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Review and Outlook 2009-2010: Insurance Agency Consultants

What are the top 3 concerns of your clients, and has this changed from a year ago? Gilman: The economy and the impact of M&As on growth, which has not changed from last year. Another concern is the growth of viral marketing and staying on top of the technology, which was not really on the radar a year ago. Lastly, the ever-changing landscape of the prospect base and universe of potential employee supply has been an ongoing concern. Cunningham: First, there is the economy/economic recovery and the significant unknown impact of same due to reduced client exposure (payroll and sales) and parallel impact on premium. Similar unknown concerns are if the recovery will occur and if the climate will be better. Another concern is whether the insurance market has hit bottom. These concerns are not major changes from a year ago. Another is what will healthcare reform look like and how will it impact healthcare plans and brokers. Hicks: A primary concern of agencies and brokerages is how to achieve organic growth in the recession. Organic growth is always top of mind, but it was especially so by the end of the year. In particular, agency leaders feel challenged by how best to grow their producers in order to grow business. Related to organic growth is a second concern: how to find and develop talent. The insurance industry is not attracting young talent in the numbers it needs to; and even when young producers are on board, the agency needs to prepare them to be business consultants as opposed to policy peddlers. Buyers are more sophisticated than ever. Producers need to be enterprise thinkers who can ask insightful questions and engage prospects in meaningful dialogue. From smaller independent agencies, we hear increasing concern about what to do about non-performers. The solution is not as simple as "fire them." These agencies are like families. When times were good, a somewhat under-achieving producer could bring in enough business to get by. Now that times are not so good, the business isn't there, but everyone in the organization knows the producer has a family to feed. As a result, we find ourselves helping smaller agencies develop the expertise and specialization of under-performing producers and counseling them not to allow these producers to continue to under-perform. Inaction has negative consequences across the agency. Burand: The huge decrease in exposures and when it will turn around, which is a definite change from last year. The question of when will the soft market end has not changed much from last year. Lastly, the intensity of the clients' concern of how to grow has changed considerably. Lieblein: The soft market continues to be the biggest concern of our clients. Many clients believed that the market would harden this year and felt that they would begin to see growth in their client base by the second half of this year. This clearly has not happened and most feel that 2009 has been their most difficult year. Second would be the impact the overall economy is having on their existing client base. We think many agents and brokers underestimated the impact of the economy on their books of business. This is particularly true for employee benefit firms, which are finally feeling the "pain" that their P-C counterparts have been experiencing the past 5 years. Finally, while recruiting is always an issue, healthcare reform is clearly a major concern for all of our EB clients or those P&C firms that have employee benefit divisions. At this time last year, most clients were concerned about the soft market but felt optimistic and were probably more concerned about how to improve their organic growth rates and recruit talent. Overall, while most clients think the worst is over, it is clear that 2009 was by far the most difficult year they have dealt with over the past 10 years.