q: Whats the typical kind of business thatstandard companies are taking back?

A: “Umbrella business is moving back, someproduct liability risksthose two areas. I dont think the standardsare terribly interested in commercial contractors, so we haventseen much movement there. D&O still is challenging,particularly if you need high limits.”

Q: Any crystal ball predictions on how long thehard market is going to last?

A: “Its a matter of definition. I guess it isleveling. We havent seen those tremendous spikes in rate increases[recently] that we did in the last three years.

“The fact that its leveling would indicate that theres going tobe some more standard market competitionweve already seen that.Theres also more competition between the wholesale companies. I seethem more strongly competing against each other. That would suggestthat pricing will probably start sliding a little bit.

“But I dont think were looking at a soft market by any means. Ithink well probably continue to have a hard market for at least acouple of years before you see any noticeable cross-cutting goingon.”

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, February 20, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved. Copyright in this article as anindependent work may be held by the author.