Robust merger and acquisition activity, carrier relocations and an aging workforce are influencing independent insurance agencies in ways an agency owner might not have experienced decades ago. But Bob Bramlett, president and CEO of The Bramlett Agency in Ardmore, Okla., and chairman-elect of the Independent Insurance Agents and Brokers of America (IIABA or the Big “I”), says one thing hasn’t changed – that the insurance business is a great one to be in.
After graduating college in 1975, Bramlett started working at the agency his mother and father founded in 1948. He bought the agency in 1982. The Bramlett Agency today has 16 employees and in addition to property/casualty lines of insurance, derives much of its revenue from benefits.
As he sees it, one of the biggest challenges faced by insurance agents today is that their insurance carriers are physically relocating away from them. “By that I mean, we used to have virtually all our property/casualty companies located in Oklahoma City or Tulsa or Dallas,” Bramlett says. “And today, you just don’t find very many there or even in Kansas City anymore. A lot of times we’re dealing with people in Chicago or all the way back to Hartford.”
He adds that while it’s not the case for every carrier, “it is a challenge in that you can’t sit across the desk from an underwriter near as much as you could back in the day when I started.”
Another change he’s seen over the years is that there aren’t as many mid-size agencies as there used to be. “There’s really becoming a division in the independent agency system,” Bramlett says. “You don’t see a lot of, say, the 10- to 20-employee agencies. You see a lot of startups that are smaller, less than five employees. And then you see a lot of, say, 30 to four- or five-hundred employee agencies. But you just don’t really see that many my-size agencies anymore. Consequently, many of us that size have looked into doing the cluster model, which is what we did about 15, 16 years ago.”
The M&A activity that has decreased the number of small-to-midsize agencies has created a problem of sorts for the associations that support independent insurance agencies. For instance, Bramlett notes, in the 1980s the Big “I” had 34,000 member agencies. Today, there are around 22,000 member agencies. The reduction has resulted in a loss of income for the association, he says.
“It’s a real challenge in the association business,” Bramlett says. “Because many of these smaller agencies that get acquired by large agencies, we lose the dues from that. Let’s say a 10- or 12- or 15-person agency gets bought by a 75-person agency. Well, the way the dues structure is in the national association … the state is only charged for up to 22 employees. … It doesn’t take very many agencies to be bought before the dues, both at the state level and at the national level, really get hit hard.”
Another big change, and one that Bramlett finds worrisome, is the aging of the insurance industry workforce.
“I used to brag to people, and it seems like only a couple years ago, but it’s obviously not, that we didn’t have anybody in this agency over 50 years old.” Now, he says, “maybe a third of our people are under 50 years old.”
Bramlett notes that “10,000 people a day are retiring from this business, and will between 2008 and 2026.” It’s imperative then, that the industry finds “the bodies to fill our spots,” he says.
It’s important to “make people understand that insurance is not just selling insurance,” he says. “I mean, we’ve got lawyers. We’ve got accountants. We’ve got actuaries. We’ve got safety people. … There’s all kinds of jobs within this business, and that’s the story we have to tell.”
The IIABA, with its Invest program, is spreading the word in high schools and colleges around the country, he says. “We’ve got a great story to tell, and we have just got to do a better job of telling it.”