Technology is an integral part of MGAs' service strategy
Information technology, including the Internet, has been and will continue to be a tremendous boon to MGAs.
If one assumes that the average age of today's property/casualty insurance executive is about 35, then it is also safe to assume that the majority of today's insurance industry personnel have never, ever seen a hard insurance marketplace. The last hard market came in the mid-1980s. It was a severe one, coming off the cash flow underwriting years of the late 1970s and early 1980s. However, by most accounts, the hard market we are experiencing today has all the earmarks of being much worse than the one of the mid-1980s. The question is: Are today's front-line insurance executives prepared?
During the soft market years, which many mistakenly predicted would possibly never end, managing general agents watched as a good many surplus lines risks found homes in the regular insurance marketplace. In order to survive, most MGAs had to court retail agents who were having no trouble finding markets for even their most exotic risks. But today things have changed.
The hard market, which began about two years ago, and then only in certain lines such as workers compensation, commercial auto and long-haul trucking, is apparently surpassing the market of the
mid-1980s in all lines. MGAs are being inundated with requests from retail agents and, understandably, are having difficult times keeping up with the workload. The answer for these MGAs might just lie in new information technologies.
It is not surprising that the AAMGA automation seminar held in March was a tremendous success, according to AAMGA organizers. The seminar, "Technology: Money Pit or Money Maker," drew about 230 attendees to Atlanta, surpassing the AAMGA Automation and Technology Committee's expectations. Before the seminar, AAMGA officials said that they expected 125 MGAs, technology providers and business partners to attend.
Kevin Tromer, chairman of the AAMGA Automation and Technology Committee, and William Fink, senior vice president of the AAMGA board, report that this meeting was the largest automation seminar the AAMGA has had in the 10-plus years that the association has been hosting them. Tromer is vice president of MacNeill Group in Sunrise, Florida, and Fink is president of Delta General Agency in Houston, Texas.
"We put together a comprehensive program designed to provide an unparalleled opportunity to learn more about emerging technology trends along with tools and strategies needed for planning the future needs of every insurance wholesale organization," says Tromer. "This is one way that AAMGA members stay in the lead in delivering effective, efficient service to the insurance companies we represent and the retail agents who are our customers. What made this seminar stand out from all the others is that we geared this one toward business people and their views of information technology, rather than only to technology people."
The program began with training sessions and presentations co-sponsored by the AAMGA University and the AAMGA Automation and Technology Committee. The opening session, led by Andrew Kantor, editor-in-chief of Technology Decisions magazine, was titled "Disaster Planning and Recovery." The second session, "Pink Slip Protection: Surviving the Loss of a Key IT Person," was conducted by Larry Woods, an IT executive with Assurant Group.
A highlight of the conference, according to Tromer and Fink, was the keynote address, "IT's Money," by Tom Shipley, who has three decades of operational and executive IT experience. Fink points out that Shipley's session was sponsored by the National Association of Professional Surplus Lines Offices (NAPSLO), whose members were invited to attend this year's AAMGA automation seminar.
Other program highlights included two AAMGA University courses to help members improve their operational efficiency, and a roundtable discussion showcasing "What You Are Doing with XML." Participation by vendors was also up, according to Tromer and Fink, and the technology vendor exhibition area had to be expanded.
"MGAs came away from the seminar with a new perspective on information technology," says Tromer. "They were able to learn firsthand what tools are out there to develop their IT business. In addition, they obtained real life knowledge of what carriers are doing in the area of information technology."
One question often raised in the insurance industry is whether information technology, specifically the Internet, will be a valuable sales tool. Several recent studies on Internet insurance sales have shown that, at least on the retail side, insureds prefer to purchase insurance coverages face-to-face with an insurance agent rather than on the faceless Internet. Tromer says that, while that may be true on the retail side, information technology, including the Internet, has been and will continue to be a tremendous boon to MGAs, whose ultimate customers are retail agents, not consumers.
"On the MGA side, the Internet is being used as a sales tool, rather than a sales strategy," says Tromer. "The entire process of MGA and retail agency interaction is being streamlined by information technology and the Internet. We conducted an informal poll of our MGA audience at the seminar, asking those who use the Internet to conduct business with their retail agents to raise their hands, and at least 50% indicated that they did. Two or three years ago, perhaps only 10% would have raised their hands."
Fink adds: "There is no question that MGAs' use of information technology and the Internet reduces costs for both the MGA and the retail agent and provides for greater efficiency of operations. And, for the retail agent's ultimate customer, it makes for better quality of service. Information technology is extremely important in today's hard market," he says. "The number of submissions coming into MGAs today is enormous. Those who have the technology already in place are ahead of the game. Those who are in the start-up period will have a more difficult time." *