Insurers, Agents Together Need to Lower Distribution Costs: Berkley

By | June 23, 2016

  • June 23, 2016 at 2:02 pm
    Dave says:
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    A lot of interesting points are brought up by Mr. Berkley. I especially like his analogy regarding travel agents and that industry being shrunk by 90%. Was unaware of that. I don’t see a 90% shrinkage in the insurance agency business, but I do see it getting smaller with automation and direct carriers. Agents bring valuable services to many of their clients, but Mr. Berkley is right in that those services need to be delivered more efficiently.

    • June 23, 2016 at 2:24 pm
      Agent says:
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      Dave, economies around the world are shrinking due to Progressive Socialism, high taxation on business, Crony Capitalism and no encouragement from government to small business to hire and grow. Businesses are stifled with all the regulations on everything they do. Agents are on board with technology advances, efficiency of operations and what do we get for that, but reductions in commissions.

      • June 24, 2016 at 5:02 pm
        insurance_guy says:
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        Why bring bring politics into this? Politics has absolutely nothing to do with a Silicon Valley startup coming in and disrupting the insurance industry.

  • June 23, 2016 at 3:19 pm
    TX Agent says:
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    I can see this in personal lines and maybe “BOP” business but middle market and large commercial, or Cat business (E & S) No… Big difference between booking a plane ticket from Portland to Milwaukee and insuring a multi-million dollar business account with 100’s of employees, fleet etc…

    You don’t make the flight you get on next one. Can’t say that for a claim…Well we will pay the next claim but not this one.

  • June 23, 2016 at 3:24 pm
    Dan says:
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    Travel agents had the same reply as TX Agent. The public will never go online and self serve, they will be too confused and they will get frustrated. The problem we have now is automation has destroyed these protected high paying jobs. In a few years the public will not pay a broker 10% so the broker can assist them with a claim or getting their 100 vehicle schedule correct, they will simply link the vehicle schedule with the DMV. Agents are mostly stuck in an inefficient process, which will get fixed by a company like AirBNB, Uber, and agents will go the way of the dinosaur. I hate it as much as you do.

    • June 24, 2016 at 9:26 am
      Agent says:
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      Dan, you sound like a typical Millenial geek know it all. You have no idea how much education/training it takes to be an agent and do what we do because you are obviously not one. By the way, there is quite a difference between a travel agent who books a cruise for someone and an Independent Insurance Agent. Sorry you can’t see that. We have seen the stories of the demise of the agent many times and we are still here and growing. How about this for a story? 66% of all Millenials do not own a home. 70% of these people who rent do not buy a Tenant Homeowners to protect their valuables and provide premises liability. Does that sound “smart” to you? All they have to do is ask an agent for advice, but most would rather play on their iphone or tablet and have no clue about protection needs.

      • June 24, 2016 at 11:22 am
        confused says:
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        Let’s put some context around that 66% home ownership rate, shall we?

        After peaking about 10 years ago, annual homeownership rates across all generations have been declining.

        Ownership rates for every under-65 age group — under 35, 35-44, 45-54, and 55-64 — have fallen to below even their mid-1980s rate

        Even with this post-recession dip, millennials still own homes at roughly the same rate Gen Xers did more than 20 years ago

        http://blog.credit.com/2016/06/its-not-just-millennials-who-arent-buying-homes-148484/

        http://money.usnews.com/money/personal-finance/articles/2016-06-20/are-millennials-the-renter-generation

      • June 24, 2016 at 11:22 am
        confused says:
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        Let’s put some context around that 66% home ownership rate, shall we?

        After peaking about 10 years ago, annual homeownership rates across all generations have been declining.

        Ownership rates for every under-65 age group — under 35, 35-44, 45-54, and 55-64 — have fallen to below even their mid-1980s rate

        Even with this post-recession dip, millennials still own homes at roughly the same rate Gen Xers did more than 20 years ago

        links below

        • June 24, 2016 at 11:22 am
          confused says:
        • June 24, 2016 at 12:41 pm
          Agent says:
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          I choose to believe the Property Casualty 360 article, not your summary. They pointed out that Millenials don’t understand the need for coverage and really don’t care. They are in their own little world. Every time there is an apartment fire, most residents don’t have coverage for the loss of their belongings. They could have bought a policy for $150-200 and chose not to. Not smart, by the way.

