The Market Will Always Be ‘The Market’

Our “market” is still essentially no different than what it was a century ago. We are still in the business of protecting the assets of our insureds while generating a profit.

For as long as I have been in the insurance market, professionals from all sides of the business have been asked to predict how long a particular cycle will last and when a new one will start.

Is the market hard or soft? Is it tight or steady? In my experience, very few of us have accurate crystal balls. Frankly, one is not needed when we finally recognize and accept the fact that the market is “The Market.”

Too many people in our industry concern themselves with where we are in the current market cycle and where that cycle is going. We would be better off focusing on how to strengthen our relationships with our business partners, forging alliances that will prosper and grow from year to year—irrespective of the market’s condition at the time. Designing a business or marketing plan around a perceived market cycle will never be as valuable from an Return On Investment and Return On Equity perspective, than one that is based on customer service.

It has long been my contention that there is no “hard market,” nor is there a “soft market” or anything between the two. There is only “The Market.”

In our industry the term, “The Market” is instantly recognizable whether you are an agent, wholesaler, managing general agent (MGA), company market or reinsurer. There are very few segments of the economy with such universally recognizable descriptors. However, golf seems to have more than a few of them, if we look at the “Masters” or the “Open.”

I am not a golfer, but as an insurance professional, I have had more than my share of exposure to the sport. Notwithstanding the foregoing, I am nevertheless adequately able to use a golf analogy and compare “The Market” to as some in the United States call it, the “British Open.”

The Open is not always held in the same place. Some years are more challenging than others due to weather related conditions, how the course is playing, pin placement and who the “hot” competitor is that year. This is not unlike our “market,” which is affected by weather catastrophes as well as the legal/judicial environment, which has a direct result on our industry’s operations and results.

New markets with unencumbered capacity also drive supply and demand.

Like in golf, our equipment or tools are better than they have ever been with information, statistics, trends and communications abilities that were not even dreamed of 15 years ago. These tools are dramatically affecting how we do business today.

My first dealings with the London marketplace were via Telex and consisted of short sentences or phrases of abbreviated words that were received every night on paper rolls that had to be torn apart and distributed every morning. The fax machine was an incredible step forward, something like e-mail that we now take for granted was pure science fiction.

The advent of technology has sped up the time aspect of all facets of the way we do business. The amount of information that we are able to capture, digest and use to make decisions has increased exponentially in a fraction of the time it used to take. But, like the Open, new titanium shafts, oversized club heads and research studies on dimpled ball technology have not changed the fundamental aspects of the game of golf, and through it all, the game has retained its honorable tradition and its integrity.

Our “market” is still essentially no different than what it was a century ago. We are still in the business of protecting the assets of our insureds while generating a profit for our agencies, companies and reinsurers, and ultimately the stockholders of the aforementioned.

From an MGA standpoint, we need to continue to do what we have been doing for years.

We need to continue to prove our worth to our company markets and reinsurers.

We need to continue to educate our staff to be the best source of knowledge to our retail agents.

We need to continue to take advantage of advances in technology to make us easier to do business with by both our agents and markets.

Relationships with our retail agents and our companies need to be built upon to the point we are invaluable to both, and we need to foster new partnerships on which to build our future.

Joseph P. Hutelmyer, CIW, is president and CEO of the Seaboard Underwriters, CMGA of Burlington, N.C., a position he has held since 1991. He joined Seaboard in 1981 as vice president of underwriting. Prior to that, he held underwriting and executive positions with Travelers Specialty Insurance Company, The Insurance Company of North America and The Hartford Insurance Company. Hutelmyer will assume the role of president of the American Association of Managing General Agents at its annual meeting in May.