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NATIONAL UNDERWRITER

PROPERTY & CASUALTY

www.PropertyCasualty360.com February // 2018 // Volume 122 // No. 2


RESEARCH PROJECT ON P&C PRODUCERS

What Do Agents Say? THE 2018 NU/PIA INDEPENDENT AGENT STUDY, CONDUCTED BY FLASPÖHLER | NMG (AND PART OF ITS PROPRIETARY STUDY), EXAMINES PRODUCERS’ PERSPECTIVE ON THEIR CHALLENGES, BOOKS OF BUSINESS, AND THEIR FAVORITE CARRIERS

I

BY SHAWN MOYNIHAN

n 2017, NU forged an alliance with the National Association of Professional Insurance Agents (PIA) and Flaspöhler | NMG to conduct the inaugural Independent Agent Study — a research project designed to annually take the pulse of independent Property & Casualty insurance agents throughout the U.S. and provide revealing insight into the demographics, books of business and challenges they face, and reveal their most highly rated carrier partners. Flaspöhler has long conducted its own larger annual study of agents (the Flaspöhler | NMG Producer Study) on behalf of key P&C carriers, which use the results to help them best meet agent needs. Flaspöhler distributes the expanded questionnaire to NU’s proprietary lists of independent agents nationwide as well as PIA’s national membership (in return for the exclusive right to publish highlights of the findings), resulting in the most reliable and scientifically sound sample available. Among the insights gleaned this year: The exodus of talent on the agency side remains concerning. Forty-five percent of our independent-agent study respondents, most of them principals or owners, said they planned to retire in the next nine years. Only about 1 in 4 (24%) of PIA members who responded said their insurance carrier relationships were improving; 19% said their relationships had declined. Despite 56% being armed with agency smartphones, only 41% of respondents said they can provide quotes to prospects while out in the field. The data included here are extracted from Flaspöhler’s larger research study (upward of 300 pages), which the firm makes available to rated P&C commercial lines carriers. (Contact rick.flaspohler@nmg-group.com for more information.)

“IT IS ESPECIALLY NOTEWORTHY THAT EASE OF DOING BUSINESS IS RANKED FIRST BY INDEPENDENT AGENTS AS THE QUALITY THEY VALUE MOST IN A COMMERCIAL P&C CARRIER.” —MIKE BECKER, EXECUTIVE VICE PRESIDENT & CEO, NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS (PIA)

RESPONDENTS: WHO’S TALKING THE MAJORITY OF RESPONDENTS WERE 50 AND OLDER, WITH THE HIGHEST PERCENTAGE — 37% — IN THE 50-59 AGE RANGE.

93 83 90 %

Mostly retail agencies were represented, as opposed to retail brokers/firms and specialty wholesale agency brokers/firms.

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%

of total respondents have worked in the P&C business at least 15 years or more.

%

of respondents identified themselves either as an agency principal or owner (mostly owners). PROPERTYCASUALTY360.COM


BUSINESS BREAKDOWN WHAT ARE THE TOTAL ANNUAL REVENUES OF YOUR FIRM?

WHAT ARE THE TOTAL P&C PREMIUMS THAT YOUR FIRM CONTROLS?

30.2

29.7%

29.3%

28%

18.1%

13.8%

7.9%

10.9%

7.6%

9.0%

6.8%

8.6%

%

$1M to < $5M

$0 to < $500K

$500K to < $1M

$1M to < $5M

$0 to < $500K

$500K to < $1M

$5M to < $10M

$10M to <$25M

$25M or more

$5M to < $10M

$25M or more

$10M to <$25M

WHAT IS THE TARGET MARKET FOR YOUR FIRM?

87.5

%

80%

27.4

%

60% 40% 20%

9.7

%

Large Corporate Risk (Revenues >= $750M)

Middle Market (Revenues between $250M-$750M)

Small Commercial (Revenues <= $250M)

MOST DESIRED

Respondents revealed what they want most from their carrier partners: continuity of underwriting and pricing behaviors in their market; timely information on product changes and new products; and more knowledgable company reps.

WHAT PERCENTAGE OF P&C BUSINESS YOUR AGENCY WRITES IS COMMERCIAL LINES?

64

%

10%

20%

30%

40%

Less than 20%

20% to 39%

40% to 59%

60% or more

Don’t know

N/A

of respondents who said their commissions in Commercial Lines decreased say their commissions slipped between 1% and 5%. However, 9% said their commercial lines commissions fell by 6% to 10%.

WHAT PERCENTAGE OF P&C BUSINESS YOUR AGENCY WRITES IS PERSONAL LINES?

