While agents and brokers are trying to hit the ground running this year, many may feel like they are stuck on a treadmill, struggling to keep up their books of business while more clients contract or fall by the wayside in this challenging economy, past National Underwriter Commercial Insurance Agency of the Year award winners warn.

Last fall, during NU's "State of the Agent Roundtable," Gary Ivey, president of West Point, Ga.-based J. Smith Lanier & Company, noted how the recession was taking a toll on his earnings.

Indeed, Mr. Ivey said that Lanier--NU's 2008 "Champion"--had seen payroll cutbacks undermine the firm's workers' compensation book and reduce commissions, while bankruptcies, consolidations and takeovers eroded his overall client base.

Meanwhile, as client firms closed their doors, he noted, the agency was exposed to credit risk if premiums were left unpaid. Thus, he said, it is "clear this is a time when brokers and agents have to be extremely disciplined internally" to survive.

When business is lost, according to Ray Bouchard, president of Bouchard Insurance in Clearwater, Fla., which won an Honorable Mention in this year's NU award program, "the only thing you can do, no matter what the state of the economy, is to go out and create new opportunities and try to write new business."

One strategy being employed by NU's 2004 Champion agency--Senn Dunn--is to stay on top of your customer's situation, said Tim Ward, executive vice president of the Greensboro, N.C.-based firm. "We are staying in touch with our clients, even if there is no problem," he told NU. "We stay close to them because we know they are under financial pressure."

He said his firm has taken the initiative, keeping close track of premium collections by making it a routine focus of discussion every Monday morning.

Producers find that when talking to clients, the focus is not limited to insurable risk, expanding into a broader discussion about how to deal with the economic downturn, allowing agents to see the "storm clouds" facing a client far in advance.

"We want to stay in business, so we want to know early on about a client's problems, so we're not left holding the bag," said Mr. Ward, who added that sometimes all an agent can do is hope their accounts don't go into bankruptcy.

Beyond concern for the fate of individual customers, the bigger question is what 2009 holds for agents and brokers.

"I don't know if I so much call [2009] a challenge as an uncertainty," said Jim Krause, chief financial officer of Higginbotham Associates, NU's 2002 Champion. "The economy is dipping down to unprecedented levels, and [we] are going into next year with a lot of uncertainty. Clients are subject to the whims of the economy."

"We have not been through times like this before," according to Cyd Alloway, commercial insurance department manager for Overland Park, Kan.-based Haake Companies, NU's 2005 Champion.

With information traveling faster than ever, business leaders are aware of the global impact of economic events much more quickly, which is breeding a lot of anxiety--and that is impacting buying decisions, according to Ms. Alloway.

The financial woes of American International Group underscored the interconnection of global economies, she noted, reflecting a "new experience for the general public," which may be a good thing in the long run. "I think people believe that the more knowledge they have, the more they will feel in control of what is going on around them," Ms. Alloway observed.

It was AIG's financial problems that fueled a newfound desire for more details about a carrier, as opposed to taking the financial health of big-name entities for granted, according to those queried.

Indeed, the fallout from the economic crisis will probably reveal weaknesses in a number of insurers, according to Mr. Ward, noting others besides AIG have reported or suggested their own financial problems.

Clients are thus more demanding when it comes to questions about their carriers these days, putting producers on the spot to deliver more information on each placement.

"We are seeing concern and a lot of discussion about a carrier's financial standing and status," confirmed Chris Rooker, vice president of commercial lines for Higginbotham Associates.

Such concern, which was once rare, has now become routine, as clients ask a lot of questions about a carrier's financial strength, their ability to pay claims, and about how losses would be handled should an underwriter become insolvent, according to Mr. Rooker.

However, the degree of concern differs with each customer, he added, with some asking about "fallback positions" should a carrier run into financial distress and an agency's book needs to be moved.

"Ninety-nine times out of 100, there are options," said Mr. Rooker.

Some customers were not that concerned initially over the fallout from AIG's federal bailout, recalled Mr. Ward. But as events unfolded, he said, concern grew--and now clients who appeared comfortable with AIG are requesting more bids on their renewal.

"Who would have thought AIG would be in the position it is in?" said Ms. Alloway. "For most midmarket clients, if they were with a name they recognized, that was all they cared about. Now, we get a lot of phone calls asking about the financial condition of carriers."

Beyond having to reassure nervous clients and spend more time explaining insurance placements, producers say they must pay closer attention to the latest news about the industry in all kinds of media. "We have to understand what is hard news and what is conjecture," said Ms. Alloway.

While customers are not necessarily abandoning AIG, those queried for this article said, there is heightened competition for AIG's business, so underwriters are making sure they are proactive in keeping agents and brokers better informed.

"I don't feel carriers are leaving us out in the cold," said Mr. Krause. "We see willingness on the part of all carriers to get out in front and address concerns with clients--especially from AIG. They are way out ahead and bending over backward to get to us and tell their story."

Producers say that while many of their colleagues and competitors are suffering in this contracting economy, diversification in their books of business helps defer some of the worst effects of the downturn.

"We don't know [what will happen in 2009]," said Mr. Ward. "And I'm sure that is true all across the country. I don't think anyone is smart enough to figure it out."

On a more positive note, added Mr. Rooker, "we are still delivering good news to our clients." Pricing remains soft in most sectors of the commercial lines marketplace, he noted, and while there are signs of the market leveling off, there is no widespread hardening on the horizon--music to the ears of clients whose sales are falling.

However, broader macroeconomic conditions, such as the continuing tight credit market, are affecting agents and brokers in different ways. A few said they secured financing they needed in advance of the credit crunch, and thus are still able to pursue their acquisition strategy.

Both Mr. Rooker and Mr. Krause at Higginbotham said the current recession has not hit the North Texas area as badly as it has the rest of the country, keeping the firm in a good financial position.

However, Mr. Ward noted that due to the credit crunch, it is more difficult for younger producers to buy a partnership in their agencies because loans are harder to get. Some carriers and banking institutions--such as InsurBanc, affiliated with the Independent Insurance Agents & Brokers of America--have helped, but young producers are hamstrung because they must make a more significant down payment than in the past.

The downturn has also made some partners re-think their retirement, observed Ms. Alloway. "There is less retirement talk and more talk about working until 70, and that is a direct reflection on the economy."

In one sense this is good, she said, because it gives the younger generation access to mentors they may have missed in the past. But the challenge, she continued, will be accommodating those experienced workers who want to continue working, but for fewer hours.

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