The famous Notre Dame football coach Frank Leahy coined the phrase, "When the going gets tough, the tough get going." Long after these inspirational words were first spoken, they continue to motivate countless numbers of ordinary people to do extraordinary things (not the least of which was a last-stand resurgence of the Delta Tau Chi fraternity in the classic movie, "Animal House!"). This encouraging phrase must also apply to Florida's independent agents as they confront the realization of today's triple threat: Full-blown, politically made insurance "reforms," a prolonged soft market, and the worse economy since the Great Depression.
While these conditions are daunting to many agency owners, there are significant changes on the horizon that will soon make for a different day. Most notable is a wholesale change coming in Florida's political landscape that simply has to be better than the populist crusade led against the insurance industry by Gov. Charlie Crist.
The dismal shape of Florida's private property insurance market demands this new reality. Once avoidable market outcomes have now been realized in the form of a rapidly increasing Citizens Property Insurance Corp. population and non-catastrophic losses pushing private carriers to the brink. Florida's surreal proliferation of public adjusters who now hover over the property insurance carcass are symptomatic of four years of political pandering and a complicit regulator.
Yes, change will come with a new governor, chief financial officer, and legislators who will undoubtedly take a different approach to the concept of private property insurance in our state. This new cast of elected leaders will encounter rates that are rapidly rising due to a candle that has been burning at both ends — politically suppressed rates and unsustainable loss ratios.
The good news is they should be able to at least dampen the flames with a few common sense solutions: 1) re-establishing a replacement cost holdback provision; 2) creating a more reasonable definition of sinkhole activity; 3) applying real actuarial science to Florida's fraudulent mitigation credit system; and 4) returning Citizens to a market of last resort by charging rates reflective of its exposure. Oh, and by the way, a positive result of these changes would be the non-proliferation of public adjusters!
Another different day is approaching rapidly for those agencies that have significant resources committed to health insurance delivery. A disheartened view suggests this revenue line to be severely threatened as "Obama Care" phases in and more implementation details are revealed about medical loss ratio calculations and the makeup of state-based exchanges.
On the other hand, the "tough get going" approach recognizes both hope in the electorate to preserve private health insurance and a market mindset that persistently demonstrates the value of trusted health insurance counsel. No matter the conditions, the need for professionally trained health insurance agents will remain. These agents will adapt and work differently to serve the needs of an altered client base; they will because they must.
Finally, a different day will ultimately come about in our nation's economy, and when it does, the soft P&C market — only made more so by declining payrolls — will subside. Indeed, high unemployment and fierce insurer competition for top-line results has made today's commercial producer wonder at times whether the sky is falling. Weary clients who have historically translated into dependable agency relationships have increasingly become fickle price shoppers. This "blood in the water" environment has placed a huge target on the back of once-comfortable incumbent agents while giving rise to sales tactics that test the limits of Florida's unlawful inducement statute.
"Can-do" perseverance for commercial agencies during this economic doldrum comes in the form of working smarter, learning to live on less, and clearly demonstrating a service standard second to none. Faithful producers are empathetic to their clients' plight, while at the same time confident and well-versed in the solutions they propose. They are professionally trained and keenly aware of their competition. They are nimble and have the ability to adapt. Failure to secure the account disappoints, but does not discourage.
Well, enough for the motivational speech! It just seems to me that a brighter side needs to be illuminated. So, times are tough. Okay, now what? The tough must get going!
Jeff Grady is president/CEO of the Florida Association of Insurance Agents and serves on the Florida Underwriter Editorial Advisory Board.
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