Carrier executives playing musical chairs are a bigger concernfor program managers than those who drag their feet awhile beforesigning on to a new program, program administrators say.

Three program administrators expressed their concerns aboutrevolving door personnel during a panel discussion at the TargetMarkets Program Administrators Association midyear meeting inApril, after two carrier executives touted their ability to givequick responses on new programs as key differentiators for theirfirms.

“Part of the thing with response time is anybody can say no–andthat can be very quick,” said John Paulk, chief executive officerof the Britt Paulk Insurance Agency in Carrolton, Ga. “The biggestthing we're looking for is a partner that understands thebusiness.”

“Response time is good, but at the end of the day” the moreimportant question is: “Who are you doing business with? Do theyknow that they're doing? Are they able to execute your program?”agreed Geof McKernan, president and CEO of Norman Spencer McKernanin Conshohocken, Pa.

He added, however, that he has found insurers that get back tohim with an answer about whether they'll sign on to a new programwithin 30 days usually know what they're doing. “The people thatdrag it out, get too many people involved in thedecision-making…really can't execute on what they say they can do,”he said.

Greg Thompson, chairman and CEO of THOMCO in Kennesaw, Ga.,added that stability and ethics are characteristics he seeks in acarrier partner.

“How long has this company been around? How long is thismanagement team going to be around? And what are the ethics of thegroup of people that we're going to be doing business with, all theway up to the top of the organization?” he said.

During an NU interview, Mr. Thompson noted that no matter how acontract reads and how a program administrator may think itprotects them, “the reality is the carrier can make your life verydifficult.”

“So you really have to rely a lot on the quality and ethics ofthe management team–and your assessment of how long they're likelyto be there,” he said, noting that some carriers are notorious for“a revolving door in management.”

“We also actually look for a carrier that has discipline,” hecontinued. “We always intend to make money for our companies, butif they allow some administrator to take advantage of them–and sellcheap insurance or not properly underwrite it–ultimately, if theylose their financial rating, that will hurt us.”

Participating on the TMPAA panel, he repeated these concerns.“We are in a volatile industry, and what can be true one day interms of a relationship can change pretty abruptly the next withoutanything being done adversely on the part of the programadministrator,” he said.

Mr. McKernan agreed. “We MGAs are very entrepreneurial. We stayin our positions forever. I'd like to see a survey of how manycompany executives have been at the same company for more than fiveyears. And have they been in the same position?”

He said program administrators deal with management changes atcarrier partners all the time. “We get comfortable with somebody,”and suddenly that person's no longer there, he noted. “That's veryhard for us, because then we're starting from scratch–from dayone.”

He added that “at the end of the day, we look at the people. Ifyou trust them, they trust you, then you're going to follow thosepeople…as long as they end up with a carrier or financial partnerthat has the backing to do it.”

During the session, an on-site audience poll actually didn'tentirely confirm the perception of frequent turnover in carrierexecutives during the last five years. Fifty-two percent of theprogram administrators attending the session said insurance companypersonnel on their programs had been in the same positions for fiveyears or longer, while the other 48 percent said personnel hadchanged.

Stephen Porcelli, senior vice president for Hudson InsuranceGroup in New York, speculated that timing was a factor influencingthe survey result. “I wonder how much of that is the result of thefact that we've just come out of a hard market,” he said, observingthat “carrier people tend to move around in a soft market.”

Responses to other questions gathered on-site by Benfield–aLondon-based reinsurance intermediary and a strategic partner ofthe association–during the session titled “Strategies for Survivingthe Soft Market,” indicated some other areas where programadministrators and their carrier partners aren't totally aligned intheir thinking about business strategies.

For example, while 60 percent of program administrators saidthey view loss control as a valuable tool, giving them acompetitive edge during the soft market, 56 percent also said theircarrier partners don't all compensate them for loss controlefforts.

Ninety-seven percent said they would increase efforts in losscontrol if carriers compensated them sufficiently.

During an NU interview, Mr. Thompson, who is the president ofTMPAA, said his firm uses loss control services as a bigdifferentiator on programs with larger premium accounts.

He cited as one example a senior living program called “THOMCOUniversity.” The online program allows a nurse at a senior livingfacility to go online and get protocols for issues such as handlingmedication and mitigating slip-and-fall exposures. It also hasinformation explaining how to report an incident if the facilityhas one, and how to deal with it publicly. “There are even coursesonline that they can take for continuing education,” Mr. Thompsonnoted.

“We feel these types of efforts have not only helped our clientsfrom a risk management perspective, but it's also given us muchneeded public relations with the client, even though the businessis being produced through [retail] producers,” he said.

Mr. Thompson also listed the following strategies among those heuses at THOMCO to deal with soft market pressures:

o Increased sales training and incentives for THOMCO'speople.

Mr. Thompson described the incentives as recognition rather thanmonetary. “If you give big monetary incentives, carriers becomeconcerned they're going to try to sell any policy in order to writebusiness, and their loss ratio will eventually feel thateffect.”

o Asking carriers for more commission.

“Where we have very good loss ratios, we're going to thecarriers and saying, you're making money but we're not–or not asmuch as we used to. We're only asking that where their loss ratiowould allow additional commission and they can still make money,”he said, adding that carriers have been fairly receptive to therequests so far.

o Incentives for retailers.

“In one industry we insure where only a small number of agentshandle the bulk of the business, we've come up with an incentiveplan to really attract those large producers to partner with us,”Mr. Thompson said.

o More face time.

“We're traveling more and we're spending more. We're focusingmore on our customer service,” he said.