'Risk Managers' Beat Policy Peddlers

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NU 'Agencies Of The Year' analyze threats, identifyopportunities ahead

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What are the critical challenges facing independent agentstoday? Producers large and small, as always, are caught in themiddle between the demands of buyers and insurers on a host of keyissues, including the softening market, recent damage to theindustry's reputation, and calls for more products and services atlower overall costs. To help make sense of lingering and emergingtrends, National Underwriter assembled a panel representing five ofthe most innovative independent agencies in the country.

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One is from the winning firm in this year's "NU CommercialInsurance Agency Of The Year" award program. Two head up the otheragency finalists this year, receiving an Honorable Mention. NUaward winners from the past two years also joined the debate.

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One theme dominated the lively two-hour discussion, moderated byyours truly--and that was the need for agents to go beyond the saleof insurance on price alone, to become aggregators of services andserve as true risk managers for clients. The key, all agreed, is tofocus on lowering the long-term, overall cost of risk, rather thanjust shop an account on the basis of the short-term,commodity-driven cost of insurance--easier said than done in asoftening market.

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Capsule profiles of the participants appear throughout thesection. (For a more comprehensive look at this year's three agencyfinalists, see NU's Sept. 12 edition.) Highlights of our roundtablefollow:

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Sam Friedman,

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Editor, National Underwriter:

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o ARE ALL BUYERS CREATED EQUAL?

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Our cover story on the "NU State Of The Market" survey lastspring (June 13) was headlined: "A Tale of Two Markets." We foundthat even in a softening market, the smaller the account, the lowerthe average price cut they received on a percentage basis, whilebigger accounts enjoyed far deeper premium reductions.

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Has it been your experience that the smaller and middle-marketcommercial accounts have more of a problem getting better pricequotes?

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Scott Addis,

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The Addis Group, 2003 Winner:

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The game has changed. There is an intense and demandingunderwriting process at work. It is a more logical pricing approachas compared to prior soft markets.

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Today, in a softening market, it is those accounts that haveearned the right and opportunity to reap the rewards of goodperformance that get the best price quotes. The sophisticatedconsumer and agent-broker are well prepared to take advantage ofthat shift.

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Creative risk management strategies are more prevalent todaythan ever. As a result, middle-market accounts are getting a lotmore attention from carriers.

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Steven Schill,

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Haake Companies, 2005 Winner:

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I would concur with Scott. The sophistication and knowledge ofbuyers is improving, especially if they upgrade their loss controlwithin their own organizations, or hire others to come in and betheir risk management arm.

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Does that make a difference? Absolutely, for those doing theunderwriting at insurers. As a result of risk management, those arethe accounts where their performance has been good over the lastthree, four years--lower frequency rates, lower severity rates. Youare now seeing those particular accounts starting to lose some ofthe short-term costs they have carried through the hard market.

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So, in conjunction with their agent or broker and their ownstaffs they're doing a good job of bringing forward a stronger riskmanagement program. They've changed their risk characteristics, andthose are the ones who are getting the better than averagepricing.

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Timothy Nielsen,

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Fullerton & Company,

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2005 Honorable Mention:

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I think the larger accounts are getting the larger dollarsavings, but it's not completely across the board. A really largetheme with the carriers right now is to go after middle-marketbusiness and to go after smaller-accounts business. If you've got asmall accounts department--which we do--we get an awful lot ofattention from quite a few carriers, and I think what they areseeing with that is they don't have the same exposures.

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When there's a claim, it's generally not as large a claim, andthey get a good spread of risk in what they're writing. From that Ithink they're finding they can make quite a bit of money if theytake a significant presence in small-to-middle-marketbusinesses.

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Sam Friedman:

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How do you define a "small" account?