48 % 37 %

10%

20%

30%

40%

Less than 20%

20% to 39%

40% to 59%

60% or more

Don’t know

N/A

PROPERTYCASUALTY360.COM

50%

of respondents said the percentage of Personal Lines in the P&C products they write is 60% or more.

of respondents said their commissions in Personal Lines had decreased: Of those agents, 71% said their commissions had decreased by 1% to 5%. (17% said their commissions were down by 6% to 10%.)

NATIONAL UNDERWRITER | FEBRUARY 2018 |

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OF LIFE & HEALTH DO YOU SELL LIFE & HEALTH COVERAGE PRODUCTS, INCLUDING ACCIDENT AND HEALTH OFFERINGS?

6

56

%

None of these

%

Yes, we sell both Life & Health

WHAT PERCENTAGE OF YOUR AGENCY REVENUE DOES LIFE & HEALTH REPRESENT?

79 15 %

10% or less

%

34

2

%

Yes, Life only

2

%

%

Yes, Health/A&H only

Other

33 32 %

%

of those agents who sell Life & Health products say their commissions decreased.

of those agents who sell Life & Health products say their commissions increased.

(32% of those agents who sell Life & Health products say their commissions remained the same.)

11%-20%

DO YOU PLAN TO INCREASE YOUR LIFE & HEALTH REVENUE OVER THE NEXT 5 YEARS? 60% 50% 40% 30%

5

%

21%-30%

1

%

51

%

26

%

20%

23

%

10%

31% or more

Yes

No

Don’t Know

WHAT WOULD AGENTS LIKE TO SEE THEIR AGENCY PARTNERS OFFER? “LOWER TO NO-COST PRODUCER TRAINING THAT IS MORE THAN JUST PRODUCT TRAINING FOR SMALLER AGENCIES. LARGE AGENCIES CAN ACCESS PROGRAMS AND EVEN GET CARRIER FINANCIAL ASSISTANCE TO INCENTIVIZE THEM, BUT SMALLER AGENCIES CAN’T AFFORD THE PROGRAMS AND CAN’T GET THE ASSISTANCE THEY NEED TO GROW.” 20

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PROPERTYCASUALTY360.COM


CARRIERS OVER THE NEXT 12 MONTHS DO YOU INTEND TO …? 50%

40%

WHICH COMMERCIAL CARRIER(S) DO YOU BELIEVE IS/ARE BEST, OVERALL?

42.2%

1.

20%

9.7

%

10%

Keep the same carriers I now use

Keep the same number of carriers, but add some and delete others

Add additional carriers

1.4

Consolidate your business among fewer carriers

%

Other

2.

3.

4.

THIRTY-NINE PERCENT OF PIA-MEMBER RESPONDENTS SAID THEY CHANGED CARRIERS IN THE LAST THREE TO FIVE YEARS.

5.

OF THOSE THAT DID, 53% SAID IT WAS THEIR DECISION TO DO SO, NOT THEIR CARRIER’S; 16% SAID IT WAS THEIR CARRIER’S DECISION. (TWENTY-FOUR PERCENT CALLED IT A “MUTUAL DECISION,” WHILE 7% SAID “OTHER.”)

6.

7.

OVERALL, IN THE PAST THREE YEARS, HAVE YOUR AGENCY’S RELATIONSHIPS WITH YOUR CARRIERS IMPROVED? (PIA MEMBERS ONLY)

24 19 58 %

Only about 1 in 4 respondents say their relationship with their carriers has improved in the past three years.

PROPERTYCASUALTY360.COM

35

%

24.1% 22.6%

30%

%

%

About 1 in 5 say that relationship has declined.

Slighty more than half say it has stayed the same.

8.

9.

10. NATIONAL UNDERWRITER | FEBRUARY 2018 |

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CARRIERS BEST CARRIERS BY KEY FACTORS TO PRODUCERS, ON A SCALE OF 1 (POOR) TO 9 (EXCELLENT) PRICE COMPETITIVENESS

UNDERWRITING PROCESS

FINANCIAL STRENGTH

RESPONSIVE SERVICE

CLAIMS MANAGEMENT

7.73 7.63 8.58 7.86 7.82

RISK MANAGEMENT & LOSS CONTROL PROGRAMS COMPENSATION PROGRAM

PRODUCTS AND COVERAGES STRONG/ POSITIVE BRAND/ REPUTATION RELATIONSHIP MANAGEMENT

7.70 7.68 7.87 8.32 7.56

BUSINESS CAPABILITIES INDEX: WHAT DOES IT MEAN?

