The Predictions Panel:

• Richard M. Bouhan, executive director, National Assn. of Professional Surplus Lines Offices, AA&B editorial board
• Anita Z. Bourke, executive VP, American Institute for CPCU, AA&B editorial boardChris Burand, president, Burand & Assocs. LLC
• Louie Castoria, attorney at law, Wilson Elser Moskowitz Edelman & Dicker LLPDemmie Hicks, president & CEO, DBH Consulting, AA&B editorial board
• Edwin L. Lamont CIC, CRM, president, Lamont Consulting Group Inc.
• Shirley Lukens and the consultants at Reagan Consulting
• Bill Wilson, CPCU, ARM, associate VP, education & research, IIABA, Big “I” Virtual University faculty
• Bernd G. Heinze, Esq., executive director, AAMGA
• Rick Morgan, Senior Associate, Aartrijk
• Tim Cunningham, OPTIS Partners, LLC

• John E. Meeker, CPCU, CIC, The Van Dyk Group

NOTE: Predictions do not reflect the positions of NAPSLO; American Institute for CPCU; Burand & Assocs. LLC; Wilson Elser Moskowitz Edelman & Dicker LLP; DBH Consulting; Lamont Consulting Group Inc; Reagan Consulting, AAMGA, Aartrijk, OPTIS Partners, The Van Duk Group or IIABA.

Underwriters will exist at carriers only for larger commercial risks. Agencies will be paid on personal and small commercial accounts based on loss ratios, so they will be the underwriter on those accounts. Removal of layers and duplicity of underwriting for smaller accounts will facilitate greater competition with direct writers. Demographics, carrier pressure and benefits of scale will reduce the number of independent agencies over the next 10 years. Fewer, larger agencies will emerge, including more agencies with a national presence.

More emphasis and reliance on technology to customize, deliver and service personal lines products will be needed to cater to a younger generation of consumers. Clients will initiate many of their own transactions online through agency portals. This will make the agency more responsive to client risk analysis and asset protection needs. All agency employees will have customer contact, dealing with important features of risk management, not just serving as clerks. Agents will not be paid commissions in the future. All their revenue will be fee-based. Surplus line coverage will be free of state regulation and sold over the Internet. Surplus line insurers will allow approved brokers to use online portals to tailor policy forms to insureds the way we can buy a laptop computer online today. CE laws will be repealed and insurance education will become a means to an end rather than an end in itself, with only high-quality education providers surviving. There will be more small, independent brokerages in the U.S. 5 years from now because it will be easier to operate a one-person brokerage from a home office. Failing to properly document a client's file will still be the largest problem in defending E&O claims against insurance agents and brokers 5 years from now. There still won't be a network television series based on the adventures of an insurance broker in procuring coverage for clients. Profitability metrics are more important to insurers and agents who have invested in staff education to recognize and bring profitable business to carriers will reap the benefits. More agent training content will be online, including continuing education requirements. Agency staff will download content to electronic readers, reducing cost and introducing flexibility into the learning environment. Specialized online education will preserve institutional knowledge before key people retire. Social networking will take on new meaning as agencies cut back on attendance at courses and conferences for expense reasons in favor of Web-based seminars. Traditional carriers for highly regulated insurance may become obsolete, possibly replaced by an eBay type of insurance market. Within 5 years, most licensed agents will also be licensed by FINRA to offer some types of securities to the public; at least 25 percent also will be Certified Financial Planners. Through technology and market sharing via aggregators, there will be more small “boutique” agencies offering personal services at a low operating cost, with insurers and specialty firms marketing coverage, loss control and other services on an independent contractor basis as part of unbundled services offered by these small agencies to their clients. With the rise of undergraduate risk management programs and the gradual departure of the baby boomers, the industry will improve its ability to recruit and develop younger employees. Independent agents will take back personal lines market share from direct writers and direct response carriers. However, success will depend on the use of technology like social networking, which will be used as business development tools by younger agents. Current healthcare reform activity will influence some of the more significant changes to the employee benefits distribution system. Whether the change will be positive or negative remains to be seen. The trend of combining specialization with risk management for clients of all sizes will continue. Agents whose sole source of solutions are insurance products will be left behind.