          • June 24, 2016 at 12:49 pm
            confused says:
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            notice how i did not respond to your renter insurance comment but i responded to your home ownership comment?

            you should have responded to the thing i actually said.

            that’s how you converse – by responding to what someone else said. not by talking about something that wasn’t brought up.

          • June 24, 2016 at 2:53 pm
            Captain Planet says:
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            Confused,
            You are basing your comments on the false premise that Agent has any reading comprehension.

          • June 24, 2016 at 2:54 pm
            Agent says:
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            Notice how I stick to my guns instead of being side tracked by a Progressive Millenial. If I were you, I would contact an agent today and see if you can still get a Renters policy. For the 4th of July, a pop bottle rocket could start a fire and you can lose what belongings you may have.

          • June 24, 2016 at 4:03 pm
            confused says:
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            why would i need renter’s insurance when i have a homeowner’s policy that covers replacement cost, a personal excess liability policy and a landlord’s policy for the home i rent out?

            if this is the kind of advice you give your clients, i’m glad i don’t live in texas and have you as an agent.

      • June 24, 2016 at 2:56 pm
        UW says:
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        Dan, you sound like a smart person, so Agent ignores you.

        • June 27, 2016 at 12:25 pm
          Agent says:
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          Hey UW, Confused and Planet. There is a new medicine on the market called Hydrogen Barackside. Mfg name is Messianic Pharmaceuticals. The benefits they allege are: Kills Capitalism on contact, kills jobs on contact, Stimulates Marxist tendancies, No oversight needed, endorsed by unions.

          For the general destruction of wealth, if you catch a nasty case of Free Market Capitalism, try Hydrogen Barackside – it will cure you of all your money issues. The solution is right on the Marx.

          Warning Label: Keep away from wallet while opening!

          • June 27, 2016 at 1:37 pm
            confused says:
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            hey agent. you are just so smart and clever copying and pasting someone else’s thought and making it seem like your own original piece of work. You sure handed our heads to us this time! end sarcasm.

          • June 27, 2016 at 3:19 pm
            Agent says:
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            Hey Confused, I tried to make it so simple that even your pea sized brain could underdstand. Aren’t you the one who says with most starting posts, I am confused. I think anything confuses you, especially free market Economics.

          • June 27, 2016 at 3:29 pm
            confused says:
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            you made it simple by cutting and pasting the exact text someone else wrote and trying to pass it off here as your own original thought? at least change a couple words next time!

            I’ll be honest – you know what REALLY confuses me right now?

            I have a home policy reimbursing replacement cost, a PEL and a landlord’s policy for the home I rent out. I’m confused why such a smart and knowledgeable agent like yourself would tell me I need a renter’s policy to protect my personal belongings.

            Such a smart agent like yourself should be able to easily deconfuse me and explain why you suggested I get a renter’s policy. Please advise

          • June 28, 2016 at 1:45 pm
            Godot says:
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            Oh, Agent – if you aren’t the wittiest guy around!

  • June 23, 2016 at 3:27 pm
    Dan says:
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    The agency system is completely inefficient. Brokers are not being paid for advice but for processing. Soon customers will link DMV with carrier portals and large vehicle schedules will be insured. Going forward the public will not pay 10% for a processing middleman. Finpro will wipe us all out, and we will be but a memory like when you had to wait 2 weeks to process pictures and then only 1 hour. Guess what, now it is instant…

    • June 24, 2016 at 8:57 am
      James says:
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      I’m not familiar with Finpro. Please elaborate.

    • June 27, 2016 at 5:46 pm
      Agent says:
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      Confused, 66% of Millenials do not own a home and therefore “rent”. Of those renters, 70% do not buy a Renters policy. Please explain those numbers without going on your typical rant. Why do the vast majority of Millenials not believe in protecting themselves? Is it because most are still living in mom’s basement and have failed to launch?