CARRIERS’ RATINGS ARE DISPLAYED ACROSS TWO KEY AXES For over a decade, Flaspöhler/NMG has shared an extract of their producer report exclusively with NU. What’s especially impressive, however, are the analytics in the Flaspöhler report that are shared only with carriers who subscribe to the results of the complete study. As a special bonus this year, Flaspöhler has agreed to share two samples of the custom analytics that appear in the full report studied by carriers. Flaspöhler’s Business Capabilities Index (or “BCI,” seen here) is a revealing analysis that shows how each of the top 34 commercial lines carriers is perceived, relative to one another, on two key axes. The horizontal axis of the BCI chart illustrates the overall performance of each carrier on 13 evaluation factors, 14 line-of-business ratings, key contact personnel ratings, ease of doing business, new business solicitation effectiveness and client advocate score. The vertical axis of the chart illustrates the Net Positive Perception of each carrier in the market, and is the sum of the percentage of producers who either currently use or would strongly consider using each carrier, minus the proportion of producers who would not consider each carrier. The overall BCI chart here (there are dozens in the full Flaspöhler report, including charts by line of business, size of carrier, producer business volume, etc.) shows Auto Owners as the highest-rated carrier across all factors. Joining Auto Owners as carriers rated especially well across all factors are FM Global, Travelers, Chubb, Cincinnati and Liberty Mutual. Travelers has done the best job of leveraging its strong ratings into a deep and positive market presence. Liberty Mutual, Chubb and Cincinnati are well-positioned to achieve greater positive market position with proper leveraging of their strong BCI scores.

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PROPERTYCASUALTY360.COM


BEST CARRIERS BY LINE OF BUSINESS BUSINESS INTERRUPTION COMMERCIAL AUTO CONSTRUCTION & ENGINEERING CYBER LIABILITY D&O, E&O, PL, EPLI GENERAL LIABILITY BOILER & MACHINERY INLAND MARINE PRODUCT LIABILITY PROPERTY SURETY BONDS UMBRELLA/ EXCESS LIABILITY WORKERS’ COMPENSATION

53.6 % 55.8 % 42.4 % 46.7 % 40.0 % 45.8 % 53.5 % 35.9 % 40.9 % 47.3 % 59.2 % 41.9 % 46.2

PROPERTYCASUALTY360.COM

%

2. Hartford 3. Liberty Mutual 4. Auto Owners 5. Chubb Group 2. 3 4. 5.

Travelers Companies Liberty Mutual The Hartford Auto Owners

2. Liberty Mutual 3. Auto Owners 4. Nationwide 5. The Hartford 2 Chubb Group 3. The Hartford 4. Philadelphia Ins. Cos. 5. Lloyd’s 2. Philadelphia 3. Chubb Group 4. The Hartford 5. CNA 2. The Hartford 3. Liberty Mutual 4. Auto Owners 5. Nationwide 2. Travelers Companies 3. Liberty Mutual 4. Chubb Group 5. CNA 2. Liberty Mutual 3. The Hartford 4. Auto Owners 5. Nationwide 2. Liberty Mutual 3. The Hartford 4. Chubb 5. Auto Owners 2. Liberty Mutual 3. The Hartford 4. Auto Owners 5. Nationwide 2. Travelers 3. Liberty Mutual 4. RLI 5. Auto Owners 2. 3. 4. 5.

Liberty Mutual Auto Owners The Hartford Chubb Group

2. 3. 4. 5.

The Hartford Liberty Mutual Auto Owners Berkshire Hathaway

NATIONAL UNDERWRITER | FEBRUARY 2018 |

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CARRIERS WHICH COMMERCIAL INSURANCE PROVIDERS ARE ONES YOU KNOW AND DO NOT CURRENTLY USE, BUT WOULD CONSIDER USING?

33.7 % 22.8 % 15.8 % 15.6 % 15.3 %

13.4 % 13.0 % 12.7 % 11.0 % 10.5 %

WHERE RELATIONSHIPS AND SERVICE INTERSECT THE RMOC INDEX (RELATIONSHIP MANAGEMENT VS. OPERATIONAL MANAGEMENT)

Operational Management and Relationship Management are two of the most important metrics tracked by senior executives at leading commercial carriers. The RMOC Index (Relationship Management vs. Operational Management) chart illustrates where carriers rank at the intersection of these two axes. The overall RMOC Index from this year’s Flaspöhler/NMG Study shows Auto Owners as the highest-rated carrier on both relationship measures and operational measures. XL Catlin, showing significant improvement in recent years, ranks No. 2 in Relationship Management and Travelers is a strong No. 3. While Auto Owners leads the pack in Operational Management, Chubb improves to second place, Travelers is third, Liberty Mutual fourth and XL Catlin fifth. (If you are a commercial carrier who wants to see more of this type of analysis, enter “Carrier” in the subject line and e-mail a request to rick. flaspohler@nmg-group.com. If you are an agent who would like to see more of this type of analysis, enter “Agent” in the subject line and e-mail a request to rick.flaspohler@nmg-group.com.)

