Siaa

[JSJAG]

I thought I'd check out Noodle so I paid them their entry fee. I have found their appetite in my State and my usual markets is lacking. I've looked into Iroquois and their monthly fee bugs me. SIAA seems to have the best thing going but the fee is above $10,000, plus a long term contract, plus in several different ways, they take a percentage. They've made deals with the insurance companies to get a good commission rate but what if the companies cut that rate? SIAA still gets their cut, you're into a long term commitment and the entry fee...ouch! SIAA is still a good model. The P&C side of my business is the icing, not the cake. For 20 years my base has been group health and business life (funding buy out stuff). It's amazing how many owners of profitable businesses have no continuation plans in place. I've always worked deals with existing agencies and did a commission split. That was fine until agencies started to have salary only sales people and no longer wanted outside producer people.

This business should not be so hard to find companies that will allow you to sell for them. I have heard all their reasons but I usually can rebut each and every excuse. There is only one excuse, they are using an outdated business model and one that could easily evolve. There once was a time that life, health, etc. insurance was sold through the agency system. That life and health agency primary system being the number one distribution system for life / health is long gone.

The P&C distribution can be compared to the Securities distribution system. Old, overburdened, cumbersome and costly to run. Originally there was to be more than one private regulatory agency but the NASD is the only one. Therefore they act as a quasi private / governmental body and constantly petition for more power. They have no other competition and they can set their own fees and rules without the consequence of losing membership. Where else ya gonna go? In the same vein, the P&C agency / insurance company relationship has promulgated the same business as usual model of selling insurance. Both systems do not want to give up their power structure or change to a model that may be more efficient and profitable for all involved in the sale of P&C insurance.

I really think that with the recent investigations the legislators are finally opening the door on the hidden crazy uncle called the P&C distribution system. Now that the nose is under the tent, these people are going to query the existence or non existence of competition, the wonderful hard - soft market cycles, non presence of multiple insurance carriers in rural areas, why more insurance companies don't have an open brokerage system and many other questions.

There is not one valid reason why the P&C system can not have multiple distribution channels. Each channel would have it's own economy of scale and the commissions paid out would be reflected the difference in them. The agency model could exist side by side with a well run open brokerage system.

I have friends and acquaintances in the Federal and State governments. Personally I want....... no I need, to see some change in this business. I have drafted letters and sent them to those I know in government and those that are working in the insurance committees. The people on the committees need to know what questions to ask and why. These people need to ponder why it is so hard and costly for a start up P&C sales organization. Right now there is a chance to open up the doors, allow all to do what we do best, allow the new start up's to be able to make a living in this business, allow start up organizations to have access to good markets, allow rural residents the ability to get competitive quotes from the well known, well rated carriers.

You've probably heard me give this rant before but it is the same one I've given for darn near 20 years. This is the first time that the powers to be have turned their eye upon the distribution system. Could this really be the time of change?
:ph34r: