Washington
Conditions are ripe for a hardening market, but economic realities may not allow that to happen right now, a senior executive with CNA predicts, joining other top insurers in calling for independent agents to focus on delivering better service and added value as risk managers.
"It is set up for a hard market, but we have never seen a market like this since the 1930s," said John B. Hennessy, senior vice president for distribution management with CNA, during a panel discussion for young agents at the Independent Insurance Agents and Brokers of America Annual Legislative Conference and Convention.
Mr. Hennessy said the reason for his pessimism is that the economic recovery may be shallower than the rebound from past recessions, affecting clients' buying power. He advised agents to take action and not wait for a market turnaround.
Independent agents need to market their value to clients, underscoring what they do as risk managers, and to perform that role more effectively than they do today, thereby adding value to the cost of a client's insurance program, he noted.
Jim Clay, president of Westfield Insurance, was reassuring about surviving the present financial climate, recalling that both companies and independent agents have been through some difficult economic periods in the past and will survive these latest challenges as well.
Agents, he said, should help clients trim their costs while advising them on how to keep a robust insurance program in place.
Harold L. Morrison Jr., executive vice president and chief global field officer for Chubb, advised agents they need to sit with their clients and closely review coverage. "I think this is a time to be creative and to help your customer through these times," he said.
"This is a time we can really make a difference. This is why they hire us," said IIABA Chair Brett Nilsson, senior vice president for The Buckner Company in Ogden, Utah.
When asked if agents in niche markets are better off than others during this economic downturn, the panelists indicated it all depended on what sector the agent is targeting. However, agency business diversification is the most effective survival strategy, they agreed.
Scott R. Goodby, president of the regional companies group for Liberty Mutual Agency Markets, said agents should recognize companies that have proven their loyalty to a niche. Too many times a company will enter a niche, only to pull out because they discover they lack the experience to underwrite it properly.
"It is consistency [agents] need to look for," he said.
When asked about agents building their brand, Mr. Nilsson said the industry has not been very good at telling the world about "the good things we do." The IIABA's "Trusted Choice" branding program, he noted, aims to remedy that, and he urged companies to join with the association to help get that message across.
Mr. Hennessy said CNA is "not well-known on the street" and depends on marketing by independent agents to get the word out about the company, so CNA finds co-branding very important.
Mr. Goodby said Liberty Mutual sees branding with Trusted Choice as its future with independent agents.
Mr. Clay said being a Trusted Choice member is a minimum requirement for receiving an appointment with his company, adding that Westfield questions whether they want to do business with an agency if they are not involved with the IIABA program.
Mr. Morrison said Chubb is not a Trusted Choice member but is looking into the possibility.
Mr. Clay also suggested agents begin using the Trusted Choice logo on their Facebook page as part of their marketing, noting that with the explosive growth of social media, it is incumbent upon the industry to find ways to use that to their advantage.
When asked about the imposition of federal regulation, Mr. Hennessy said it appears the creation of a federal systemic risk regulator is inevitable, but added Congress should not abolish state regulation of insurance because it has proven itself very effective.
Mr. Nilsson said the IIABA agrees there will be a systemic risk regulator, but the major concern is how the system will look in the end. "We don't see [state regulation of the industry] as broken, and we would like to see it remain as it is," he added.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.