NAPSLO Celebrates 30th Anniversary at Annual Conference

Doing business in a changing marketplace, coping with terrorism’s threats, state and federal legislation, and building relationships throughout the surplus lines industry were key topics discussed during the National Association of Professional Surplus Lines Offices (NAPSLO) 30th anniversary conference in Orlando, Fla., from Sept. 19-22. Despite worries about Hurricane Jeanne — which waited for the convention to end, and then headed right back toward Florida—more than 2,800 attended the conference.

NAPSLO’s advancement over 30 years as a fledgling group into a professional association representing the surplus lines industry—which A.M. Best has determined is just as solvent as the overall industry—was outlined by H. James (Jim) Griffith, NAPSLO’s 2003-2004 president. He said that during his term he was proud to have maintained and enhanced such a record.

“NAPSLO has taken the forefront in the debate over federal regulation, recommending minimum standards for all states,” Griffith said. He predicted the organization would play an ongoing role in making recommendations for state and federal regulations.

“Congress is now working on the State Modernization and Regulatory Transparency Act, or SMART Act, and discussions are expected to take place in the fall and spring and NAPSLO will make our views known,” Griffith said.

The SMART Act would establish an oversight board including state and federal regulators and would create national standards for the insurance industry.

“It also includes a mechanism in which surplus lines brokers would remit premium taxes to a single state,” Griffith said. “Within three years, premium taxes would be handled electronically.”

Griffith also reported that NAPSLO has gone “from ‘Good to Great’ in our 30th anniversary year.” He said, “We have achieved records in both numbers of members and number of convention attendees.” NAPSLO membership topped 800 in July 2004, the highest membership total in the association’s history.

Griffith applauded NAPSLO’s Excess and Surplus Lines and Advanced School, which are being held for the 15th and 10th year, respectively, in 2004, and also the recipients of the Associate in Surplus Lines Insurance (ASLI) designation.

NAPSLO established the Excess and Surplus Lines School in 1990, with a basic curriculum, but within five years, it was apparent there was a need for an Advanced School. Last year, new seminar programs were offered in Chicago and New Jersey and in the future, seminars will be offered in other parts of the country.

The Associate in Surplus Lines Insurance (ASLI) program was one of the primary original objectives of the Derek Hughes/NAPSLO Educational Foundation, which developed the program with the American Institute for CPCU.

Griffith presented the Charles A. McAlear/ NAPSLO Industry Award to Andrew S. Frazier of New Jersey-based Western World Insurance Group for his work to improve the industry. He also presented the NAPSLO President’s Award to Internship Committee Co-chairs R. Max Williamson of Scottsdale Insurance Company, and Tim Makowski of Benchmark Management Group Inc. for their work on the NAPSLO internship program. Joseph D. Timmons, president of the foundation also participated in the ceremony.

The top four graduates of ASLI’s 2004 class were: Cole V.N. Shaffer, assistant vice president of Aon Specialty Re, Suwanee, Ga.; Marc Fontanet, assistant vice president and senior underwriter, Scor Reinsurance, New York; Joseph D. Kirby, marketing manager, Brown & Brown Inc., Fort Lauderdale, Fla.; and David Scott Schmidt, president, Insurance Intermediaries Inc., a Nationwide Insurance Company in Columbus, Ohio.

Shaffer, the Distinguished Graduate, won $500 and a commemorative plaque. Fontanet, Kirby and Schmidt won Awards for Academic Excellence, which include a cash award of $250 and a commemorative plaque.

Frazier also presented ASLI diplomas to members of this year’s class of 150 new ASLI designees who attended the convention. The 2003-2004 class represents 28 states and London, England. Seven-hundred-twenty nine students have completed the program.

The ASLI program consists of four courses and national examinations. The courses cover the purpose, evolution, regulation and distribution of surplus lines insurance. They also cover surplus lines marketing issues, products, underwriting and risk financing. Topics relating to broader insurance industry topics include ethics; insurance contract analysis; and insurance operations such as underwriting, loss control, premium auditing, reinsurance and claims practices.

