|Copyright:||(c) 2011 A.M. Best Company, Inc.|
|Source:||A.M. Best Company, Inc.|
Despite moderate improvements in the U.S. economy, agents and brokers can expect to see continued pressure on their bottom lines for at least the next two years, according to a group of top executives and experts. The markets continue to remain soft, particularly on the commercial lines side.
Commercial lines have been particularly affected by the soft market, Hartwig said. "One reason there hasn't been the sort of pain in the industry that would traditionally have kick-started a hard market is that we have had tremendous prior-year reserve releases, tens of billions of dollars over the last several years, and that has lowered the industry's combined ratio by three to four points on an annual basis for the last several years. Results are actually worse than they appear," Hartwig said. "When that well runs dry, the pain will become more intense. The industry hasn't yet begun to feel the reality of very low investment yields."
The discussion came as part of the
Berkley said he thinks regulators need to dial back efforts to regulate the insurance industry, which would allow insurers to compete more freely and drive down prices "naturally."
"When regulators allow the market to move freely, you may see prices go up initially, sure. But competition drives them down below economic levels because people want volume," Berkley said. "Regulators often have their own agenda and are afraid to let us compete."
Yet another challenge, said
That has caused many insurers to pay lower commissions that they have in the past, Rusbuldt said. Pointing to comments made by U.S. Sen.
He said he and IIABA's lobbyists have been speaking with members of
Despite Rusbuldt's claims about the negative effect MLRs have had on broker commissions, some regulators remain unconvinced that they are the culprit for the decreased commissions.
"That tells us that the insurers are squeezing the agents and brokers, squeezing consumers, and squeezing providers. Everybody is getting less from the insurers than the insurers themselves," McRaith said (BestWire,
Clay said uncertainty over the nation's
"If you ask a room full of people whether their children will be better off than they were during the previous generation, you don't see a lot of hands go up," Clay said. "It really affects peoples' psyche."
Another major industry challenge is being able to attract talented professionals -- especially diverse candidates that would help the industry better reflect the nation as a whole, Murphy said. He recommended agents begin investing in the process by bringing in interns and participating in IIABA programs designed to promote recruiting.
"If you're not starting to invest in these kinds of things, you're not going to have the success you want," Murphy said. "Fostering diversity is just good business."
Despite the challenges facing the independent agent and broker community, Clay said he remained optimistic for the future of his industry.
"There is no question that there are challenges within the agency system," Clay said. "But I see a bright future on the horizon."
To hear an audio interview with Hartwig, click here: http://www.ambest.com/media/media.asp?RC=185519