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DECIDING FACTORS ON A SCALE OF 1 TO 9, HOW IMPORTANT ARE EACH OF THE FOLLOWING FACTORS TO YOU, WHEN SELECTING AND EVALUATING A COMMERCIAL CARRIER?

8.44

EASE OF DOING BUSINESS

8.40

RESPONSIVE SERVICE

THE GREATEST CHALLENGE FOR P&C AGENCIES IN THE NEXT 5 YEARS? “THE PASSING OF OWNERSHIP AND RELATIONSHIPS FROM CURRENT BUSINESS OWNERS AND AGENCY OWNERS TO THE NEXT GENERATION. GROWTH AGENCIES NEED TO BE READY TO TAKE ADVANTAGE OF THAT TRANSITION.” WHICH COMMERCIAL CARRIERS ARE ON YOUR AGENCY’S APPROVED LIST? 65.8% 63.3%

Progressive

8.34

PRODUCTS AND COVERAGES

Travelers

52.0%

The Hartford

48.0%

Liberty Mutual

41.7 41.3% 41.3% 41.1% 39.8% 38.4% 36.9% 33.0% 31.1%

%

Markel

8.20

PRICE COMPETITIVENESS

Berkshire Hathaway Philadelphia Nationwide Lloyd’s

8.13

UNDERWRITING PROCESS

8.05

CLAIMS MANAGEMENT

Chubb AIG Zurich North America RLI Great American Insur. Group Auto Owners

7.92

FINANCIAL STRENGTH

7.70

RELATIONSHIP MANAGEMENT

7.48

COMPENSATION PROGRAM

7.47

STRONG/POSITIVE BRAND/REPUTATION

INNOVATION SOLUTIONS

CNA

7.33

PROPERTYCASUALTY360.COM

W.R. Berkley Hanover Allianz QBE XL Catlin Arch Crum & Forster State Auto Ironshore OneBeacon Cincinnati Selective Munich Re Swiss Re Aspen FM Global Zenith National Erie

26.5% 23.7% 23.0% 22.1% 21.9% 19.1% 18.7% 16.7% 16.2% 16.2% 16.0% 14.6% 12.9% 11.5% 11.4% 10.1% 8.1% 7.6% 6.0% 5.9% 5.2% 10%

20%

30%

40%

50%

60%

NATIONAL UNDERWRITER | FEBRUARY 2018 |

70%

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CARRIERS BESIDES PRICE, WHAT INDICATIONS OF QUALITY DO YOU VALUE MOST IN A COMMERCIAL P&C CARRIER? (TOP 5)

64.3%

Ease of doing business

46.1% Fair, timely claims handling

FORTY-FIVE PERCENT OF INDEPENDENT AGENTS (MOST OF THEM PRINCIPALS OR OWNERS) WHO RESPONDED TO OUR SURVEY SAID THEY PLANNED TO RETIRE IN THE NEXT NINE YEARS. OF THOSE INDIVIDUALS, ONLY 52% (OPPOSITE PAGE) SAID THEY HAD A SET PERPETUATION PLAN FOR THEIR AGENCY; 60% OF THEM SAID THOSE PLANS WOULD INVOLVE AN INTERNAL SALE.

38.7%

37.4%

36.5%

Strong, knowledgeable underwriting

Superior customer service

Consistent underwriting

HOW WOULD YOU RATE YOUR OVERALL LEVEL OF SATISFACTION WITH THE COMMERCIAL CARRIERS YOU USE?

36.8% Very Satisfied

52.5% 8.0% Somewhat Satisfied

| FEBRUARY 2018 | NATIONAL UNDERWRITER

Somewhat Dissatisfied

0.4%

Very Dissatisfied

ARE YOUR RELATIONSHIPS WITH CARRIERS, OVERALLâ&#x20AC;¦? (COMPLETE MARKET)

42.6%

Improving

26

Neither Satisfied Nor Dissatisfied

2.4%

49.8%

Not really changing

7.6%

Declining

PROPERTYCASUALTY360.COM


TECHNOLOGY NEEDS WHAT TECHNOLOGY DEVICES DOES YOUR AGENCY USE/ALLOW?

