To get where you're going, you have to know where you are.

Scott Anderson, owner and executive vice president of Concorde General Agency and a past president of the American Association of Managing General Agents, found this out while fleshing out an idea he calls “Vision 2017.”

When he conceived this initiative in 2007, he saw it as a way to focus on what the industry would look like for wholesalers and MGAs in 10 years with regard to technology and the evolving marketplace.

However, Mr. Anderson soon discovered that in looking at how wholesalers would operate in the future, there was a degree of uncertainty as to how they are viewed in the present, particularly by retail agents. Mr. Anderson and the rest of the professionals that make up Vision 2017 have now refocused their efforts on defining, and perhaps redefining, the role of the wholesaler.

In 2007, Mr. Anderson, who was then AAMGA's president, decided that it would be beneficial to attempt to examine where the industry would be in 10 years, and so an initiative named after that concept was started–Vision 2017.

“I just decided that it was something that might be valuable to [the AAMGA] membership to have ideas or things to watch for, or kind of a checklist as we move forward, and to determine what we can do to ensure our value in the distribution channel,” Mr. Anderson said.

The AAMGA board endorsed the Vision 2017 idea, Mr. Anderson said, and he self-appointed the group that would comprise its membership, which he described as a cross-section of the industry.

The members of Vision 2017 are:

o Mr. Anderson, who said that he represents the general wholesaler.

o Chris Jameson, chief information officer of Max Specialty Insurance Company, who offers a technology perspective.

o John Latham, senior vice president in operations at Markel Corporation, who represents the E&S perspective.

o John Hayden, president of the American Modern Insurance Group, who represents personal lines in the insurance industry.

o Tom Albrecht, who is the immediate past president of the AAMGA.

o Paul Goodwin, client executive at Munich Re America, who represents the reinsurance perspective.

o Bryan Clark, senior vice president, underwriting at the Harry W. Gorst Company, who is a managing general agent representing the younger, under-40 perspective.

o Gary Clark, programs and facilities leader at Miller Insurance Services, Ltd., who represents the London perspective.

o Robert Fulwider, chairman of the Independent Insurance Agents and Brokers of America, who represents the retail agent perspective.

Mr. Anderson said that he is looking to add someone from the National Association of Professional Insurance Agents.

Speaking to NU just prior to the AAMGA annual meeting in mid-May, Mr. Anderson said the Vision 2017 group had only had one meeting. He said that first meeting was convened to focus on the future: what the industry will look like and how wholesalers will conduct their business.

“We didn't even talk about that,” he said. “We talked about how we are viewed in the marketplace.”

Mr. Anderson said that when Mr. Fulwider talked about how wholesalers are viewed by retail agents, it became clear the group needed to get a better understanding of the present, so they could better prepare for the future.

Retailers, Mr. Anderson said, view wholesalers as a market of last resort–where they go when they can't find coverage somewhere else. The first Vision 2017 meeting, he said, examined how the industry could move beyond that perception to show retailers the value that wholesalers bring to the distribution chain.

“What I wanted to do originally is paint a picture and say, 'Okay, wholesale industry, here is one image of what we think things could look like in 10 years,'” Mr. Anderson said. “Well, that's totally out the window. Now we're saying, 'Let's be proactive and move to get ourselves entrenched in the distribution channel.'”

The issue, he said, is image, and the image that retailers have of wholesalers and general agents stems from the traditional role of these professionals. Mr. Anderson noted that wholesalers started as void fillers, and most still fill this role. For example, a retailer will turn to a wholesaler to secure E&S coverage for a bar that they cannot obtain coverage for elsewhere.

“[Wholesalers] are niche underwriters,” Mr. Anderson said. “We need to be. We're experts in that.”

But Mr. Anderson said that wholesalers can be a lot more to retail agents than simply a market of last resort. He explained that his office “is not a market of last resort for a lot of agents. We have a standard company, we have E&S companies, we have specialty personal lines, and we're oftentimes the first choice [retailers] have. And so we're trying to come up with a way to invite the retail sector to use the wholesalers not only as the market of last resort…but to also look at us as an alternative for primary coverage– first look.”

The plan is now to start an awareness campaign designed to improve the image of wholesalers and GAs, Mr. Anderson said. Part of this drive, he said, will involve “getting brand awareness out there–letting them know what the AAMGA is.”

The group will also have to address additional obstacles that come between the relationship of the retailer and the wholesaler. For example, Mr. Anderson said the group discussed the fact that “retail agents live on their contingents in some cases.”

“When [they] deal with wholesalers, typically we take the contingent out of the picture–and they don't like sharing in that commission. So that adds to…the negative perspective,” he said.