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Timothy Nielsen:

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That's changing quite a bit. I think at one point you would haveused something around $5,000 or $10,000 in revenue, but that'sgoing up. Why I disagree a little with the "bigger is better" trendis that the percentage of savings you're seeing sometimes on$20,000 or $30,000 premium accounts is dramatic. You can see a20-to-30 percent change, which means you're talking $4,000 or$5,000 in savings.

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The percentage is very large for a relatively small account, andit's all because maybe it was written in a certain package styleand some carrier has decided that this now fits into abusinessowner's program, and they completely re-rate the wholething and include all the coverage that you were ratingindividually before. We're seeing more and more of that going onnow.

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Two or three years ago when the market was at its peak, we werespending a lot of time rewriting these accounts--out of the packageand into some other type of coverage, whether it was two differentcarriers writing different lines, or just trying to find a way toput the whole thing together.

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Now we've got these carriers coming back into the market,saying, "Hey, we'll write that account and we'll put it all underone program." So that piece is having an impact on the percentagesavings on the smaller accounts.

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David Maki,

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Insurance Office Of America,

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2005 Honorable Mention:

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What is regarded as a middle-market versus small account versuslarge account? It's kind of like beauty--it's in the eyes of thebeholder.

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Our agency covers the gamut, and we have many agents that arewhat I term "Main Street writers." A $30,000 to $40,000 account tothem is like gold, yet we have other agents who won't look at anaccount unless it generates more than that in revenue--all workingin the same shop.

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My point is that risk management is as applicable to a $30,000account as it is to one for $3 million, and if the agent can go inand offer something besides policy and price, he's going to win theaccount. I think risk management gives the opportunity for a moresophisticated agent to negotiate better terms, conditions andprices than ever before.

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Sam Friedman:

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o CAN AGENTS BE RISK MANAGERS FOR THEIR CLIENTS? CAN THEY AFFORDNOT TO BE?

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It's easier, I would imagine, to sell clients on a riskmanagement approach during a hard market when you're looking tocontain rising insurance costs. However, now you're up against asoftening market, so perhaps it's a little harder pitch with thetemptation to shop for whatever carrier can get the lowestrate.

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Are agents who are committed to risk management able to deliverthe same level of service as premium rates fall? What kind ofcompetitive pressures do you face from more price-drivenagencies?

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Steven Schill:

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You have to determine your culture and how you are going tooperate. We always talk about the "three P's." We talk price. Wetalk products--which includes the service capabilities we candeliver to our clients. We talk about personal relationships.

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An agency has to determine how it's going to operate on themacro level, and it can't change that operation just because themarket is changing. At the end of the day we can influencepricing--we can work with the client to contain short- andlong-term costs--but the underwriter is also going to set the pricein some broader context because of the marketplace.

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We just want to be able to have the risk indices to fall back onand say our client is doing better than most on controlling costsand exposures. On a micro level, we have to get into each client'soperations. We have to look at how they are performing, and showthem what we've delivered in terms of service, loss control plans,stewardship reports, and attention paid to their needs.

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You have to get to know your client and deliver a unique valueproposition to them, and that's a big thing we look at in the totalscope. We realize price is always going to be a part of thatproposition. But we also have a market condition report. It isincluded in our service plan, so we bring them up to date with whatthe marketplace is doing--putting market trends into context andlooking at how they have performed against the overall market.

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Gray McCaskill,

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Senn Dunn, 2004 Winner:

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I think it's more important now than ever that you know yourclient and their business, especially the competitive pressuresthey face. Some of our clients are in tough times right now, andyou're fooling yourself if you don't think price is not veryimportant. But agents must stay the course.

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We had a $250,000 account, and a challenging agent came in$40,000 lower. Our producer did a great job trying to reiterate thebenefits of sticking with the same carrier and the partnership wehad formed together with the client, and all the value-addedservices we offered. But the buyer said, "Well, I'm sorry, I reallylike you and the carrier, but I can't look away from that amount ofsavings."

