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Review and Outlook 2009-2010: Independent agents andbrokers

What are 1 or 2 initiatives that your firm must executein 2010 to reach your growth goals?
Robert C. Smith: We are working with each producerto develop solutions that address specific issues clients arefacing in this difficult economy. On the P-C side of our business,these solutions include reducing the total cost of risk throughinsurance program design, safety programs and loss control orclaims analysis. On the employee benefits side of our business, thesolutions address access to wellness programs, health savingsaccounts and plan design options that help defer some of theincreases employers are facing with rising healthcare insurancecosts.
Karen K. Farris: Our firm has a 10 -year strategicplan that includes specific growth objectives. There are twoinitiatives within that plan that are critical to us achieving ourgoals. Three years ago we embarked on a mission to repositionourselves as a stronger sales organization. This involved anoverhaul of our sales process as well as a shift in culture. Wework with an outside accountability partner to keep us on track. Ithas paid off and we are successfully executing a growth plan in adown economy. The second initiative involves a change in the way webring in young producers; relying more on sales profiling and theestablishment of a learning path to make them validate in a shorterperiod of time. Discipline around these two initiatives will becritical to achieving our growth objectives.
Allen Fee: We are just starting our planningprocess and have identified several key action items that we mustaccomplish to attain the type of organic growth we are hopingfor:

o Improved internal marketing

o Improved producer performance

o Better prospect call performance and preparation

o An improved and streamlined sales process

o Identification and recruitment of new producers.

How does your firm consistently inspire, motivate andconnect your people toward your stated growth goals?
Farris: Our strategic plan is a working document,not a once-a-year exercise that gets put aside once it iscompleted. Teams consisting of owners, managers and account servicepersonnel have been assigned to the 6 strategic initiatives thatsupport our plan. Once a month, we hold an accountability call andreport on our progress and identify any issues that need to beaddressed in order to move forward. We have a financial model thatoutlines the benchmarks we must achieve and everyone is aware ofthe role they play in this process.
Fee: We try to motivate and inspire by our ownactions. The owners are the top producers, and are driven bygrowing our books of business. We have tried trips andcompetitions, but at the end of the day a good producer is going tobe motivated by the thrill of success and increased financialgain–and that is an internal motivation.
Smith: We have a group of highly motivatedindividuals who operate effectively in a team environment. Thegoals and expectations at Ascension are high, and our compensationplan rewards achievement. We provide excellent account managementsupport to allow the producer to be focused on solution-basedselling, and give the account management team the tools andresources they need to be successful.
In addition, we ensure that each person knows what the corporategoals and objectives are and the importance of their performance.Each person in our firm should feel invested in hitting his or hergoals, so in turn, the organization can hit its goals.

What do you think are the current and future trends inthe industry that will require you to have newskills?
Fee: The Internet, Facebookand social networking are going to be increased competition andopportunity, therefore figuring out how to use technology as anenabler is a huge trend we are going to have to deal with on anongoing basis. I think the insurance buyer is going to be differentas well; hopefully there will always be a value on relationshipsand attentive service, but I believe the buyer 5 to10 years fromnow is not going to be the same as it was 5 to10 years ago.

Smith: We are in the middle of a transitionalperiod where the agent or broker will be increasingly compensatedbased upon the advice, counsel, and the proprietary products andservices that he or she brings to the client. Producers mustincreasingly become students of the insurance business and of theirclients' businesses while staying current on new products, servicesand solutions.
Farris: Trends that I see in the industry involvemore specialization, more globalization and the need to maximizethe use of technology to drive efficiency and expand ourcapabilities. As a result, we will need employees who can bringmore to the table than general insurance knowledge, who have theability to design a seamless program that complies with all localstatutory requirements for a client with international exposures,and be able to deliver products and services using the latesttechnology on a 24/7 basis.

What have you done to control costs/expenses in thissoft market?
Farris: We have alwaysbeen conservative in our financial management; we have a strongbalance sheet and feel that this is a time of opportunity for ourfirm. We have budget metrics that govern our overall operation andwe benchmark against our peers to keep on track. Like many others,we have started outsourcing some of the more routine backroomfunctions in an effort to have our staff concentrate on their corecompetencies. We are keeping a closer eye on the profitability ofeach of our divisions and taking the necessary steps to makeadjustments if needed.
Fee: We have always run a conservative agency,from an expense standpoint. This year we became debt free. Debt isa growth engine, but it also can take you down. We felt at thistime in this economy and in this market, being debt free was aprimary factor to future success. We manage financially on our corebusiness, never using investment income or contingency income torun the agency on a day-to-day basis. We have taken a close look atall of our expenditures, and cut out unnecessary things. At thesame time, there is opportunity now for good people, so we are notletting the market get in the way of future growth by overlookinggood opportunities. We have not frozen raises, salaries or 401(k)contributions. We are going to grind through it and take care ofour people; at the same time, if there are underperforming people,now is the time that you have to make some hard decisions aswell.
Smith: Each employee feels a heightened sense ofurgency in their personal effectiveness in serving the clients. Theperformance expectations that the clients and insurance companieshave placed on the agents and brokers has been raised. It isessential that we equip our employees with the tools and skillsthey need in order to be successful.

This is not the time to “cut expenses.” Now is the timeto improve our effectiveness for our client. Whendo think we'll see a firming in the market?
Fee: I thought it was going to harden in the firstpart of 2010, but it's not. I think 2010 is going to bring a gooddeal of underwriting hardening. I think accounts that have had lossproblems are going to be a placement problem, but I do not see anypricing hardening on good accounts in the near future.
Smith: We do not anticipate any meaningful pricingincreases in 2010. We are building our budget with an expectationthat 2010 will be similar to 2009.
Farris: I think that the market has firmed, butyou don't see the result because the exposure base is down.Projected revenues and payrolls are still down or flat but thepremiums are not decreasing proportionately. Additionally, carrierscontinue to price new business more aggressively than renewals. Idon't see any change in the market until the middle of 2010.

What exciting reasons would you give new talent to thinkabout becoming an agent or broker?
Smith: There is a bright future for dedicatedpeople who are willing to work hard and advocate for their clients.But the business is not for the faint of heart. It requiresdedication and passion for which the person will be richlyrewarded.
Farris: What I think is exciting about thebrokerage side of the insurance industry is the opportunity topartner with our clients and function as an extension of theirstaff. We are involved at a strategic level and have an amazingwindow into their business. I don't define what we do as simplyproviding insurance, I see it as helping them identify, mitigateand address risk. Everything our clients do has an element of riskand it is our job to help them balance the risk withopportunity.
Fee: I believe there will always be a demand inour industry for motivated, competitive people who are drivenfinancially and driven to assist people in important decisions totheir business or personal lives. Protecting your assets is animportant business, and one we have always treated as a profession.If you care about what you are doing and who you are serving andwant to be a financial success, this is a good business to be in,but it won't be easy. You have to differentiate yourself more thanever, and you have to go at it each and every day. I think you mustbe goal driven, and willing to do the things necessary to reachyour goals.