As the Florida Association of Insurance Agents prepares to hold its 104th Annual Convention and Educational Symposium in Orlando this month, much of the discussion among agents is expected to surround topics such as the major property legislation recently enacted. However, it would be an injustice to describe the convention's purpose solely as a meeting to cover the recent legislation out of Tallahassee. In fact, professional agents are much more likely to be concerned with the availability of markets, commission rates, agency management services, and other business practices that have a direct effect on the their bottom lines.
FAIA's annual conference caters to the many concerns of agents by offering three days of breakout sessions that cover topics ranging from ethics to claims to operating an efficient and profitable agency. The convention also will offer agents the opportunity to meet hundreds of exhibitors and network with other agents. This year's convention is highlighted by keynote speaker Tony Snow, who recently served as the White House press secretary. Brian Billick, former head coach of the Baltimore Ravens also will be on hand to describe what it takes to win a Super Bowl.
Company Survey
On the eve of its annual conference, FAIA released its 2008 Company Survey, which allows agents to compare carriers in a number of areas. FAIA Vice President Scott Johnson said the survey had its genesis in the mid-1990s, when national carriers such as Progressive, Geico, and Response Ins. Co., started to make an end run around agents by appealing to consumers through the Internet and direct mail. In fact, one major carrier ran a television ad in which an agent was dumped out of a vehicle and left standing alone on the side of the road.
Johnson credited then-Insurance Commissioner Bill Nelson for stopping the most egregious of those practices under the unfair trade laws. In the aftermath of those battles, FAIA looked north to the Independent Insurance Agents & Brokers in search of an efficient means to reward carriers for working with independent agents. Johnson said the survey helps spotlight deserving carriers and bring them to the forefront of agents' attention. "The survey allows agents to learn more about companies they represent or may choose to do so in the future," he said.
The survey asks FAIA members to rank any five of the insurance companies they have a relationship with in nine categories. Included among the categories are: competitiveness, automation, management approach, agent compensation, and underwriting practices. The survey also includes four service categories, one each for personal lines, commercial lines, claims, and accounting and dispute resolution. Each of those nine categories are then broken down further into subcategories that target more specific items such as how a carrier handles quotes, underwrites new business, or services renewal policies.
This year, 584 agencies responded to the survey, representing around 40 percent of FAIA's member agents. The agents returned 749 survey forms that ranked 63 companies. The association only ranked carriers that were submitted by six or more agencies, which confined the survey to 21 companies. The 2008 survey differed from previous years in two respects, the first of which is that the survey was conducted online as opposed to regular mail. More importantly, the association decided that all participants must include Citizens Property Insurance Corporation among its top five picks, since the insurer is now competitive with the voluntary market.
The impact of Citizens on the survey was immediately felt. After not being included in previous studies, the insurer ranked first among homeowners' insurers in the competitiveness category. Why? Researchers had several explanations, including the fact that lawmakers rolled back Citizens' rates while implementing a rate freeze. Also, since the insurer is subsidized by assessments on policyholders, it negates some of the solvency concerns that must be considered by those companies in the voluntary market. Then there is the fact that the insurer offers coverage in many coastal counties that the voluntary market steers well clear of.
Special Merit
Looking over the survey results, FAIA singled out several carriers for special achievement.
American Strategic Corporation ranked highest in the automation category, placing first in two subcategories addressing the use of an agency management system and coming in second in the other two subcategories.
Auto-Owners Insurance Company placed in the top five in six out of the nine main categories, including all four of the service categories. The company also placed in the top five in 19 of the 29 subcategories.
Florida Family Insurance Company received a perfect score in the commercial lines service subcategories, which include quotes, new business, and renewals. In so doing, the domestic insurer tied the national carrier Metropolitan Ins. Co.
Old Dominion ranked first in all five subcategories for the underwriting category. Among other things, agents said the carrier is number one when it comes to innovation, flexibility, desire to write business, and consistency in applying underwriting criteria.
Edison Ins. Co., Frontline Insurance Managers, and Homewise Ins. Co. all received top 10 rankings in their first appearance in the survey.
The survey also showed the five companies that are the most improved over the last five years. Safeco, Bankers Insurance Group, Florida Family Ins. Co., Metropolitan, and American Strategic saw their scores improve considerably since the 2003 study.
The Next Step
Looking forward, Johnson said the association is considering ways to encourage more agent participation, such as moving the survey online. He also said the association is having discussions about how to make the survey more comprehensive and scientific as opposed to relying primarily on anecdotal evidence. Involving more companies is also a goal.
It is not unusual for carriers to survey their agents in order to gather data and assess the strengths and weaknesses of the company/agent relationship. Although there is no proof that how agents respond to such surveys may affect their status with the company, the fact remains that agents are dependent on the company for their incomes. One idea being considered is a joint survey with FAIA and carriers. For example, insurance companies may send the survey to their agents, but the agents would provide their responses to FAIA, which would collate and disseminate the data.
All survey results aside, Johnson said that the chipping away at agents' income due to rate decreases and the increased regulatory and underwriting demands imposed on agents remained a paramount concern. "Companies continue to ask agents to do more and pay them less money for doing it," he said. On a positive note, agents are benefiting from competitive markets in workers' compensation, auto, and even homeowners' insurance in some areas.
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