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So they left us, left that carrier. But 60 days later thingswere not working out at all like they planned, so they called backand asked whether our carrier would write their account again andwe got them back. So price is definitely not everything, althoughyou've got to keep reminding clients of that.

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Timothy Nielsen:

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When premiums were growing in the hard market and income alongwith them, we did add more services, put a risk manager on staff,put more people in claims and tried to do more to stay on top ofworkers' comp losses. Along with all that comes an expectation.When the market was hard, a few of our carriers were getting awayfrom loss control and they were getting away from risk management,trying to save dollars and trying to push more of it back onto theagency.

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Well, they're getting back into the game now. They're coming inand starting to sell their own services, and they want to augmentand work with our people to do those types of things. What I seegoing on is maybe a slow, not so much transformation, but sharingof responsibility on risk management, where in the past it waseither all or nothing.

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Steven Schill:

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Our clients have become much more sophisticated, and theyunderstand us and what we're trying to accomplish from a riskmanagement standpoint. As they go through this transition, they cangauge the barometers themselves. Our job is to incorporate this andmake it a part of the marketing process with carriers. We have todeliver a return based on their risk management investment becausewe know what happens if we don't deliver on the client'sexpectations.

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But we're also trying to keep the pricing piece as only one partof our service plan--the last part, when it comes to buyinginsurance. We focus on all the other variables that make up thecost of risk.

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On a macro level we try to stay consistent. This is the way weoperate, and realize that price is a component of our "threePs"--with products/services and people being just as important.

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Gray McCaskill:

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The type of client who really buys into the risk managementapproach understands that I'm not always going to get the lowestpossible price. Price is important, but overall I'm buildingcredits with this carrier and it's a process that's going to payoff over the next five-to-10 years, hopefully bringing down overallcosts.

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Scott Addis:

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Over the past few years, prudent agencies reinvested time,energy and financial resources to build service systems, offeringrisk management resources and capabilities that may not have beenthere five-to-10 years ago. That translates into a true partnershipwith the consumer.

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Today, many consumers realize insurance is solely arisk-transfer tool--not a risk mitigation strategy. Agents who arecommitted to risk management demonstrate significantly higher newbusiness hit ratios and retention percentages as well asexceptional loss ratios. They have become much more of a trustedadviser.

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David Maki:

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I agree that you can't allow the hard or soft market to dictatethe culture of the agency. You've gone out and represented yourselfas someone who delivers risk management services. You can't bend onthat because the market heads down.

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The challenge for the agency is to determine how to deliver thatsame level of service in a more efficient manner with fewer dollarsto work with in a soft market.

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The solution is a constant financial management process. Wereview the cost-versus-service benefit picture every month toretain our profitability.

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Gray McCaskill:

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It's important if you do a true consultative approach thatthere's a cost to your client for moving their coverage. If it's avery sophisticated account, you have carrier relationships andsupport services you provide.

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There should be some pain for disengagement, so the clientunderstands you are not interchangeable with another agent justpitching cheaper premiums in the short term.

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Scott Addis:

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There are many more agencies with an entrepreneurial spirit.They realize that the game has changed where they simply can't shopwith 15 carriers and think that's going to get the job done fortheir clients.

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Sam Friedman:

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o IS RISK MANAGEMENT A LUXURY OR A NECESSITY?

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Ten years ago, risk management was a really alien concept in theagency business. There appears to be a growing awareness that riskmanagement is a key component of an agent's overall service. Do youfind yourselves up against more competitors pitching themselves asrisk managers?

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Steven Schill:

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Most of the agencies we consider our peer group have nottransformed to the consultative risk management approach. However,they are now beginning to inquire and do things differently. Forexample, they are going to possibly bring loss control and OSHAcompliance people into the mix.

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But it's inevitable that more agencies will gravitate towardthis approach because the game has indeed changed--because of thesophistication it takes today to be in our business. Betweencatastrophe modeling, exposure concentration and litigation, youhave to look at all of these variables we didn't use to take intoconsideration. So, our business has a much more analytical elementto it than what we've had in the past. That's what risk managementis all about.

