Flying solo now, former Zurich exec ‘gooses’ independent agents

A retired insurance industry executive turned turbo-charged speaker told a group of independent insurance agents that they are the greediest people he has ever met.

Ray Thomas, a former Zurich North America Small Business CEO, meant his remark as a compliment, explaining that for agents to provide optimum service for customers, they must make efforts to gain as much business as possible. Only then can they perpetuate a cycle of future business fueled by working capital earned from current business.

Thomas was a speaker at the Independent Insurance Agents of North Carolina annual conference. He retired from Zurich in August, but said he relishes his status as a speaker and consultant. He features a cartoon goose on his business card and tosses toy geese to his audience, rewarding correct responses to questions.

Thomas said the goose has qualities that agents should emulate, including the ability to be both a leader and a follower, referring to the flock’s streamlined flying ‘V’ formation: “When the leader is tired, he drops back and the next in line is there to fill in.”

Applauds agents’ success
Thomas applauded agents’ recuperative efforts following catastrophic 2004 and 2005. He said since Hurricane Katrina, $3.3 million losses have been settled: “Ninety-nine percent of the auto claims are done and 98 percent of the homeowners claims are done.”

He also praised agents’ success in commercial lines selling. “As independent agents, you write 80 percent of all commercial lines in the United States,” he said. “This is a $467 billion industry — the underpinning of the U.S. economy.”

Thomas attributed the gain in productivity to agents’ efforts in “harnessing technology — making this business more of a science than it has ever been in the past.”

The key to building a successful business is an agent’s ability to understand each generation’s potential customer. “Make sure you’re paying attention,” he said.

Based on what he called the strength of hard markets, Thomas said that while the industry typically has a lower return on equity compared to other industries, history is about change. “This year we’ll match Standard & Poors. The picture is rosy relative to the industry right now.”

He predicted that this year’s P/C industry combined ratio would be the best in 51 years. The impact of reserve changes based on the 2005 combined ratio has prompted CEOs to “firm up balance sheets, bolstering reserves and creating stronger balance sheets.”

Factors that Thomas said contribute to superior agency performance include: talent; profitability; organic growth or retention; stability of carriers; and productivity. A business plan is among the ingredients of success.

“Agents who have a vision and a mission supported by a business plan are more profitable,” he said. “You must realize the power of new and renewal business — you have to do both well.”

Thomas advocated recruitment, replacement and retention of talent, and a quality work force. He urged agents to reinvest in the balance sheet, relinquish stock gradually and leverage benchmarking to understand and increase an agency’s value.

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