59

%

100%

82% 80%

78%

75%

69% 58%

60%

56%

of respondents say they cannot provide quotes to prospects while out in the field

50%

DOES YOUR AGENCY ALLOW EMPLOYEES TO USE THEIR OWN DEVICES (SMARTPHONES, ETC.) TO CONDUCT AGENCY BUSINESS?

40%

33% 16%

20%

0% Electronic document retention system

Agency Wi-Fi (wireless internet connection)

Third-party mobile network to access agency documents or network (cellular service)

Agency laptops

Agency smartphones

Agency flash drives

Agency website

Agency social media pages

Remote desktop connection

53

%

Yes

47

%

No

FUTURE PLANS, WHAT’S NEXT? HOW IMPORTANT ARE EACH OF THE FOLLOWING IN YOUR EXPANSION PLANS? USE A SCALE FROM 1 TO 5 WHERE 5 = VERY IMPORTANT AND 1 = NOT AT ALL IMPORTANT.

10

%

0.0% 0.0% 1% 0%

23 22 % % 44 11 %

89

%

Securing new customers through my current agency

11% 0.0

%

89

ARE YOU PLANNING TO RETIRE IN:

Less than 5 years

Retaining current and increasing the number of policies insured per customer portfolio through my current agency

In 10 or more years

0.0% 4%

In the next 5 to 9 years

Don’t know

DO YOU HAVE A SET PERPETUATION PLAN FOR YOUR AGENCY?

0.0%

%

%

10% 10%

29%

Buying an available book of business from another agency

31

%

17

%

1 (Not Important)

4

2

5 (Very Important)

3

N/A

52

%

Yes

PROPERTYCASUALTY360.COM

48

%

No

NATIONAL UNDERWRITER | FEBRUARY 2018 |

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THE CHALKBOARD

2018 NU/ PIA INDEPENDENT AGENT STUDY: WHO RESPONDED, WHAT BUSINESS DO THEY WRITE, AND WHAT WOULD BETTER SATISFY THEM? Here’s a look at the respondents to our annual study of independent agents Data is extracted from the 2018 Flaspöhler | NMG Producer Study, available from Flaspöhler.

23.4%

OF RESPONDENTS WRITE (OR MANAGE BROKERS/AGENTS WHO WRITE) COMMERCIAL LINES ONLY

73.8%

OF RESPONDENTS WRITE (OR MANAGE BROKERS/AGENTS WHO WRITE) BOTH COMMERCIAL AND PERSONAL LINES

I CAN’T GET NO… WHEN ASKED HOW THEY WOULD RATE THEIR OVERALL LEVEL OF SATISFACTION WITH THE P&C (COMMERCIAL LINES) INSURANCE PROVIDERS THEY USE, 52.5% OF RESPONDENTS REPLIED, “SOMEWHAT SATISFIED” AND 36.8% SAID THEY WERE “VERY SATISFIED.”

SO, WHAT WOULD MAKE THEM MORE SATISFIED? RESPONDENTS SAID THE FOLLOWING ATTRIBUTES ARE DESIRABLE:

BREAKDOWN OF LINES OF

BUSINESS THAT THEY WRITE: P&C COMMERCIAL..............................83.3% P&C PERSONAL ...................................58.0% EMPLOYEE BENEFITS............................. 11% LIFE & HEALTH ....................................20.5%

GREATER EASE DOING BUSINESS BETTER RATES FASTER RESPONSE TIME HIGHER COMMISSIONS BETTER ONLINE SYSTEMS TO GET QUOTES & MANAGE CLAIMS BETTER RELATIONSHIPS & COMMUNICATION BETTER UNDERWRITING MORE PRODUCTS MORE INNOVATION BETTER CLAIMS SERVICE MORE ACCURATE QUOTES

46.7% 40.4% 32.6% 30.4% 23.9% 23.7% 21.1% 20.3% 15% 8.5% 8.3% 3.2%

ILLUSTRATION BY SHAW NIELSEN

THE CAPACITIES IN WHICH RESPONDENTS’ FIRMS DO BUSINESS: AGENCY ................................................. 86.2% BROKERAGE..........................................23.2% MGA...........................................................2.6% OTHER........................................................1.3%

HIGHER RISK APPETITE

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PROPERTYCASUALTY360.COM

The 2018 National Underwriter/PIA Independent Agent Study  

What Do Agents Say?

The 2018 National Underwriter/PIA Independent Agent Study  

What Do Agents Say?