MGAs seek to maintain quality service to retailers
while handling deluge of new business
The hardening insurance market has caused wholesalers to seek new, creative ways to serve retailers who are turning to them for coverages they no longer are able to obtain in the regular marketplace.
In honor of the American Association of Managing General Agents' 76th annual meeting, Nevada Governor Kenny Guinn proclaimed May 5-9, 2002, as a week to recognize the organization. In his proclamation, Guinn noted that AAMGA was "founded on the principles of excellence, trust, leadership and distinction in order to expand business proficiencies and expertise for member agencies and companies."
Baron D. Garcia, AAMGA president, responded: "We're thrilled to have been honored in this way and are touched by this special welcome. This affirms that we made the right decision in selecting Nevada and Las Vegas as the gathering place for the nearly 2,000 attendees."
This month's meeting marks AAMGA's first major gathering since September 11-an event that forever changed the property/casualty insurance marketplace. MGAs need to grapple with these market changes to justify their role in the insurance arena. Discussions doubtless will continue for some time to come regarding hard market conditions, expanding markets and more efficient working conditions. Some of those topics were discussed just last November at the AAMGA midyear roundtable meetings in Scottsdale, Arizona.
Marketing tactics and operational efficiency highlighted these roundtable discussions. At a roundtable focusing on market conditions, AAMGA members agreed that the hardening insurance market has caused wholesalers to seek new, creative ways to serve retailers who are turning to them for coverages they no longer are able to obtain in the regular marketplace.
"Retailers are coming out of the woodwork," said Preston H. Gough, Jr., a past president of AAMGA and president of Southern Cross Underwriters in Jackson, Mississippi. He added, "MGAs have to learn how to assist them without sacrificing their assistance to the retailers who have been loyal to them in the past."
A consistent theme of the midyear meeting, which was attended by more than 200 MGAs, insurance company representatives and industry vendors, was the increasing need to fill the void that is permeating the industry as underwriting capacity diminishes and premiums rise. Panelists agreed that the declining stock market and other economic factors were contracting capacity throughout 2001-- the events of September 11 accelerated capacity contraction. Joe Hutlemyer, a regional vice president of AAMGA and president of Seaboard Surety Underwriters in Burlington, North Carolina, who facilitated part of the roundtable discussion, echoed Gough's sentiments that retail agents are becoming desperate for markets and are deluging MGAs for assistance.
Also at the roundtable, agents discussed such tactics as requiring retailers to meet volume minimums and other criteria to ensure that those who create business are served and to avoid getting "bogged down in quotes" for retailers who provide little business. MGAs at the roundtable agreed that in this way, the market creates its own efficiency.
"By attending local meetings and staying in touch with our retailers, we learn what competition is doing and who is no longer writing certain classes of business," said Garcia, who is president of Oklahoma General Agency, Oklahoma City.
Agents attending the roundtable agreed that, on average, 20% of agencies with which they have contracts write the vast majority of their MGAs' total business. Maintaining agency contracts with the remaining 80% requires the additional expense of checking for errors and omissions insurance, licensing and financial background, all of which adds to costs that, if those retail agents don't produce, cannot be recouped.
One MGA attendee, Frank Mastowski of Jimcor Agency, Closter, New Jersey, observed that the MGA marketing plan should be based on a sound strategic business plan that remains consistent regardless of whether markets are hard or soft.
Leonard T. LoVullo, immediate past president of AAMGA and president of LoVullo Associates,
Inc., CMGA, Depew, New York, encouraged MGAs to work more with promising retailers. "We can't pull in our horns completely," he said. "Marketing is part of an educational process. We want retailers to understand how we operate."
Thomas D. Stamm, an associate member of AAMGA and president of Markel Southwest Underwriters, Inc., Scottsdale, Arizona, reminded MGAs at the roundtable that they too must earn the business they do with insurance companies. "Figure out how to expand business with your markets because you may lose time as they also seek additional efficiency," he said.
AAMGA Eastern Regional Director Francis Johnson of Johnson & Johnson, Inc., Managers, Charleston, South Carolina, facilitated a session on document imaging, saying that more and more MGAs are using optical scanning of paper documents to provide electronic access of information to various departments for additional efficiency.
Other types of efficiency discussed at the midyear roundtable included: allowing workers to process documents at home, hiring employees who are located far away, and reducing the psychological barrier of having dozens of documents piling up on desks as a visual image of work yet undone.
"Going paperless allowed our workers to do one policy at a time," said Tap Johnson, III, of Tapco Underwriters, Inc., Burlington, North Carolina. "Imaging knocks the walls off your office because people can work at home. We hired an employee who lives 65 miles away; we never could have done that without imaging."
Other MGAs at the midyear meeting offered other benefits of document imaging and other electronic methods. Several attendees shared that e-mail has dramatically cut both mailroom
and paperwork handling costs while improving service to retail agents. These improvements include
faster telephone response to
phone inquiries.
In another roundtable topic at the midyear meeting, Roger Lott, western region director, and vice president of Graham-Rogers, Inc., Bartlesville, Oklahoma, led a discussion on premium financing. He and other MGAs noted that working with experienced premium finance companies familiar with the insurance industry reduced problems and could be a valuable tool to assist retailers on boosting sales. They also urged other MGAs to ensure that premium finance companies have errors and omissions coverage.
These issues and many others will continue to be "hot subjects" at AAMGA meetings. *