Like insurers participating in the surplus lines segment, wholesale brokers are putting an array of strategies in place to address the challenges of a soft market–with tech tools to offer fast service leading the way.

Taking a cue from the theme of this week's annual meeting of the National Association of Professional Surplus Lines Offices–”Navigating Change”–NU asked several brokers to share their strategies for navigating treacherous market conditions. Specifically, NU asked:

How is your firm different in 2008, and what changes do you see for 2009?

o Tap Johnson III, president of TAPCO Underwriters in Burlington, N.C.

“We always bragged about being insulated from the hard and soft market because we sold a service model, not a pricing model,” he said, referring to his firm's use of advanced technology to quote and bind on the phone within five minutes.

Even so, TAPCO's volume is down 10 percent this year, Mr. Johnson revealed. “Some of our peers may be down 40 percent, but [because of our model] we're somewhat proud to be down only 10 percent.”

To counteract the decline, he said, “we are on an aggressive expansion plan to let other agents in the country know our business model exists, that it works just as easy in California as it does in Burlington, and that larger accounts can be handled with our five-minute process.”

o Alan Jay Kaufman, chairman, president and CEO of Burns & Wilcox in Farmington Hills, Mich.

“We became global during 2008, leveraging our position as a provider of contract business to London by forming a business entity with London-based C.J. Coleman & Company–named Coleman and Kaufman Ltd.,” he noted. “This new entity supports many classes of insurance placed in the London market, which increases our writing capabilities for all of our clients.”

For 2009, he said, “we made a recent, significant investment in a new technology platform that will allow us to be a leader in providing technology-driven results to our clients. We plan to launch this new platform in 2009, enabling us, in most cases, to go from quote to bind in a matter of minutes.”

o Frank Mastowski, president of Jimcor Agencies in Montvale, N.J.

In 2008, Jimcor has increased its marketing presence, added select programs and expanded online capabilities to its producers, according to Mr. Mastowski.

“Next year, we see expansion into additional product lines and are considering expanding our regional presence, especially with our ability to use the online products effectively,” he said. Jimcor now serves the Northeast through offices in New Jersey, New York, Pennsylvania and Massachusetts.

o William H. Newton, president of Lemac & Associates in Los Angeles.

“There is today a certain expectation that business needs to be turned around much more quickly,” he said. “There is a growing need for technology,” and more of a requirement “to have good support staff than there ever was in the past.”

“Our goal will be to get all submissions completed within 24 hours. We need to make it easier to do business for both carriers and brokers,” he added. “The emphasis for the future will be to get out and hustle up business.”

o Arthur Seifert, president and CEO of Lighthouse Underwriters LLC, a Dallas-based program underwriter and subsidiary of U.S. Risk Underwriters.

“We have been busy trying to rationalize expense to revenue, and that is a trend that is not unique. Everyone is wrestling with that,” he said, noting that this is a typical response to a 2008 market in which pricing dropped faster than most everyone predicted.

“The drop-off has been severe,” he said. “Those that figure that out will be well positioned to take advantage of the market when it begins to turn in 2009.”

Mr. Seifert also noted that Lighthouse is moving smaller books–under $20,000 in premium–onto an Internet platform to make it easier to access and service that business.

o James A. Roe, president of Arlington/Roe & Company in Indianapolis.

Noting the dramatic impact of price competition and expanded carrier appetites, he said that “we can't control the market, so we try to control those things we can have an impact on”–eyeing expenses, for example, as a natural target.

“We have cut back on staff about 12 percent and have consolidated more of our back office and service functions,” he said. “I suspect in 2009 we will continue to see more of the same in terms of competition so we will continue with these initiatives.”

Asked how they distinguish their firms in the marketplace, most wholesalers echoed the sentiments of Mr. Mastowski, who said the trick is to do it “the old-fashioned way, [with] service, seasoned experienced staff and training.

Mr. Kaufman and Mr. Newton, however, pointed to their very different ownership structures as competitive advantages.

Burns & Wilcox's Mr. Kaufman said that “most of our competitors have to answer to shareholders, banks or private equity groups. As a private company, however, we are devoted only to the wholesale-specialty insurance industry.”

“With our complete independence, our agents are assured that decisions are made in their best interests,” he added.

Mr. Newton of Lemac said: “Our market access is different because we are not only sizable, but being part of RPS, we can get to every market out there.” He was referring to the fact that Lemac is a division of Risk Placement Services, which is the wholesale arm of Itasca, Ill.-based insurance broker Arthur J. Gallagher & Company.

“Our people know how to make deals, and at the end of day we make the best deals,” he said. “We have superior knowledge of the competition and the product.”

At Arlington/Roe, Mr. Roe said: “We consider ourselves to be a one-stop shop for specialty products. Most of our underwriters and brokers have long backgrounds in the standard lines underwriting area” as well.

“Because of this expertise, we have been able to obtain extended underwriting authorities from most of our binding markets,” which enables the firm to place business that competitors would have to submit, which speeds up service, he said.

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