Since 9/11 everyone’s vulnerable
“Since 9/11 Americans have been living in a world at an intersection between terrorism and technology,” said former Secretary of Defense William S. Cohen, during his Sept. 21 keynote speech. Cohen, the 20th U.S. Secretary of Defense who served during the Clinton Administration between 1997 and 2001, said that central issues to the insurance industry are a result of everyone becoming complacent, lazy, indifferent and dropping their defenses. “This made us vulnerable; terrorists took advantage of our pride, openness and low security.”

Cohen warned Americans to recognize the role of religion and culture in the overall world picture and that there are people who hate the United States because it is seen as too powerful, arrogant and undiplomatic.

Cohen outlined three hypothetical scenarios in which U.S. interests were threatened by terrorist actions—and how, although hypothetical, they resembled occurrences that had recently been in the news.

Cohen described various possible reactions to terrorist actions and how the international community would react. He suggested a diplomatic solution under which various European and Middle Eastern countries would become more involved in finding a problem for the current crises taking place in Iraq.

“The way to cope with terrorists is to go on the offensive, instead of being defensive,” explained Cohen. He said too many countries see the Iraq War as an American war.

“We need to spread a net of information and share intelligence,” concluded Cohen. He encouraged the participation of European and Muslim countries to establish international support.

Building relationships
On the final day of the convention attendees were brought together for a final panel discussion, “Building Relationships Among the Retailer, Wholesaler and Company.”

The panel, moderated by Insurance Journal Publisher Mark Wells, included: Steve Brown, president of Hoffman Brown Company, an independent insurance agency in Sherman Oaks, Calif.; Bradley Dickler, president of Essex Insurance Company; and Michael J. Warfield, president of U.S. Risk Underwriters.

Relationships are critical in any business setting, but perhaps particularly so in what Wells termed as a “triad of commerce.” According to Wells, you have someone who wants to sell, someone who wants to buy and then of course the wholesale broker who provides for a smooth transactions.

“The only thing that makes this work is a trust in the industry and trust in the wholesaler,” Brown said.

Brown stated that his agency works with only five wholesalers total, which helps to maintain strong relationships that are built on trust. “Knowing who to go to and having those relationships is what allows us to have success going forward,” he said. “We all will succeed in the long run.”

According to U.S. Risk’s Warfield, building a strong relationship with either the retailer or the insurance carrier begins with a “good fit.”

“Because we are a wholesaler/MGA, we need to fit in the middle between companies and producers,” Warfield said. “Starting with the right fit is the first thing to beginning a good relationship.”

Essex’s Dickler stated that the key to building strong relationships lies in emphasizing “the elements that generate a superior transaction.” Dickler said this must include the company’s ability to be a problem solver. “What differentiates one company experience from another is the ability to be a problem solver.” He added that the “triad” participants must provide excellent service. “None of us are ever successful without it.” And lastly, you must have a positive attitude,” Dickler said. “There is no bad relationship … that’s an oxymoron … because there is no relationship without a good relationship.”

Changing the guard
The 30th anniversary NAPSLO convention concluded in Orlando with the association’s annual business meeting where members formally elected new officers for the 2004-2005 year.

The new officers include: Richard Polizzi, Western Security Surplus Insurance Brokers Inc., president; Lawrence Wesson Jr., U.S. Risk Insurance Group, vice president; William Newton, Lemac & Associates Inc., Secretary; and Mary Ellen Rozzell, Continential/Marmorstein & Malone, Treasurer. Outgoing President H. James Griffith will continue to serve on the NAPSLO board through next year as immediate past president. (See IJ’s Sept. 20 issue for interviews with both Polizzi and Griffith.)

NAPSLO’s 2005 annual convention will be held on Sept. 14-18 in San Francisco, Calif.