From the December 2011 issue of American Agent & Broker •Subscribe!

R&O Editorial: Educated Guesses and the Magic 8-Ball

Welcome to our annual Review & Outlook issue, which gives us a chance to look at the events of the past year and try and prognosticate on what lies ahead in 2012, based on feedback from agents and brokers, insurers, wholesalers, associations, consultants and young insurance professionals.

Of course, prognostication has its drawbacks. Based on last year’s input, we anticipated a slow and steady economic recovery, the end of the soft property-casualty insurance market, and better times ahead. Instead, we got a deluge of unprecedented natural disasters, more political gridlock, the near collapse of the European economic market, and yet another year of a soft pricing market.

In light of the current roller-coaster ride going on in Congress, on Wall Street, in the international markets and in the insurance business, predictions are hard to come by this year, even solely for the world of insurance. There is much uncertainty around legislative issues like NFIP modernization, healthcare reform, Dodd-Frank implementation, and more. And although property-casualty pricing may be firming, we’re still flush with capacity and investment income is still poor, which points to more uncertainty on when or whether the market will harden anytime soon.

But the real wild card continues to be the economy. One young agent reported the hardest thing he had to do in 2011 was continue “staying positive” amidst all the doom and gloom.  Is it any wonder that some people are convinced that the ancient Mayan calendar predicted the world will end in 2012?

Sometimes I think the best way to predict the future is to turn to that sage voice of our childhood, the Magic 8-Ball. Ask a question, shake it up and watch the answer swim up from the depths of the toy (although like just about everything else, there is now an online 8-Ball, I prefer to consult the real thing). Remember how frustrating it was to get those evasive answers like “Reply hazy, try again,” “Ask again later” or “Better not tell you now”?

People turn to fortune-telling when they feel helpless—a pretty typical reaction to the confusion of information we’re swimming in today. But luckily, our Review & Outlook sources pointed out areas where we can make positive action you can take today, in spite of how misty the future may be. 

Some examples:

  • Clearly define your role. The Big I is enhancing its Trusted Advisor program to set its members apart from mere order takers; NAMIC is carving out a branded identity for mutual insurance companies to differentiate themselves from stock-driven insurers. Independent insurance agents provide an impartial and valuable service to their customers, and we need to communicate that difference.
  • Keep looking toward future generations. It’s easy to lose sight of planning when you’re just trying to survive, but smart agencies never stop recruiting, retaining and training the next      generation. Leadership development will play an important role if you want your business to survive another generation. Take the initiative and give your young employees the guidance and mentoring they want and need.
  • Hone your technological edge. A simple Web presence and a couple of occasional tweets is no longer enough for today’s tech-savvy buyer. Mobile apps, real-time transactions between agents, carriers and customers and agency management “dashboard” technology to streamline workflow are all ways to stay ahead of the game. Scrimping on tech advances is no way to succeed in tough economic times.
  • Be selective with business. Carriers say that in spite of the need to be competitive, it’s more important to carefully select and underwrite risk than to accept anything that comes along. It’s good advice for agents, too.

Magic 8-Ball notwithstanding, none of us can predict the future. However, we can make some educated guesses on what will be important in the coming year and beyond, and take action to ensure our businesses can provide what customers need. Don’t let uncertainty turn you into a deer in the headlights. Continue growing and investing in your business, and the future will take care of itself.

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