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Q: What are the most important legislative issues facing brokers? What are the CIAB's chief legislative goals?
A. No. 1, No. 2, No. 3--surplus lines for us right now. Our entire focus has been to incrementally improve the regulatory environment as it relates to surplus lines. We're excited about what's recently happened on the House floor--that it's passed unanimously. That's now the second time we've been able to assist in moving a bill through the House. Prospects for the Senate are good. It's hard to predict exactly what that means, but we feel very positive about what's going on in the Senate and we hope that we'll be able to move something through there.
Second issue, another very key issue for us and our clients is TRIA. I think that issue is moving along well. There have been recent hearings; we've had a number of good proposals on the table. There's some disagreements, but I think ultimately we're going to see a longer-term (terrorism backstop) solution put in place, and that's good for all of us. I think it continues to stabilize the business.
Q: Do you believe optional federal charter legislation will pass in the next five years?
A. Simple answer--yes. I think we're going to see an optional federal charter in the next five years. The regulatory system that this industry is struggling under just does not work. And we've seen that as it relates to transparency; we've seen that as it relates to almost all the regulatory issues we're dealing with--speed to market, all the things that make us nimble and allow us to do our business well. I think the pressure is going to be pretty substantial to move an OFC bill along the path and see some kind of enactment. It's time and it's an industry that's too important to the economy. We just have to move something along.
Q: Any other issues--state legislative issues?
A. Not that we're really focused on. We're really focused right now on surplus lines and all the pieces of that will come from that. As the fallout from that, there's going to be a sort of process that has to be put in place. I think there's going to pressure on the regulators to make some sense out of what's going on.
I think our plate's full. As you know, we've been very careful about it. The council's always looked at its legislative agenda in a very simple way. We pick issues where we feel we can have a real impact. We're not a me-too organization. We're not an organization out there covering every issue across the board--it's not possible. There's enough players out there doing it. We look at key issues to our members and their bottom lines and their profitability and focus our attention on it.
When you look at our three issues, look at surplus lines--critical component. I got an e-mail the other day from a member who was hailing the passage of the bill. He said he couldn't talk long because he had 39 filings to place on a piece of business he had just done. That's absurd. That's a good example of why these bills are important to our members. He said it has improved; it's come down from 79--so it's gotten a little better.
The second issue is TRIA. TRIA--we need TRIA. TRIA is an important component of the insurance package our clients need. We can have an impact there, and our members are driving some of those issues.
And the third one is the whole regulatory reform issue in general. Our hands are being tied, and often they're being tied because of political pressures from protectionist local agents who are in there trying to keep the world the way it was rather than the way it's going.
When you look at issues like globalization and where our businesses are going, capital movements--it's pretty clear that we're going to have to change.
Q: Speaking of change, where do you see the brokerage industry business five years from now? How is it going to be different?
A. I wish I had a crystal ball and could say "I think it's going to be this." I can tell you that I think we are in the most dynamic period of change in this industry that we've seen in a long time. There are financial pressures. There are globalization issues. Our clients are different, and the kinds of risks we're covering are different.
When I look at the industry and where it's going, No. 1, I'm sort of pleased. I think it's an industry that's going to respond. I see consolidation increasing substantially. I see that consolidation moving toward larger firms because larger firms are necessary. And I'm not talking about just global firms, I'm talking about midsized firms that are expanding to create the efficiencies they need to create to provide the kinds of services and advice and counsel that our clients need.
I also think there's an important dynamic going on in the industry that people haven't focused completely on that's changing the distribution sector. That is we're spending a lot more time in this industry talking about what we do. Ten years ago, insurance brokers and agents didn't sit and talk to the clients about all the pieces they put together. They built relationships and delivered products. I think that's changed. I think people are spending more time talking to their clients, their clients understanding the value they bring in this process.
I think that's appositive thing for the industry and the distribution sector. I'm excited about where things are going. I think there will be some real winners here--you can already see it now. Go back five years, look at the top 50 firms and look at the top 50 firms today. It's a very different group and it's going to continue to change.
The increase in private equity interest is going to have an influence on the movement and consolidations, so I think we're in an interesting, dynamic period. I think there's going to be some real opportunities here for a lot of people.
Q: Do you see financial institutions continuing to be interested in getting into the business?
A. Financial institutions have had a huge impact on this industry, on the distribution sector. If you look at the number of firms that are owned by financial institutions, what it did to the valuation in the industry, what it's done to the distribution of products--it's a very dynamic kind of influence on the industry and I think that's going to continue. I don't think it's going to be anything over the top; I just think we're just going to see that influence. We are part of the financial services sector. We were probably less part of one 20 years ago than we are today and I think people view us that way.
Q: One last crystal ball question. Where do you see the council being five years from now?
A. The council is a different organization today than it was five years ago and hopefully it will be different than it was today. Hopefully, all this change and opportunity, we embrace it. Our job with our members is to be nimble, to move quickly with them, to provide them with tools and the services that they need to be profitable. It's about their profitability; it's about their success; it's about us doing collectively what we can do with them that they can't do alone. Advocacy, which is really nothing more than creating a friendly environment for them to do business in. That's what we're focused on. Providing them the info and what I call the color commentary of what's going on and why it's important. Those are all the pieces of making them a stronger business and allowing them to grow and to focus on what they do, which is provide services to clients.
I think the world's changed. I think we're going to see more global activity. I don't think there's going to be a broad movement to global activity. I think there's going to be players on the global side; I think there's going to be players on the domestic side. There's plenty of business out there to go around, and I think the job of the council is actually to respond to that.
We responded when our members changed their revenue mix to include benefits. We moved very quickly and nimbly to create a whole division around the benefits area. That's been hugely successful. We've spent the last 15 years in the international field--not because we thought at the time there was a need, but you can't move quickly enough when there is a need. And it's getting prepared for that. We're in that process now by identifying what those new issues are; where are we going to be moving in the next five to 10 years, what are those products or what is that information are members are going to need in order to be successful.
I think we continue to respond quickly, and that's one of the things I think distinguishes us from a lot of other organizations. We spend time moving fast.