NU Online News Service, May 19, 2:34 p.m. EDT
BOCA RATON, FLA.–Wholesale brokers are in a prime position to grab new business when a revived economy begins producing start-up companies that standard line carriers won’t insure, a trade group leader advised here.
Curtis Anderson, the incoming president of the American Association of Managing General Agents and president, national binding/programs for Risk Placement Services Inc. in Scottsdale, Ariz., gave that market prognosis during a press conference at the association’s 83rd annual meeting.
The entrepreneurial spirit will drive some of the unemployed to start new businesses, observed Mr. Anderson. Generally, many standard line insurers will not provide insurance to a business with no loss history, he said. For these cases, the excess and surplus lines market will be the one to fill the void for these businesses, he noted.
Mark Rothert, of Ron Rothert Insurance Services Inc. of Portland, Ore., and the incoming president-elect of the association, said that one thing all economic downturns have in common is that they end. The managing general agency community has the experience and resources to survive this downturn, he added, and will find itself in the position to take advantage of this crisis when it comes to an end.
“Somebody has to insure these guys,” said Mr. Rothert, referring to budding entrepreneurs.
Mr. Anderson called the MGA community “a very resourceful group” that is already in the process of regrouping after the economic shock that has struck everyone.
Regarding the issue of federal regulation of the insurance industry, Mr. Anderson said he did not believe the states would allow their Congressional representatives to vote for legislation that would eliminate a major form of tax revenue to the states.
He said changes would be slow in coming.
Euclid Black, the outgoing president of the association and president of BlackWhite Group in Henderson, Nev., discussing the subject said there are some areas where the federal government would “not want to take on the headache” of regulating some lines of business.
Many associations are working together to keep the lines to the excess and surplus market open, noted Mr. Rothert, adding that what the eventual form of federal regulation will look like is not known at this point.
Touching on the issue of social networking through the use of technology, such as Facebook and Twitter, Mr. Black said he did not believe it would have a strong place in the relationship between clients and their insurance transactions.
He said he could not see how brokers and insurers could build a significant social network with clients for a transaction that is a once-a-year event in their lives.
However, Bernd G. Heinze, executive director of the AAMGA, noted that such social networks as LinkedIn are effective and efficient tools for informing large groups of individuals of events of interest to them.
Earlier in the day, during the association’s opening session, Glenn Reynolds, a professor of law at the University of Tennessee and author of the book “An Army of Davids” about new technology, dismissed social networking as a passing fad. However, he added that he thought it is an effective tool for professionals to showcase their expertise and build their reputations. Long-term, however, he was suspect of its continued popularity.