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I think over time, you're going to see more agencies gravitateto a similar approach--that is, being more consultative by nature.I think you're going to have to--competition is going to forcethem.

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We're working hard to stay ahead of the trend and differentiateourselves, first by our unique approach, and then later by theunique experience and expertise we bring to the consultativegame.

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David Maki:

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Can agents who sell on price only survive in the market? Myanswer to that is yes--as long as there are price-drivenbuyers.

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The problem is that price-driven buyers disappear, and we areliving proof that risk management services will win in the longrun. Prosperous agencies in the future will deliver riskmanagement. I think the survivors and thrivers and prosperousagencies will be the ones that can compete on that level.

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Our agency has employed experts to provide risk managementtools, such as loss control, premium audits, claims management andexperience modification analysis. Many small accounts benefit fromthis "luxury" on a one-time basis, but if it satisfies their singlemost important need, we have a loyal client that we will retain forlife. I view this "luxury" as a necessity in today's competitiveenvironment.

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Timothy Nielsen:

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The risk management services model is a formidable one to haveif you can be price-competitive--or cost-competitive, depending onhow you define those terms. You offer value-added services, andthen the final thing that puts us over the top is our personalrelationships with and knowledge of our clients. That can be a verydifficult model for other ways of selling insurance to competewith.

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With midsized accounts, we deal directly with thedecision-makers. We form a strong bond with the owner of thebusiness and we provide some value-added service and demonstratethat our overall cost has reasonable value to them. Then they lowertheir expectations on having the absolute lowest price forinsurance.

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They still expect us to be in the range and to be fair, and theywant to know that we're working for them to get costs down as lowas possible. Put that combination together and you've got a brightfuture in this business. It's not common, but we have competitorsin our area that are also doing it--but not very many.

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Sam Friedman:

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What advice would you give to agents who are either goingthrough the transition or contemplating making that leap into riskmanagement?

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Steven Schill:

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You need to have a stick-to-it attitude. Once you determine thisis your culture, the leaders in your agency absolutely need to havethe resolve to stand by and continue to say this is how we're goingto operate, even though some of your producers may want to backaway from what they perceive is a lot of work upfront--and it is.It takes a lot of work to gain the trust of the client and helpthem understand how you're doing business.

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I think most people in this business are fairly open to newideas, but you have to have resolve as well as the vision to makethis work. Once you create your vision, you must be able to instillthat new culture into your people's work habits, and you need toask whether you possess the skills and capabilities you must havein your organization to deliver a value proposition for yourclients.

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Unfortunately, that doesn't always mean the same faces in thesame places, but you really must have the resolve to make whateverchanges are necessary.

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Gray McCaskill:

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What I think a lot of folks try to do is an imitation. It's a"me, too" approach. We can do that, too--me too, me too. Where Ithink the rubber hits the road is when you can really sit back andhave your client say, "Well, you told me you can do all of this.What did you actually do?"

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I am confident because we make an agreement that we are going todo certain things, and I say to the client, judge me on what weagreed to do. That will speak for itself. As long as we make sureto hold our producers and associates to that standard, we'll bejust fine.

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That doesn't mean every agency has to do it the exact same way.Many agencies deal with some tough industries, and often times themarket is price-driven. But the point is we can move toward riskmanagement each step of the way.

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Scott Addis:

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It starts with leadership. It takes the top management of anorganization to realize that a transformation needs to take place.However, once the transformation is under way, it is up tofront-line producers, account managers and risk control specialiststo make it work.

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Each organization must build its brand around a unique process.The process should facilitate the producers' understanding of thebusinesses and industries they are handling. The process must alsouncover the risk issues of the client, as well as measure andmonitor those issues. This is the essential first step to riskmitigation.

