Product Innovation Key For Crump

Mr. Jennings reported some evidence of price firming and stabilization in the Southeast wind market and earthquake markets. He said harder price conditions prevail for true financial services business– professional lines for anything in the financial institution arena, such as broker-dealer or true lending institutions.

Prices for financial institutions E&O could be up anywhere from 25-100 percent, he said.

For earthquake, there were 10-20 percent increases at the beginning of the year, "but that business has stabilized now," he said. "We're looking at some fairly flat earthquake renewals."

Price hikes for Southeast wind-exposed properties depend on the distance from the coast, Mr. Jennings said. "If you're in the prohibited counties in Florida or right on the Gulf in Houston, you're definitely looking at 10-20 percent increases."

Across the nation, however, "if you're not a coastal-exposed property, you're still in a very soft property market," he said.

The softest areas include excess liability, except for very difficult-to-place types of risks–those in high hazard classes or that have had some difficult loss experience in recent years, which have seen some stabilization in pricing.

Transportation business has continued to be a very soft market, both on a primary and excess basis, he said. General lines casualty business also continues to be a very competitive arena, Mr. Jennings reported.

Q: There are many theories about why the pricing environment has remained soft. What do you believe is the reason?

"It's clearly just due to the amount of capacity that's available today, which leads directly to competition," Mr. Jennings said. "I think the vast majority of carriers do not want to lose market share, and therefore they have just followed this market down," he added, noting that there are few exceptions.

Q: As a brokerage firm executive, what keeps you up at night? What strategies do you have in place to address your biggest challenges?

"Obviously, you're concerned about that market continuing to shrink. You have to focus on new business, and ever increasing your client share–improving relationships with clients. And then, we continually concentrate on relationships with carriers."

"For us, it's really all about developing new relationships and new products. We like to be able to continue to bring new products to clients on a very regular basis. It keeps us very busy–figuring out where the appetites are and where we can help fill those with new product and distribution."

Mr. Jennings said Crump has a special product development team that does nothing but work on new products. "I think that separates us from competitors," he said.

"We get new ideas from our brokerage clients and our in-house producers. Then we take those ideas and we move them to the completely separate product development team, which is completely responsible for putting together an underwriting submission, marketing that submission and developing the new product."

"We absolutely set goals for the amount of new product we want to see out in the market every year," he said, although he declined to reveal the numbers.

Examples of Crump's newest offerings include a tow truck program, a metalworkers program, a paratransit program and one for product recalls, Mr. Jennings said.

Beyond product development, he said his firm is continually working to create a more efficient operating platform. "Technology is a huge play on the programs side of our business and on the small business side. You need to be able to handle that business in as automated a fashion as possible," he said.

Q: What else sets Crump apart?

Mr. Jennings first highlighted operational diversity, pointing to three segments of the p&c business: wholesale brokering, binding authority and a managing general agency.

Corporately, he noted that two other operations–the largest U.S. life insurance wholesale operation and a large retirement administration platform–combine with p&c to create the largest wholesaler in the country.

In total, premium for Crump Group is a little over $5 billion, with p&c producing roughly $1.5 billion, he said.

Q: John Howard, CEO of Crump Group, was recently quoted as saying the firm is interested in making acquisitions, although his remarks were mainly focused on life insurance agencies.

A: That applies to p&c also, Mr. Jennings confirmed. "We'd like to grow certainly from acquisition, if it is the right opportunity"–one that expands distribution or the product menu, he said, noting, however, that there haven't been many p&c entities up for sale this year. "We expect that to pick up in 2010, and we'd certainly want to look at any opportunity," he said.

Q: M&A activity has been limited on the carrier side also, but there has been activity with respect to personnel changes–individuals moving from one company to another. Does that affect your business? Do you have an allegiance to the carrier or the individual?

A: "Our allegiance is certainly to the carriers that supported us in the past. Having said that, we have a bunch of relationships with individuals, [and] we'd like to support them whenever possible," Mr. Jennings said.

"All those people that have moved certainly put some pressure on the softening market," he added. "They're forced to write business in their new homes, and the carrier they left is forced to try and keep that business," he said.

Q: When do you think the p&c market will harden? Does it feel like we're near the bottom of the soft market?

A: "I would love to think we're headed toward the bottom of this one," he said, declining to venture a guess at a turn date.

"I would think in 2010 that we would hope to see true stabilization in the market, and probably get through that year fairly flat from a rate perspective. Certainly without any hurricane or any type of catastrophic event, I would not imagine that 2010 would see any dramatic hardening of the marketplace."

Next month: Bill Greene of W.H. Greene & Associates in East Aurora, N.Y. is featured in the Broker Q&A spotlight.