THE INDEPENDENT AGENT
DIETZEL: We call it a hypocritical market,
and what I mean by that is when there
is new business on the street, there is
still a tendency among carriers to
throw out rational price models.
So we’re still seeing some significant reductions—though there
are fewer examples of this than
there were a year ago.
For existing business, those
accounts that have had losses are
absorbing rate increases. Those accounts that are clean are not getting
more than 5 percent deductions.
so dependent on the rate premiums.
E ROUSSEAU: With rates for new business being
so attractive, how do you prevent accounts
being “poached” by new brokers who say they
can get a client a better deal on premiums?
COLLINS: Our account retention has been 96
percent, historically. So fortunately, the majority of our biggest clients have been with
us for a long time—they’ve gone through
other soft markets with us. They have grown
up with us. So they are not as susceptible to
being [enticed] by another broker who calls
and says I can take 25 percent out of your
premium—which is true, they can do that.
Sponsored by Liberty Mutual
E BRYANT ROUSSEAU: Let’s start with a
nice, gloomy question. What are your biggest
worries in terms of emerging trends with the
potential to have a seriously negative impact
on independent commercial agencies? What
keeps you up at night? What is the existential
threat lurking out there?
GREG COLLINS: I completely agree
with Bob on the hypocritical part.
Every carrier is still looking to expand market share, and in order to
differentiate yourself today, you still
have to be competitive on price for a piece
of new business. We know the carriers are
talking more about trying to hold the line
on some of the renewals, but we are still
seeing on average a 5 percent decline.
So from the rate standpoint, it still remains a very difficult market. We expect
to counter that [with an approach] where
E ROUSSEAU: In these tough, extremely competitive times, what are the biggest advantages of being an independent broker versus
a large, publicly traded one?
ROBERT DIETZEL: My biggest fear is a sudden change in the marketplace. I’ve been
through one—a sudden hardening. The
myth out there is that insurance brokers make more money when the market
gets hard. But when you are focusing on
accounts of our size and the transparency
of revenue, you are working a lot harder
for less, honestly. And do my employees
have the capacity—not only the time, but
the energy—to deal with a sudden change
in the marketplace? The impact of a real
hard market on the capacity of my folks’
ability to add value is scary to me.
COLLINS: It is a great time to be an independent broker. We don’t have to meet the requirements that a publicly traded company
does, which gives us an advantage. We can
look into the future, settle for lower margins
and make investments in our company
[without the pressure of quarterly earnings
reports]. There is going to be a lot of dislocation in this business, and we’re going to see
more opportunities for really good people
to come the way of the independent broker.
E ROUSSEAU: The fear of a sudden hardening—
the perfect segue to my next question. Where
is the market right now in terms of pricing?
Have we hit bottom? Is it starting to harden?
E NON-COMMISSIONED OFFICERS: Digital
subscribers, click Play to watch Greg Collins
discuss how his firm’s salary-only approach
to compensating producers helps foster
teamwork—and how he manages to lure top
performers from commission-based brokers.
the fee for services is primarily what the
compensation structure is, so as not to be
DIETZEL: Small has served us well in this
market. As you said, Greg, the larger brokers are trying to manage their margins.
There is a lot of consolidation going on
out there. Some agencies have actually
changed their names four times in the last
five years. I just want to be able to be their
business-card printer. This [turbulence] is
good for a very stable agency like ours.
Also, we can make longer-term decisions because we are in control of our
own companies. We can take advantage of
some of the market changes that maybe a
November 7, 2011 | National Underwriter Property & Casualty | 17