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If you have an old-school agency principal or sales manager whosays, "We can't afford the time. We can't do that. You need to goget competitive bids," then it's not going to work. Far too often,that's the challenge undermining a large percentage of theorganizations out there.

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Steven Schill:

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You have to demonstrate what your risk management culture isgoing to mean for everyone. It might be easier to convince youryounger producers, because they're always looking for newtechniques. They don't have established relationships in the clientcommunity, so they're looking for ways to get in to see prospects.A risk management approach might be a great way for them to openthe door.

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It might be harder with producers who have an established bookof business, and you're asking them to transition their existingclients to a different way of thinking. And that's critical. Youcan't deliver risk management to your new clients but not deliverit to your existing clients. You have to make that transition andyou need to have an implementation plan in place.

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We announced one day this is the plan going forward. For thosewith the bigger books who want to know how we implement this, wehave a step-by-step, account-by-account process. It's easier withnew business because you just start right from scratch, but with anexisting book you have to go through an implementation phase.

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Scott Addis:

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You have to go to your people and tell them we all have apurpose that is so far beyond selling an insurance policy.

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Many of the younger professionals in the industry are reallychallenging the system. As Steve Schill mentioned, it's easier forthem to step back and look at the game. They are also expectingmore than simply a paycheck. They're expecting a career that isgoing to be very rewarding to them.

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Sam Friedman:

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o THE SPITZER IMPACT.

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A big part of being a risk manager for a client is establishingtrust, which was the theme of our award essay this year. Whatprompted the question was the challenge to the integrity of thebusiness following probes by New York Attorney General EliotSpitzer, which led Marsh, Aon and Willis to give up contingencyfees to avoid potential conflicts of interest.

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How did you respond as an organization to the Spitzer probes,and what impact, if any, did they have on your day-to-day dealingswith clients?

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Steven Schill:

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We took a very proactive approach. We went out to a number ofour clients and other business leaders and asked them what theythought of the contingency piece. The first part, of course, wastrying to explain the difference between legitimate contingencycompensation and criminal activity.

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When we went through that process, they at least got anelementary level of understanding. They said, "If you guys aredoing work on a contingent basis, based on the loss experience ofmy account, based on cutting claims through sound risk management,you're trying to make us a better risk and you're trying to helpthe insurance carriers' results as well. You're helping on bothends. We don't see the problem here."

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We haven't had them come back and say, "Well, we think you'remaking a little too much money in commissions." Most of them say,"Hey, as part of the value proposition, we want to work with ourrisk management consultative agency as a viable ongoing operation.We want you to be profitable. We don't want your margins cut sothin that you're here today, gone tomorrow." They realize that asbusinessowners.

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We also keep in mind just because some practices are notillegal, doesn't mean they're ethical. We put our practices to thelitmus test of our shared values. We make sure clients understandour shared values, and we have a statement--here's how ouremployees conduct business.

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As long as I've been with Haake, we've had disclosure statementspertaining to our compensation. We have tried to be clear we are afull-disclosure agency. We will talk to anybody about how we getcompensated. We don't try to hide it. Most of our clients have notasked.

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David Maki:

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I think the Spitzer situation had limited impact on the smalleragency force. The only change we've made in operations is thedisclosure statement on every proposal--new and renewal--that wemay earn contingencies.

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I have not had one client call and ask me about it. In fact,even clients that are fee-based don't view it as a major problem,and the reason is because we've earned the trust and loyalty of ourclient base. As long as you do that and focus on the product andservice you are selling, the focus for the client is not how muchyou're making. We just don't see clients put their insurance up forbids. It shouldn't happen if we form a true partnership andestablish trust.

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Now the Spitzer investigation did uncover criminal activity,which is great. People who break the law should go to jail. It'sjust sad that our image as an industry is tainted by thatdevelopment. There are bad apples in every barrel. The probe was avery healthy cleansing action, and I think it's a great opportunityfor agents to stand apart.

