Giles Prepared To Lead AAMGA Troops

The self-described "hands-on manager" admitted that there are a lot of agency management functions he may not be able to be on top of during his year as AAMGA president, citing personnel issues, finance issues, and the oversight of the agencys marketing and underwriting departments among them.

Getting down to the more minute details, he said, "the biggest change I made is that I got myself off of carbon copies of e-mails," instructing office employees to only send on those he really should see, instead of arbitrarily adding his name to the copy list.

Tending to another detail, he said, "I have put everything I can on electronic funds transfer, so I dont have to worry about paying my electric bill."

Perhaps the only thing Mr. Giles wasnt prepared for was being surrounded by 650 black balloons as he fielded questions from a reporter by phone. The balloons, he said, were a gift from his staff to mark the occasion of his 50th birthdaya detail he had no choice but to reveal. Every once in a while one popped, he said, explaining the background noise.

In an effort to eliminate less pleasant surprises than walking into an office filled with balloons, Mr. Giles explained his need to prepare his staff for changes in the year ahead. "I wanted to make sure I have the adequate time to properly devote to being president of AAMGA," he said, noting that there is additional travel involved with being the associations president and that there are other added responsibilities that he will tend to from his office.

High on his list of priorities as he takes that helm will be to make sure that the AAMGA "continues to be in a position to help financially support" its University and to lead the planning team for next years annual convention in Boca Raton.

"Im a very strong supporter of AAMGA University," he said. "I think it's critically important to educate our new, younger people–and to train all of us on the changes taking place in the marketplace, whether they be changes in regulation or coverage terms and restrictions."

Mr. Giles holds a Certified Insurance Wholesaler designation from the University, which is awarded to agency principals who complete a certain number of courses and a special project. In addition, his agency holds a Certified Managing General Agency designation. The latter designation is awarded to agencies that satisfy an annual education requirement for their employees.

This years AAMGA annual meeting, which was held in Las Vegas last week, began with a University Day on May 5. The University Day program featured courses on reinsurance and financial reporting, a mock trial of an agency defending an errors and omissions claim, a session devoted to the problems of running a family business, and a panel discussion on broader market and regulatory issues.

Beyond University Day, Mr. Giles believes that the networking opportunities of the annual convention are a big part of what a career in the surplus lines industry is all about.

"Our convention is the cornerstone of our association," he said, noting that, as AAMGA president, he has also assumed the role of chair of the convention planning committee for next years meeting.

Asked to describe the most rewarding aspect of a career in surplus lines, he said, "its the people," citing the annual convention as a place where relationships are formed and nurtured.

"Theres just a camaraderie that we experience," he said, noting that even though, in some cases, he only sees his comrades once a year at the national convention, he has developed friendships with people in every major city in the United States. "Sometimes, well go on vacation and spend the entire time visiting with people weve met through AAMGA and other surplus lines associations [or] the surplus lines companies we do business with," he said.

The people aspect of the surplus lines business applies locally also. "Were very close friends with most of our competitors," he said, noting that such friendships enhance the service his agency provides to local agents. "If an agent comes to us and we dont have a market, we will refer that agent to another general agent" in the area, he said.

Mr. Giles said service is critical for MGAs, since they are often the last people who agents contact when standard markets turn them down. To ensure that his 70-year-old firm is ready for those last-minute service calls, "we always try to make sure we have two companies for each product line that we do business in," he said, describing Midwest General Agencys business as 75 percent specialty and roughly two-thirds commercial.

"If one company has to restrict underwriting or growth, or has problems, we always have somebody else that can pick up the slack," he said.

While the 28-year industry-veteran says he hasnt run up against such problems in this hard market, it wouldnt be a stretch to say that Mr. Giles personal motto is the Boy Scout motto: "Be Prepared." Indeed, the third-generation agent confessed that the only alternative to a career in insurance he seriously remembers considering was to become a professional Boy Scout.

"I was a Boy Scout all my life, am still active on a local council and had a cousin who had gone into the professional side of the Boy Scouts," he explained.

For any managing general agency, Mr. Giles believes that "lots of planning" is a key to success.

At Midwest General Agency, he said, "We spend a great deal of time on our strategic planning, our marketing plans, and we set very aggressive goals and objectives." For example, he said, the agencys five-year goal, either through mergers, acquisitions, or just aggressive growth or expansion, is to reach a premium volume of $100 million, roughly double what it is today. "We feel thats a critical number for us, for the long-term success and health of the corporation.

R.W. Scobie Inc., co-founded in 1932, by the grandfathers of Mr. Giles and his current partner, Peter Scobie, has completed three acquisitions in the last two-and-a-half years, he said. They included a brokerage office in Minneapolis, First Western Insurance Agency with offices in Des Moines and Omaha, and a premium finance company.

While hes prepared for the future, Mr. Giles is less comfortable making predictions about itespecially when it comes to the length of the hard market.

"You can find as many different opinions on that as people you ask," he said, suggesting that a prediction in a financial newsletter hed read sounded about right. The newsletter put the end of the hard market well into 2004, predicting that even then, "premiums wont backslide," but that increases will slow down, he said. "I think the difference between this hard market and what I experienced in the 1980s is that availability is not an issue."

With the possible exception of medical malpractice classes that he personally is not active in placing, he reported, "We dont have any [insurer] saying, we can only write so much business and then weve got to stop."

"Capacity is not an issue," he asserted.

Again referring to insurance market trends hed read about, Mr. Giles said he was more disturbed by whats going on in the health insurance arena, where some forecasters predict that significant rate hikes will continue until 2006.

"When it comes to health insurance, we dont sell or underwrite it. Were consumers like everybody else," he said. "Our health insurance coverage and premiums are, as a business, a major concern to us," he added, citing that as a top-of-mind issue facing business executives of all sizes and in all industries, including MGAs.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 13, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.