      • June 28, 2016 at 8:07 am
        confused says:
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        like i already said – notice how i did not respond earlier to your renter insurance comment but i responded to your home ownership comment? that’s because i agree with you on rental insurance.

        however, one reason could be that: 43% of that 70% said they don’t own enough personal belongings to insure! If they have $1,000 in property, pay $500 a year for renters insurance and have a $500 deductible, what’s the benefit of renters insurance for them?

        I answered your question without going on a “rant.” Now answer mine.

        I have a home policy that reimburses at RC, a PEL and a landlord’s policy for the home I rent out. I’m confused why such a smart and knowledgeable agent like yourself would tell me I need a renter’s policy to protect my personal belongings.

        Please deconfuse me and explain why you suggested I get a renter’s policy without going on your typical insult filled rant.

        • June 28, 2016 at 10:13 am
          Agent says:
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          Congratulations troll of the year. Careful, you may be “confused” as a Conservative with rental property. You insulted most Millenials when you said they might not have enough personal property to insure. Unless a renter is renting a completely furnished apartment, they often will have $20,000 or more to insure. Why don’t they have a Renters policy? Ever heard of premises liability in case someone is injured while visiting? Med Pay? Is that beyond your understanding? If they only have $1,000 or less personal property, that means they are living in mom’s basement and are depending on the parents HO as well as being on the parents health insurance if they are still under 26. Free meals, free rent, laundry service. What a good gig that must be.

          • June 28, 2016 at 10:39 am
            confused says:
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            you keep using that word – troll – but i do not think you know what that means. my post contained 0% trolling. nice hypocritical post about me “insulting” millennials. talk about the pot calling the kettle black!

            “Why don’t they have a Renters policy?” you JUST asked me this question and I gave you an answer from the study you got your number from. you may not like it, but “lack of property to ensure” is what 43% of the millennials reported as their reason for not having renters insurance. that is not me insulting them, that is what millennials said on their own.

            “Ever heard of premises liability in case someone is injured while visiting?” sure have. ever heard of a renter being held liable for the owner’s lack of maintaining a safe home? If the stairs are broken and someone hurts themselves, the renter is not liable – the owner would be, right?

          • June 28, 2016 at 11:55 am
            Agent says:
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            Confused: per Wikipedia, a troll is a person who sows discord on the internet by starting arguments or upsetting people by posting off topic messages with the deliberate intent of provoking readers into an emotional response or otherwise disrupting normal on topic discussions.

            Over the course of the past 4 or 5 years, I have made many comments as the first commenter on this site to make an on topic comment. The trolls like you, UW, Planet, Ron, Actu, Rosenblatt and a few others lie in wait to start a big argument no matter what the topic. On just this article, 12 posts by trolls, most by you.

          • June 28, 2016 at 1:40 pm
            confused says:
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            it does not surprise me at all that you had to look up the definition of a troll.

            maybe now you’ll stop calling someone a troll just because they disagree with you or when they tell you your “statistics” are either completely false or are lacking context.

            “you sound like a typical Millenial geek know it all” = agent trolling

            “I tried to make it so simple that even your pea sized brain could underdstand” = agent trolling

            “most are still living in mom’s basement and have failed to launch?” = agent trolling

            “Is that beyond your understanding?” = agent trolling

            “Let’s put some context around that 66% home ownership rate, shall we? millennials still own homes at roughly the same rate Gen Xers did more than 20 years ago” = confused making a factual statement

  • June 23, 2016 at 4:37 pm
    Allan says:
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    Why is it when political or business leaders start using big words such as “ameliorating”, whatever follows will somehow take money out of our pockets? There must be a thesaurus for words that 99% of the population never heard. :)

    • June 24, 2016 at 12:33 pm
      Agent says:
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      Allan, political leaders are “word” parsers and lawyers who like to show off on their “education” and don’t think they have to use more common terms. It is a tool to confuse the public. Remember when Obama got his head handed to him in the first mid term after Obamacare was passed? He said that perhaps his message was not explained well enough and that was the reason he got shellacked. Actually, we understood all too well what it was about and that is why so many of his followers were voted out the next time. Personally, I have not had any of my company executives ever send a letter with a term like ameliorating in it.

