Part of an ongoing series on the dynamic nature of the New England Insurance Marketplace
On Friday, members of the New England 1752 Club gathered to listen and learn about the diverse nature of the Independent Agency Membership Associations in Massachusetts, Rhode Island, and Connecticut. The three member panel, moderated by Deland, Gibson’s Tom Skelly, featured Francis A. Mancini, Esq., President & CEO of the Massachusetts Association of Insurance Agents, Mark A. Male, Executive Vice President, Secretary/Treasurer of the Independent Insurance Agents of Rhode Island and Warren C. Ruppar, President of the Independent Insurance Agents of Connecticut.
Answering questions from the Club’s members, the three man panel tackled a range of topics from the legislative challenges each association is facing to the trends in the consolidation of independent agencies that each state is facing.
What the MAIA had to say at the NE 1752 Club’s “Interact” Marketing Forum
Mancini started off by saying that the Massachusetts Legislative Session has not really gotten into high gear as of yet. Generally, once it does get off the ground, the Legislature tends to focus on the legislative matters that have been held over from previous sessions. Mancini did note, however, that this year things will be different for the Financial Services Committee. That Committee will have a new Chairman this year. Mancini intimated that this particular Committee might work more slowly than in other years because of the likely learning curve for the new Chairman and so it will take a while before there is a clearer view of how Property & Casualty issues will fare this session.
As for specific legislation that the MAIA will be focusing on, Mancini said that they will continue to be involved with the regulations involving Transportation Network Companies (“TNCs”, i.e. Uber). While Mancini indicated he was not going to chime in on whether TNCs should be regulated or not, he did say that the MAIA’s focus is on what type of insure should these TNCs carry.
The next topic of discussion for the panel revolved around how the associations were dealing with the perennial issue of how to attract young talent into the insurance industry. “This issue of young people,” responded Mancini, ” has been on top of the MAIA key goal list forever.”
Having tried a number of avenues over the years, including community college and programs with the YMCA, Mancini says that the MAIA, and in particular its Young Agents Committee, is using its members to go out and recruit young talent. Noting that these young agents are the best advertisement around for the benefits of working in the insurance industry, the MAIA is helping its younger members bring in other young talent into the industry.
The MAIA has already identified 20 agencies members that have either merged or sold in the past year
Segueing into the next issue, the panel then discussed the other major trend that the associations are dealing with, the increasing consolidation of independent agencies by acquisitions.
“Consolidation has been hot and heavy in Massachusetts since 2008,” noted Mancini in his response to the moderators. “Just before Managed Competition,” added Mancini, “…we had 1600 member agencies. Now we are at 1300 member agencies.” And the trends shows no sign of slowing down. A case in point: Each Spring the MAIA gets in touch with its members who have not paid their yearly dues. Since March 1st of this year noted Mancini, his association has already about 20 agencies that have either merged or been sold and, in Mancini’s opinion, that trend is going to continue.
But, increased consolidation may not be all doom and gloom. Mancini noted that while the number of member agencies may have decreased substantially over the last years, the number of employees working at agencies has almost doubled since 2007.
In fact, the most troubling aspect of the whole consolidation process is the lack of perpetuation planning that most agencies have. With the average age of agency owners hovering in the 53-58 year old range, perpetuation is an issue for many agencies in Massachusetts. “One of the most frequent questions we get,” noted Mancini, ” is can you help us with a perpetuation plan.” While the MAIA tries to help its members as best they can, there are many agents who have never thought about what will happen to their agency after they are gone.
Direct writers and captives and a look a the split between direct writers and independent agents in MA
The final topic of discussion focused on whether direct writers and captives can help the independent agency marketing channel and the make-up of the independent agency system in each state. As Agency Checklists reviewed in the Big “I”‘s latest market share report, while Massachusetts private passenger auto insurance share has decreased down to 66% from a high of 77% before the introduction of Managed Competition, the Commonwealth’s independent agency system still has a strong market share.
As for competing with the direct writers, Mancini said that independent agents should probably not spend too much time worrying about whether they can compete with the advertising budgets of a GEICO or a Progressive. Instead, there are other ways that the IA system can compete.
In particular, he noted the many claims that independent agents are dealing with from this past winter. He noted that that was a perfect opportunity to emphasize to insureds the benefits of being insured with a local agency versus a #1-800 number.
What a future agency will look like and what it needs to succeed
The final question of the forum focused on what each panel member thought that the successful agency of the future should look like and what it will have to do to succeed. While each noted the importance of technology, each of the associations noted that the best way that independent agents can be successful in the future is to remember that no matter how good your technology is, there is always something special about being able to be face to face with someone who can help you.
How you can attend the next New England 1752 Club
Named after the year commemorating the birth of mutual insurance in this country, the New England 1752 Club is an organization composed of special agents and other field representatives of insurers doing business in the American Agency System throughout New England’s six states. A direct successor to the “Association of Mutual Fieldmen of New England”, the Club reorganized in 1944 adopting the following mission statement:
“The organization of this club is for the purpose of fostering education, public relations, accident and fire safety, understanding and cooperation; and encouraging free discussion; also for the acquisition and exchange of information to the end that each member may be better qualified to convey to the public the high standards and ethics of the profession of mutual insurance and be better able to effectively serve the interests of their company and its agents.”
As the oldest insurance field association in the country, the New England 1752 Club is another institution that the Massachusetts insurance industry should be proud to have based in the Commonwealth. For those interested in learning more about what the NE 1752 Club does or how you can join, contact Christine Robidoux of Quincy Mutual for more information.