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Timothy Nielsen:

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As far as our compensation goes, we haven't seen a large impactfrom a negative standpoint. There was a study by the insurancecommissioner where they asked questions and wanted us to disclosesome information, and we were all happy to do that. And from that Ithink they concluded that the system is pretty straightforward.

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There are always exceptions, but as a rule the system workspretty well, and so I think going forward most customers reallydon't get into asking about specific income and how you getpaid.

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They really want to understand the cost element, and if you areupfront about how your pricing goes, and give that detail to acustomer and then figure value-added services into that, you builda trust level with them as you build their understanding in theoverall product they're buying.

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Gray McCaskill:

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When I tell clients what our average commissions are in thisindustry for all the good things that we do for them, theirreaction is, "How do you stay in business?"

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They realize we take those commission dollars and invest them inthe best catalogue of services available. Many of the things we doare not free--but there is just no additional cost to ourclients.

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Sam Friedman:

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Marsh has announced it will cut thousands of middle- andsmall-market accounts that it had on its books--presumably totrigger now defunct volume-based contingency fee deals. Doesn'tthis mean that a lot of good accounts are going to be in play?

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Timothy Nielsen:

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There is definitely an opportunity here for the independentagent. Before all this news broke, there was a change going on withthe national brokers, who were indeed trying to generate morerevenue by creating different models to draw more middle-marketbusiness. However, many of those accounts, once sold, were servicedout of some central location far from the client.

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That was going to create opportunities anyway for local agentsto pursue clients who just want to deal with local people. Theywant to be able to talk to an individual. They want to be able tosee that person face to face. The questions Spitzer raised aboutbig broker compensation and loyalties will only increase thoseopportunities for agents.

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Steven Schill:

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It definitely creates opportunity for agents. After theseprobes, I think we're on a little more level playing field. We livein the middle market, and now the national brokers have to exitmore of the middle market, so it creates an opportunity for us.

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Sam Friedman:

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o WHERE DO EMPLOYEE BENEFITS FIT IN?

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NU's award recognizes the commercial insurance agency of theyear, but all the agencies we've honored over the past four yearssell a lot of employee benefits. What role do employee benefitsales play in your overall book of business, and where does itfigure in your overall strategic plan to fill all of the insurancebuyer's needs?

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Steven Schill:

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We've had a very strong cross-sell environment between ouremployee benefits and our p-c operations. I think our penetrationis in excess of 70 percent of our p-c clients. That was a visionHaake had over 15 years ago.

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As a matter of fact, the way we conduct our benefits businesswas one impetus sparking the change in p-c to a consultative-basedsale. In health insurance sales, helping employers select anddesign the right consumer-driven health care program for theiremployees is a consultative-based sale versus price-based.

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Benefits are about capabilities and how we'll service theclient, rather than price alone. This really was the beginning ofour consultative model and how we started our transformation in thep-c area. So benefits fits very well into our model from aconsultative standpoint.

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Gray McCaskill:

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When I joined Senn Dunn 20 years ago, many of our clients said,"Please help me with employee benefits. Can't you just handle itall?" Our business model then was that we really didn't dobenefits, because p-c producers were afraid that if they didsomething wrong with the benefit program, they would lose theentire relationship.

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But since then we've learned that there's too much money on thetable in benefits to ignore. Today we have 20 people in ouremployee benefits division. We'll do about $4.1 million in benefitsrevenue for 2005, of which about 63 percent came from our existingproperty and casualty relationships.

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Our whole model is to be able to provide all insurance-relatedproducts that our clients need. For those p-c producers who don'twant to turn over their great clients to a benefits producer forfear they will endanger the account, my argument is that we havemade the wrong hire. I feel I should be able to send anyone in ouragency to my best client and have the confidence they willrepresent the agency as I would.

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So, in our scheme now, benefits is probably representing closeto 25-to-30 percent of our revenue.