      • June 24, 2016 at 2:55 pm
        Captain Planet says:
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        Hmm, I seem to remember President Obama being re-elected in a landslide and Romney ran on repeal.

        • June 26, 2016 at 9:51 pm
          Dave says:
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          When Obama lied about what he said about Benghazi during the debate and Candy Crawly covered his lying ass, the race was over.

          • June 27, 2016 at 7:54 am
            Ron says:
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            Dave,

            If that is all it took, then Mitt Romney was not qualified to even be considered for president. Until the Republicans remove emotion when they vote in the primaries, and give us a reasonable candidate, Democrats will keep winning the White House.

            The fact that Hillary Clinton is where she is in the polls, screams what a poor selection Donald Trump is for the Republicans.

          • June 28, 2016 at 2:42 pm
            Agent says:
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            Dave, I am waiting to get the movie “13 hours” on Netflix. People I know that have seen it say that Hilliary is a traitor and anyone voting for her is totally out of their mind.

          • June 28, 2016 at 7:35 pm
            Dave says:
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            So Ron, you agree Obama and Crowley lied.

          • June 29, 2016 at 7:38 am
            Ron says:
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            Dave,

            Yes. Do you agree that Mitt Romney, if one line in a debate is all it took to end the race, should not have even been considered and the Republicans should have selected a more qualified candidate?

            Do you think there has been a campaign in the past 40 years not littered with lies and distortions?

          • June 29, 2016 at 3:02 pm
            Captain Planet says:
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            Agent, did you see Chris Stevens’ family even said Hillary did not lie. You Republicans and your fabrications. Just how many Republican witch hunts coming up empty does it take? How many hours of testimony and you all still have nothing?

          • July 5, 2016 at 9:57 am
            Agent says:
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            Dave, did you know we still don’t know what the President was doing or where he was on the night of Benghazi? I don’t think it was in the situation room, do you?

    • June 28, 2016 at 2:44 pm
      Agent says:
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      Confused, this is about 13 trolls on your part from my original post. Still don’t get it, do you? By the way, 70% of Millenials surveyed say they don’t buy Renters policies when they rent. That is an astounding percentage even if you don’t recognize it.

      • June 28, 2016 at 3:11 pm
        confused says:
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        i have already agreed with your 70% and 66% statistics multiple times.

        the only thing i did was clarify 66% is similar for Gen X-ers home ownership 20 years ago and told you another part of the study where 43% of that 66% of millennials don’t have renters insurance because they feel they don’t have enough property that needs to be insured.

        so to recap: I AGREE WITH YOU, but just felt your #s needed more context from the study that you were quoting.

        geez man. i agree with you. why can’t you see that yet?

        is any reply I make to your posts an automatic trolling attempt in your opinion, even when i keep agreeing with you?

        • June 28, 2016 at 3:15 pm
          confused says:
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          sorry – 43% of the 70% is what i meant. you’re trying to start an argument with me when i actually agree with you and acknowledged your numbers are correct – that provoked me to make a partially emotional response.

          • July 5, 2016 at 9:55 am
            Agent says:
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            70% of Millenials who “rent” do not buy Renters Insurance. Let that burn in real good.

  • June 23, 2016 at 4:55 pm
    Lou says:
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    Of course provide business of all sorts need to focus on saving and being efficient as possible. What I didn’t hear from Mr. Berkley, is the benefit derived by customers from insurance agents. The great majority of us deliver great service to our clients. It is us who holds the carriers feet to the fire if they do not live up to policy obligations. It is us who guides them through this process. Can you imagine what liberties carriers would take if now agent was in the picture. Also, while most of do very well financially if you’re a good operator. We don’t enter into the mega rich level. Also if your a customer and want the best deal as a small business owner, and your presented with dozens of companies, how are they going to sort through that and do they want to? Remember, carriers are a few people with a large check book. The real work is done on our end.

