In soft markets and hard markets, MGA emphasizes strong relationships with retail agents
By Phil Zinkewicz
Anthony R. Glotzbach, CPCU, is president of United Brokers, Inc., in New Albany, Indiana.
There is a kind of chain of communication in the property/casualty commercial insurance marketplace. Starting at the top, there are the reinsurers who, via various intermediaries, communicate to primary insurers what coverages they are willing to write, under what terms and for how much. Primary companies then communicate with their producer forces to let them know what they are willing to take on in terms of exposures, basing their decisions on reinsurance availability and costs. The producers, particularly those that deal directly with consumers, then have to communicate to their clients the reasons for any price increases and coverage restrictions--not an easy task after so many years of soft market conditions.
In fact, in that chain of communication, the retail agent probably has the most difficult job, according to Tony Glotzbach, CPCU, president of the New Albany, Indiana-based United Brokers, Inc. United Brokers, CMGA is a managing general agency (MGA) that specializes in the transportation industry, but which writes other lines of business as well. "In today's hard market, the retail agent has to do more than just explain to clients, who have enjoyed 15 years of soft market conditions where prices were low and coverage conditions were generous, why insurance company markets are raising prices significantly or no longer want their business at all," says Glotzbach. "The retail agent then has to canvass the marketplace to find new companies willing to take on their clients. At least in that last task, MGAs can demonstrate that they play a vital role in assisting agents in effectively placing business."
Glotzbach's assessment of the property/casualty commercial lines insurance marketplace is more than a fairly accurate one. From the late 1980s up until 2000, the P-C marketplace had remained extremely competitive. During those times, a good deal of business that had traditionally been placed in the surplus lines arena found its way into the standard market, of course at lower prices. Property/casualty insurance companies were eager to attract additional premiums in order to invest in a booming stock market, and to take advantage of large investment gains.
For a while, it appeared to most insurance industry solons that the industry never again would see an overall hardening as it had in the past. But the insurance marketplace began bottoming out in 2000, due to a faltering economy and a downturn in the stock market; and there were signs that insurance companies were returning once more to sound underwriting practices. Then came September 11, which not only changed the face of the nation, but which also brought about a hardening of the property/casualty insurance marketplace, the likes of which had not been experienced since 1984-85.
"Retail agents are on the front lines," says Glotzbach, "but the good news is that they have the backing of a strong MGA community to help them. As an MGA, we've built up strong relationships with our underwriting companies over the years. We will be there for the retail agent now when he needs us most."
United Brokers was started in 1983 as a general commercial lines insurance agency. By 1985, it had begun its metamorphosis into an MGA, specializing in the transportation industry. "Today, fully 70% of our business is in the transportation arena," says Glotzbach. "The rest of our business is in commercial property insurance, general liability, commercial auto and professional liability."
United Brokers operates in Indiana, Kentucky, Ohio, Tennessee, Georgia, North Carolina, and West Virginia. The firm has contracted with 200 to 300 agents in each state. How did United Brokers find its way into the transportation industry? According to Glotzbach, it was just a question of being in the right place at the right time, a lot of work and some luck.
"By 1985, the property/casualty marketplace had begun to harden significantly," he says. "We got a call from an agent whose client wanted truck physical damage coverage. Through an old relationship we found a market. As the market hardened further, we began to get calls from other agents who wanted our coverage. Today, we are involved in every line of transportation coverage."
Amy Zettel, vice president of United Brokers, and the lead underwriter for all of the company's transportation exposures, says that the company's growth pattern over the years has been steady, primarily because of United Brokers' emphasis on quality and its determination to meet its customers' expectations. In addition, she says that the MGA has worked hard to earn first shot at the business of its agents.
The products which United Brokers specializes in include: physical damage for truckers, cargo for truckers, primary liability for truckers, non-trucking liability, property, general liability, garage liability, inland marine, warehouseman's legal liability, agents E&O, real estate agents E&O, nonprofit D&O and for-profit D&O, employment practices liability, liquor liability, consultants professional liability, personal and commercial umbrellas and business auto. In addition, United Brokers also has special programs for alarm installers, restaurants, bars, taverns, contractors, vacant buildings, beauty shops and salons, day care centers and, of course, trucking.
"Rather than the standard coverages," says Zettel, "we offer special features to our products, such as combined and disappearing deductible on physical damage, disappearing deductible on cargo, monthly pay plans and direct billing. We aim for and achieve a 24-hour turnaround on policies."
One question that is often asked of MGAs is how they survived the soft market years during the late '80s and throughout the '90s. Zettel is quick to answer. "I came to United Brokers in 1995, and I saw immediately that the company's philosophy for growth was in tune with my own. Our philosophy is not growth from a premium standpoint, but rather growth from building strong agency relationships. Strong agency relationships drive premium growth. But not only that--these relationships also produce a good cross-section of quality business. The fact that we were a valuable tool for retail agents and because they knew they could rely on us, we were able to get through the soft market and grow," says Zettel.
Of course, now that the industry is in a hard market, MGAs are expected to benefit. Many MGAs are reporting that they are receiving calls from retail agents looking for markets, whereas as recently as two years ago it was the MGAs who were doing the calling to retail agents. Glotzbach and Zettel, however, say they have no intention of "taking advantage" of agents who find themselves without a market.
"We are not going to reduce our level of service in any way with the agents with whom we have done business over the soft market years," says Zettel. "Those retail agents have been the backbone of our business. Also, we are willing to talk to new agents who are having difficult times in today's market. Those new agents who want to come on board will be welcome if they fit into our philosophy of doing business, and that is providing quality service to customers. We want to make it easy for agents to do business with us."
Another reason for United Brokers' success, according to Glotzbach, is its strong relationships with company markets--markets, he says, that have been very helpful to the firm over the years. United Brokers' three major markets in the transportation area are Penn-America Group, American Southern Insurance Co. and Occidental Fire & Casualty. Company markets for other specialty lines include: Acceptance Insurance Co., Fulcrum, Great American, Lancer Insurance, Markel Corp. and U.S. Liability Insurance.
"There are a lot of years of sound underwriting expertise in those companies," Glotzbach says. "They have been loyal to us and we remain loyal to them."
One of the things that Glotzbach is most proud of is his membership in the American Association of Managing General Agents (AAMGA). "In the early days of our growth period, I joined the AAMGA as a member, and then was asked to participate actively in AAMGA committees. I cannot say enough about how valuable my AAMGA experiences have been to me. At annual meetings and seminars, we share experiences and learn from each other. Moreover, the importance of the AAMGA University cannot be overstated. It provides continuing education credits for MGAs, and it offers a forum for discussion about issues that are vital to its membership."
Finally, Glotzbach attributes a great deal of United Brokers' success to date to his employees--22 in all. "Working as a team, our employees are always intent upon getting the job done--not only obtaining fast quotes, but also getting that policy out quickly and getting the premium booked in order to complete the process. Our employees provide same-day endorsements because we don't want the agent behind the eight ball when it comes to collecting his money.
"All of our employees sit in at Monday morning meetings where we are able to monitor and measure our performance from the week before. Each employee plays an active role and is given specific areas of responsibility for which they are accountable."
So, with strong relationships with retail agents and company representatives, and a staff dedicated to providing quick responses to agents and companies alike, United Brokers appears to be well positioned to deal with the current hard market. Glotzbach says he is looking forward to a period of even further growth. *
For more information:
United Brokers Inc.
Phone: (812) 945-2720
Web site: ubinc.com