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Timothy Nielsen:

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We're in the same position. We've had a culture in the agencyfor some 25, 30 years that's devoted to selling all products, andemployee benefits is just another extension of that philosophy.

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To deal with producers who have some concern about bringing insomebody else, either to share or take over employee benefits, weneed to work on our culture. We need to work on who we're hiring,because we've got to be on the same team when working together. Andselling benefits is another opportunity to keep your competitionout of there.

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David Maki:

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At IOA, our philosophy has always been to share commissions.Whenever we have one of our agents bring one of our benefitsspecialists into a commercial account, the commission is sharedboth ways--and forever; it's not a finder's fee. It's a vestedinterest that our agents have.

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We also hire specialists in each area--a real professional inSection 125 plans and 401k specialists in estate planning. The samereferral basis holds true that the referring agent will split thecommission.

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Our whole philosophy is based on sharing among partners, andit's worked wonderfully for us.

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Steven Schill:

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Beyond employee benefits, one of the challenges for all of theagents in this room and in this industry is to become an aggregatorof services. Products and services that we cannot provide, we haveto partner with people who can.

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More is going to be expected of us to provide additionalservices for clients. We may not be able to deliver all of them onour own because it's not cost-effective or cost-efficient, but wethen have to be in partnership or at least in contact with peoplewho can deliver these services.

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Sam Friedman:

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o UP CLOSE AND PERSONAL.

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Just like with employee benefits, we see many of ouraward-winning commercial agencies doing a substantial amount ofpersonal lines business. What does the future hold for independentagents in this side of the industry?

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David Maki:

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We aggressively pursue personal lines, and the premise is thatthe personal insurance for the businessowner and their family is asimportant to them as their business coverage, so why would you notcome to an agent you trust, who is loyal, and has high integrity tohandle that portion of your insurance?

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Our volume got so large in this area--we hope to exceed $20million in personal lines premium by the end of this year--that wehired an older gentleman who didn't want to be on a commission. Wepay him a salary, and he goes out and visits all our new largerpersonal line clients just to make sure things are going well. Heloves his job, and we have received many complimentary letters fromclients thanking us for his work.

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This also goes to the point Steve Schill made earlier aboutbeing aggregators. Any time you let someone else in to pitch yourclients, your entire book is at risk. So why not handle thepersonal lines as well?

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Gray McCaskill:

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We're very deep in personal lines. In fact, we started a privateclient group.

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The risk manager's going to write a check for $500,000 for hisfirm's commercial insurance, but he's also concerned about makingsure his family and personal assets are protected. When allproducers buy into cross-selling, it creates opportunities forevery department.

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Timothy Nielsen:

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I agree with everybody on the value of personal lines. It isincreasingly becoming a bigger part of our agency, although I admitthat the majority of our personal lines growth has come fromacquisitions.

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It's an area that we still struggle with a little bit in tryingto create a career for people to specialize in personal lines. Wehave a pretty easy time in the employee benefits area. We have apretty easy time in the commercial area as far as the careeropportunity for sales and growth. It's getting people who want tofocus on or put a significant amount of time into personal lines.But it's getting better. We pay commission on it--a lot of agenciesour size don't.

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The next step is probably learning to use the Internet and a fewother ways to garner more volume.

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Steven Schill:

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We have begun to see a rise in our personal lines quoteactivity. We had personal lines as an adjunct to commercialaccounts, taking care of the businessowners and their families.We're now really shifting our gears in this particular area tobring a personal risk management approach to the affluent andemerging professional client.

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It comes down to our philosophy as an agency by being a trustedadviser with a consultative approach. We know we have to bringadditional services, so we get into anything from jewelry toappraisals to furs and the like. It's an emerging area for us as anagency.

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David Maki:

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While we are on the subject of filling all of a client's needs,I urge agents to think outside the box as far as being anaggregator of products and services and to go beyond just personallines and employee benefits.

