Boca Raton, Fla.
Wholesale brokers are in a prime position to grab new business when a revived economy begins producing start-up companies that standard line carriers won't insure, a trade group leader advised here.
The entrepreneurial spirit will drive some of the unemployed to start new businesses, predicted Curtis Anderson, the incoming president of the American Association of Managing General Agents, during the group's annual meeting.
Generally, many standard-line insurers will not provide coverage to a business with no loss history, noted Mr. Anderson, who is also president of national binding/programs for Risk Placement Services Inc. in Scottsdale, Ariz.
For these cases, the excess and surplus lines market will be the one to fill the void for these businesses, he added.
AAMGA's incoming president, Mark Rothert, said that one thing all economic downturns have in common is that they end.
The managing general agency community has the experience and resources to survive this downturn, and will find itself in the position to take advantage of this crisis when it comes to a close, he added.
"Somebody has to insure these guys," said Mr. Rothert, head of Ron Rothert Insurance Services Inc. in Portland, Ore., referring to budding entrepreneurs.
Mr. Anderson called the MGA community "a very resourceful group" that is already in the process of regrouping after the recent economic shockwaves.
Regarding federal regulation of the insurance industry, Mr. Anderson said he did not believe the states would allow their Congressional representatives to vote for legislation that would eliminate a major form of tax revenue to the states.
He predicted that changes would be slow in coming.
There are areas where the federal government would "not want to take on the headache" of regulating some lines of business, according to the association's outgoing president, Euclid Black, who is president of BlackWhite Group in Henderson, Nev.
Many associations are working together to keep the lines to the excess and surplus market open, noted Mr. Rothert, adding that what the eventual form of federal regulation will look like remains to be seen.
Touching on the issue of social networking through the use of technology, such as Facebook and Twitter, Mr. Black said he did not believe it would have a strong place in the relationship between clients and their insurance transactions.
He said he could not see how brokers and insurers could build a significant social network with clients for a transaction that is a once-a-year event in their lives.
However, AAMGA Executive Director Bernd G. Heinze noted that social business networks such as LinkedIn are effective and efficient tools for informing large groups of individuals of events, developments or opportunities that might interest them.
During the association's opening session, Glenn Reynolds–a professor of law at the University of Tennessee and author of the book "An Army of Davids," about new technology–dismissed social networking as a passing fad.
While he thought social networks might be an effective tool for professionals to showcase their expertise and build their reputations, he was skeptical about their long-term popularity.
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