Focus on growth, talentPosted On: Nov. 14, 2011 12:00 AM CST
Growth, pricing and talent are major issues facing insurance brokers, says David McGurn, newly elected chairman of the Council of Insurance Agents & Brokers. Mr. McGurn, who also is a corporate vp of Itasca, Ill.-based Arthur J. Gallagher & Co., says preservation of the private health care system, regulatory issues and attracting the next generation of talent also are key issues for the CIAB.
Q: What are the greatest challenges for the council and its members?
A major challenge for members is growth. The economy has made it very difficult for our clients to grow organically, which also makes it difficult for our members to grow. Growth is a must.
The other challenge is soft pricing, which has impacted revenues and the need to find new business. We don't know how long the soft market will continue, but the council's latest commercial property/casualty survey indicates that, in general, rates are flattening and may be moving slightly higher. January renewals may tell a different tale.
A big internal challenge is attracting and cultivating talent. There is an age gap between existing agency leadership and the next generation of leaders that is a result of the difficulty in attracting new talent into our industry. There is also a pending knowledge gap resulting from a lack of good formalized training that supports not only the technical insurance skills needed but also the consultative sales process.
Our No. 1 federal legislative priority continues to be the preservation of the private market for employee benefits. Our parochial concern is preserving broker compensation, and we continue to push for a legislative and regulatory solution that would remove broker commissions from the medical loss ratio equation. But more broadly, our members are hearing directly from their clients that there is anxiety about the future of maintaining current benefit packages, should their market competitors opt to exit the health benefit marketplace once state exchanges are fully operational. Clients are consistently telling our members that they won't be the first to exit the market, but probably won't be the third, either. Of course, that has huge implications for the future of our business, and also the viability and solvency of the government exchanges.
We continue to push for passage of the National Assn. of Registered Agents and Brokers Reform Act to streamline licensing of nonresident agents and brokers, and remain hopeful that consensus among all stakeholders will enable a bill to be dropped in the Senate soon.
On the federal regulatory front, we're completely supportive of the new director of the Federal Insurance Office, Mike McRaith, and his efforts to build an office that achieves the goals and spirit of data collection without regulatory duplicity and international harmonization of insurance regulatory regimes.
We continue to monitor the states' implementation of the surplus lines reform provisions of the Nonadmitted and Reinsurance Reform Act. We are disappointed that it has not gone as smoothly as hoped, as the requirements of the law were very simple: that the home state of the insured would have sole regulatory authority over that surplus lines placement. Instead, we've ended up with multiple methods for compliance among the states. While the implementation of sweeping changes like this is never easy, we believe that once we get past some of these early bumps in the road, the reforms will benefit all those involved in the surplus lines marketplace: brokers, carriers and, most importantly, our clients.
Actually, I believe we are getting better at attracting the best and the brightest. Many of our members have summer internships for undergraduates and entry-level programs that have become very attractive to college graduates. Also, the Foundation for Agency Management Excellence, the council's 501(c)(3) charitable foundation, has been giving more scholarships to students enrolled in insurance and risk management programs throughout the United States and beyond. These scholarships help the industry by bringing awareness to a potential career that was previously unknown to these students.
There are so many different areas of insurance that the brokerage community should be able to attract young people from almost every educational background. The career opportunities are immense.
Develop more insurance knowledge than your competitor, and understand and network the insurance underwriting community better than anyone. Treat your clients as your No. 1 priority and, with a little luck, you will be successful.
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