    • June 24, 2016 at 12:36 pm
      Agent says:
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      Lou, thank Philly for Diekman as well as Hamels. They have both been valuable additions to the Rangers who have the best record in the American League. The Philly organization must be crazy to let either of them go.

  • June 23, 2016 at 5:27 pm
    agent14 says:
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    Yes, the foot soldiers doing the grunt work for the carriers is the agents. Agents choose which carriers to present to prospects. Agents can choose to place a preferred prospect to a preferred carrier, or choose to place a substandard prospect to a substandard company. Carriers cannot threaten customers if a carrier’s retention is too low. Carriers cannot threaten customers if the carrier does not sell enough policies, or if the carrier is not writing profitable business. Does anyone who works for a living work for free? Most agents work their arse off, now more than ever. Not like the agents of 30 years ago that played golf once a week. I am lucky to get 5 days off a year, and I am a mid sized agent. My expenses go up every year, from management systems, to carriers forcing more expense downline to the agents. Enough is enough, we deserve to be compensated for our hard work, no matter what any numbskull mental smally may say… You cannot expect quality workers to work for you if you do not compensate them fairly. They will go do something else.

  • June 24, 2016 at 9:06 am
    James says:
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    I’ve always wondered why we do business with carriers who also go direct, such as Liberty Mut. Don’t mean to pick on them since they seem reputable, and there are certainly others that do the same thing. Hartford is another.

    • June 24, 2016 at 9:29 am
      Agent says:
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      James, Progressive started the trend on going direct and they just use Independents as a supplement to their main business. They don’t have to pay commissions on direct business so they can offer lower rates. We just use them for problem accounts that the other standards don’t want.

  • June 24, 2016 at 1:19 pm
    Agent33 says:
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    While I do agree in the short term personal lines and small commercial will be most impacted by the move toward greater efficiency and automation, let’s not forget that mid and large market clients have the ability to hire risk managers or entire risk management departments. I don’t find it impossible to think that the independent agent may be phased out in favor of direct sales to in house risk managers. Many universities have or are developing undergrad and graduate degree programs in “Risk Management and Insurance” – isn’t it feasible to think that those people may work for companies one day and may have the training to negotiate & understand insurance? I for one don’t think we should rely on the assumption that we provide more value than some new concept that may be created in some unknown future. I think we as an industry should try to evolve proactively.

    • June 27, 2016 at 8:45 pm
      Name withheld says:
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      I have a Masters degree in Risk Management and Insurance, so yes, I am available should a recruiter call for a large client. However, unless a risk is completely self-insured, they generally need an agent at some point. They may hire a captive for high frequency/low severity risks, but very few will avoid standard insurance altogether.

      All that said, I agree with your proactive approach.

  • June 24, 2016 at 4:34 pm
    lonestar says:
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    Actually, if my memory is correct, I believe the vast majority of Progressive’s business is through agents, something like 65-70%. Correct me if someone has the exact numbers. And, just a Progressive policy purchased through the direct channel is not necessarily cheaper than an agent channel. I have seen examples where the agency channel costs less, it seems to be about 50/50 on this. So this tell me that the direct side distribution does not have any noticeable advantage on rate vs. paying an agent. Small differences, yes. But not large needle moving factors. I thought the independent agent’s demise was supposed to happen about 20 years ago when the internet came about…

  • June 24, 2016 at 4:59 pm
    insurance_guy says:
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    Insurance Journal commentators can politicize any subject. That takes talent.

  • June 28, 2016 at 2:10 pm
    Been there done that says:
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    Lower delivery cost could start with Big Bill and other carrier biggies traveling commercial, just how much of the expenses go to private jets and presidential suites! A lot of expense dollars.

    • July 1, 2016 at 7:28 pm
      JAMES says:
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      I used to work for a carrier, so believe me, I’ve seen waste.



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