The Power of Many Specialists Rolled into One
With the softening market at the front door of the insurance industry, brokers in the wholesale industry have been scurrying about to prepare for the inevitable dawn of hard market competition. Such changing times often summon changing strategies. And Swett & Crawford, one of the nation’s largest wholesale brokerage firms and a member of the Aon Corporation, has created a specialty brokering division called Swett & Crawford Professional Services Group (SCPSG) to focus solely on marketing financial services risks to increase access to markets for retail brokers nationwide.
The strategy is simple. Combine the forces of many specialty brokers into one dynamic division that ultimately delivers “the best of a big organization, all the way down to our retail brokers,” said Jason White, managing director of SCPSG. White, who has been at the helm of efforts to form SCPSG, said the new division brings together experts based on specialization, not on office location.
Essentially SCPSG is an “office-less division” but nonetheless combines the power of SCPSG’s 30 brokers scattered around the nation who specialize in directors and officers (D&O), errors and omissions (E&O), employment practices liability (EPL), and healthcare related risks. These 30 brokers will continue to be based in their local offices in the company’s branch network of more than 40 offices nationwide, but will now work under the new specialty division name.
“I think any retail broker wants specialists handling their business,” White said. “We’ve created an environment that is one-stop shopping for the retail broker, where they can outsource 100 percent and in return they get unparalleled expertise and assistance in the placement of their product on behalf of their client.”
SCPSG’s brokers will place coverage for: D&O for both publicly-held and privately-held companies, as well as non-profit organizations; E&O for all miscellaneous classes; EPL umbrellas for all types of business; and healthcare related risks for ambulatory/urgent care providers, allied healthcare delivery systems, medical educational institutions, home care and hospice, laboratories, dialysis centers, ER medical groups, HMOs, and doctors’ groups.
“We’ve put a group of people together who work on the same type of business, who will share information for the greater good, and who will work towards best practices,” White added.
Retail brokers will continue sending business submissions to their local Swett & Crawford person, he said. “We will operate as a separate division, but internally it’s not a big change for us. Externally, we are looking to create this change to increase the profile of what we do well,” White explained.
Perhaps the most significant benefit to retail brokers will be the increased access to markets on a nationwide basis.
“What I realized is that we were in many ways, from a market perspective, getting treated as 40 different wholesalers,” White said.
Swett & Crawford is not alone in this regard, White said. Most large wholesalers deal with inconsistencies in market appointments.
“The inconsistency is that the carriers might give one office an appointment but won’t give another [Swett] office an appointment,” White said. “Part of my idea is that we need to be viewed as one division of specialists. It doesn’t matter what office or where we sit.
“We want to have the marketplace recognize us as one company that can deliver the strength, leverage and expertise of Swett,” White replied.
The added leverage will be key for retail brokers trying to access the products of SCPSG. According to White, the No. 1 reason for the creation of SCPSG was to get the markets to recognize the leverage and specialization of the group, and retailers will ultimately benefit from this leverage and specialization as well.
The concept of “specialty broking” may be somewhat unique to the wholesale industry. However, the retail industry has been dabbling in “global broking” for years, said Letha Heaton, senior vice president, marketing and sales, at Deerfield, Ill.-based Shand Morahan & Company. According to Heaton, large retailers such as Marsh, Aon and Willis have global broking offices where they aggregate the business through one group or one individual to leverage the markets for better commissions, better turnaround, and better deals. “That’s a pretty typical retail profile,” Heaton said. “But the model is unique for wholesalers … I haven’t seen a lot of wholesalers do this.”
Greg Buonocore, underwriting manager for D&O at the Atlanta, Ga.-based RSUI, said the lack of coordinated efforts has been a problem in the wholesale community for sometime.
“Wholesalers have traditionally, for whatever reason, been at a little bit of a disadvantage in that they have not coordinated their effort; not all of them, but most of them, and Swett is the biggest,” Buonocore said.
Buonocore added that when wholesale D&O professionals are hired, “they are kind of hired under the theory that they will create their own fiefdom—it’s yours and as the old saying goes in our business, you eat what you kill.” He noted that the Aons, Willises, and Marshes of the world generally have a leader, or a “big cheese,” who doesn’t have to worry about building their own book of business.
Buonocore also said Swett & Crawford is RSUI’s largest broker, and while he maintains relationships with all branch offices, the new division and coordinated efforts between the offices will be a big help when trying to get the word out. “I see it as an advantage,” he said. “It’s important to have a coordinated effort, especially in a product line that is as dynamic as D&O that changes almost on a monthly basis.” He believes the new SCPSG division will be a big win for retailers as well. “The agent community will look at this as a big positive because they’re pooling talent.”
Heaton noted that White’s book of business already receives great deals from the markets he works with, primarily because he writes lots of business with them. “So my guess is that I don’t think he’s going to see a lot of improvement, but what may happen is some of the affiliated offices that are associated with his business will see that.”
Buonocore said that White is the second largest individual broker for RSUI in the country, writing about $5 million in premium per year personally.
“He gets good service and probably gets put on the top of the pile at times,” Heaton said. “He’s a great producer of ours … he’s our single largest office.”
So, would the SCPSG model be a good fit for other wholesalers, Insurance Journal asked?
“I’m not sure yet what the values are and how this will play out in the market,” Heaton replied. But, to Buonocore, the SCPSG model is a perfect fit. “I think it’s a great model,” he said. “It’s not that Swett is the only firm that does it; there are some firms that do it, but not all of them, and they all should be.”
Heaton did say White will try to get everything a producer needs to be successful—higher commissions, higher service levels, the most experienced underwriter, etc. “But I would tell you that I think Jason already commands pretty high-end service.” And in return, the markets will have to have some balance as well, Heaton said. “Is there a return? Are we getting a good flow of submissions? Are the hit ratios high?”
But according to White, the new division will be a win-win-win for all parties: the markets, the retailers and, of course, Swett & Crawford. “We have had extremely positive reactions to the formation of this division,” he said. “Our markets are going to have a greater ability to peer into Swett and say, ‘OK, now we see what you have in these areas and this is where we want to grow with you.’ If we are increasing market access and market clout then that should translate to a retailer having a better experience with Swett & Crawford,” White said. “My idea is that if we can grow the pie bigger, and the carriers can get a greater piece of the pie, then we’re going to ultimately deliver the ability for the retailer to grow their business.”