But wholesalers do bring enough to the table in the way of unique opportunities to perhaps improve their perception among the retail agent community. Mr. Anderson said.

“What we want to do is enhance our value through the chain and say, 'Here we are. We have primary products for you.' Although they may not be mainstream like homeowners [policies], we can encircle the homeowners with [our] products” such as coverages for watercraft, motorcycles, golf carts, travel trailers, or campers, he said.

While the first Vision 2017 meeting focused on identifying how wholesalers are currently viewed, he said the next step is to examine ways to improve that image.

The next meeting, which was scheduled to take place after the AAMGA's annual meeting, was focused on bringing a technology presence to the industry. If wholesalers can make business easier for other agents through technology, Mr. Anderson said, that may give wholesalers some “credibility” in the eyes of the retailers.

“The path of least resistance is what human nature tends to follow,” he said. “So that's where the technology part of it really fits in.”

Mr. Anderson said that three issues he hopes to eventually address and explore through Vision 2017 are image, technology and perpetuation. He encouraged AAMGA members to get involved and share ideas on how to improve the industry in these three areas.

The AAMGA Web site notes that findings from the Vision 2017 group will be shared through association publications and at meetings. Those interested in the initiative can contact AAMGA Executive Director Bernie Heinze at bernie@aamga.org.

FUTURE SHOCK

While branding issues have dominated the work of the Vision 2017 group so far, the future-thinking concept that initially prompted Mr. Anderson to create the group was in full swing during a separate, early March gathering of AAMGA members in Philadelphia.

There members attending one of 17 educational courses on the AAMGA University East agenda heard some of their MGA peers speculate on possible future-world scenarios. Mr. Heinze, leading a panel of four MGA executives, coaxed each to envision where their agencies and the E&S marketplace would be in 2018.

Adam Devine of XS Brokers Insurance in Quincy, Mass., predicted his agency will be bigger and that regulatory changes mean MGAs will handle more admitted business.

“Today, your shop might be 80 percent E&S lines carriers. That might be 50 percent 10 years from now,” he said, also predicting many more MGAs would move in a direction that some are going in now–becoming aggregators of local retail agent business for standard companies.

Frank Makowski, president of Jimcor Agencies in Montvale, N.J., foresees more mergers and acquisitions–the continuation of a trend to create more large national generalist wholesalers. “The expense side, the cost of transacting business has gone up in multiples–almost geometrically,” and MGAs need to be a certain size, he said, noting that size considerations are forcing them to look into more regions and lines.

“The business is going global,” he said. “You're going to either have to be able to do something internationally, or partner with another MGA somewhere else and work with each other.”

Len LoVullo, president of LoVullo Associates in Buffalo, N.Y., presented a vision of technology that raised eyebrows–involving what he speculated could be knowledge receptors in the future.

“We're going to have a chip in our eyebrow with every movie ever made and every book ever printed–and with a thought you'll activate it and see through your eyes. You'll have the entire Library of Congress in your head and be able to come up with an answer to anything,” he said.

Supporting his view that such advances are just 10 years away, he said, “just two years ago, I never dreamed my cellphone would have the ability to have e-mail, voice mail, a camera, my entire calendar, Internet access, a satellite map of every street in every town of the world, an alarm clock, a calculator, and an endless supply of my favorite music.”

Mr. LoVullo and Mary Marines of Pennock Insurance in Chadds Ford, Pa., agreed that with such advances, identity theft and other tech-related exposures will rise. In addition, wars and pandemics will create new exposures that will in turn create opportunities for the E&S market, they said.

The MGAs went on to debate about how technology will impact day-to-day interactions with co-workers and customers. While all said technology is allowing more employees to work from home, Mr. LoVullo and Mr. Mastowski predicted a move back to the office in 10 years.

“We're going to realize that working in a group is better. That's going to come full circle,” Mr. LoVullo said.

Ms. Marines disagreed, noting teleconferencing capabilities recreate an office atmosphere at home and that rising energy costs will cut down commutes. “We can all be sitting around our screens either looking at the entire room, or just looking at each other–wherever we might be.”

MGAs on the panel and in the audience also debated the pros and cons of automated underwriting advances for some products.

“Time saved by underwriters who were writing those commodity products…should be used to develop relationships, so they can bring more business,” Mr. Mastowski said.

From the audience, Jim Roe of Arlington/Roe in Indianapolis encouraged colleagues to change their thinking about their roles as underwriters, instead embracing expanded roles as experts in risk management and financing in the future.

“We have to start shifting our thinking…from task orientation to how do we make lives whole again,” he said.

(Additional reporting by Susanne Sclafane)

Special Reports /

Forward-Looking Project Reveals Need To Redefine MGA Value

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