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At IOA, we also own a promotions company, selling everythingfrom golf balls to caps, hats and shirts with the company's logo onit. Our sales the first year exceeded $6 million. We also own FreshCommunications, which is an advertising agency that has worked withour clients.

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The premise is that the more products and services you candeliver to your client, the harder it's going to be for the clientto change agencies just over insurance pricing, and the morerevenue you'll generate.

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IN CONCLUSION:

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I want to thank all of our panelists for speaking so frankly andinsightfully about the state of the independent agency system.National Underwriter encourages agents who feel they have a uniqueapproach and philosophy to share their story by entering our awardprogram in 2006. Who knows? You might be part of our "State Of TheAgent" Roundtable next year!

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Details will be available in our magazine and on our Web site inFebruary.

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Caption for Intro:

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Roundtable participants included (l-r): Scott Addis, The AddisGroup; T. Gray McCaskill, Senn Dunn; Sam Friedman, NU; Tim Nielsen,Fullerton & Company; David Maki, Insurance Office of America;Steven Schill, Haake Companies.

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Caption for Inside Strip of Photos:

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Leaders from five of the country's most innovative agenciesagree that to prosper, agents need to go beyond merely peddlinginsurance policies on the basis of price-shopping, and become anaggregator of services and true risk managers for their clients,large and small--even though that might be easier said than done ina softening market.

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Roundtable bios--Start with Friedman top page 14, work theothers in over subsequent pages, all with mugs --See June 13 stateof the market roundtable for format

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MODERATOR

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Title: Editor-In-Chief

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Company: National Underwriter, weeklynewsmagazine and daily Web news service serving 47,000 independentagents and brokers, 15,000 risk managers, and over 9,000 insurancecompany subscribers.

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Location: Hoboken, N.J.

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Distinction: Mr. Friedman has covered the workof independent agents for over 24 years. He launched the "NUCommercial Insurance Agency Of The Year" award program in 2002.

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2005 Award Winner

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Title: Chief Operating Officer, Executive V.P.of Property & Casualty Operations

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Agency: Haake Companies, doing more than $100million in commercial premium volume, with seven principals and 61employees.

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Location: Overland Park, Kan.

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Distinction: Haake repositioned itself as itsclients' risk management adviser--a transition bolstered by adviceand encouragement from a prior NU winner, 2003's Scott Addis.

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2005 Honorable Mention

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Title: President

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Agency: Insurance Office Of America, generatingover $460 million in commercial premium volume, with 52 principalsand 370 employees.

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Location: Longwood, Fla.

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Distinction: IOA seeks partners, not justproducers. All commissions are shared, but so are management andselling responsibilities. IOA has grown into service areas wellbeyond insurance sales.

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2005 Honorable Mention

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Title: President

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Agency: Fullerton & Company, producing over$42 million in commercial premium volume with eight principals and60 employees.

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Location: Portland, Ore.

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Distinction: Fullerton stresses producerautonomy, excelling by abandoning the bureaucratic model andeliminating middle management.

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2004 Award Winner

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Title: President

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Agency: Senn Dunn, winner of the 2004 "NUCommercial Insurance Agency Of The Year" award.

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Location: Greensboro, N.C.

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Distinction: Excels as an all-purpose agency,leveraging "people power" by creating an outstanding place to work.The agency's motto is, "We'll Handle It."

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2003 Award Winner

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Title: President and CEO.

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Agency: The Addis Group, winner of the 2003 "NUCommercial Insurance Agency Of The Year" award.

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Location: King Of Prussia, Pa.

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Distinction: The Addis Group utilizes adiagnostic risk management audit process focused on the long-termcost of risk rather than the short-term cost of insurance. Mr.Addis has traveled the country speaking out on behalf of thisphilosophy, including teaching young agent seminars for theIndependent Insurance Agents & Brokers of America andChubb.