AAMGA Outgoing President Takes Changing Marketplace in Stride

It was the eve of a major trade association event, the annual convention of the American Association of Managing General Agents.

AAMGA Outgoing President James A. Roe, president of Arlington/Roe &Co. Inc. in Indianapolis, was ruminating on the organization’s goals, both past and future.

Roe will officially step down from his post during this year’s conference, passing the gavel on to Leonard T. LoVullo, president and CEO of LoVullo Associates Inc. in Buffalo, N.Y.

Describing the nature of his primary objectives during his tenure as AAMGA president, Roe said, “The world is changing dramatically and our association needs to change dramatically, too. We have been meeting for the last year trying to steer our board to where we need to go…We hope by Committee Day this year in June that we can finalize some of the things that we’ve already talked about.”

One of Roe’s key goals has been to create a greater level of visibility and conversation among the insurance associations. “The two key organizations I’ve wanted to work with are both NAPSLO and the Big ‘I,'” Roe explained. “I think we’re just now starting to do that a lot more effectively…We’ve invited [NAPSLO members] now to our university classes, and they’re inviting our members to their education program in Indianapolis. We also met recently in Washington with the Big ‘I’ senior staff with the president and executive vice president of NAPLSO…to find ways that the wholesaler organizations and the Big ‘I’ can partner more together to find solutions to problems.”

Roe said he has also pushed hard for the AAMGA University and gave kudos to Chris Behymer, AAMGA’s educational director, for his role in making the university classes more available. Noting that AAMGA had recently completed its first university weekend in Philadelphia, Roe indicated there were plans to hold other university weekends around the country. “The educational area can be one of the most effective areas for AAMGA,” he said.

Looking toward his future role as a past president, Roe said he relished the idea of getting more actively involved in the political arena and expressed the belief that AAMGA could become a more potent factor in legislative, regulatory issues, especially from an input perspective at the National Association of Insurance Commissioners (NAIC) level. “AAMGA has had kind of a difficult time taking a stance in any one area because our members are so diverse, and we’re not really sure what all of our members really stand for,” Roe said.

This has been somewhat in contrast to NAPSLO, whose primary focus is on surplus lines regulations. “They’re a whole lot more vigilant and active in that area than AAMGA,” Roe continued. “That’s starting to change now with the NAIC being much more challenged with some of the changes of financial services modernization, which forces the NAIC to come up with a multi-state licensing solution…All of a sudden AAMGA does have much more visibility and a reason to become more actively involved in the government affairs area.”

Commenting on this year’s convention in Orlando, Roe said the two primary reasons why most associations, but especially AAMGA, should exist is for networking opportunities (the meetings and the conventions), and then education. “Our headquarters in Kansas City does an outstanding job every year of putting together a wonderful annual convention with all the backroom things that need to be done there,” he said.

“In the past few years, my [convention] time has been fairly wide open to go to different meetings because the marketplace has been soft enough that we haven’t really been looking for markets,” Roe said. “Some of the things that are happening with us specifically, and the marketplace in general, is it is tightening up, and we are now looking for expansion of our business. We’re looking for more markets…So my schedule this year, from a business perspective, is getting a whole lot more cluttered because I’m here to do a lot more work with our markets.”

Roe elaborated more specifically on how the marketplace has changed recently. “Obviously it’s changing by territory-it’s changing by company,” he said. “Our industry is still overcapitalized, but there are a lot of companies out there that are realizing that they can’t continue to do the things they’ve been doing. We’re going to continue to see merger and consolidation activities going on until such time as price levels go up where some of these carriers will want to unleash some of that capacity and get back in the business.”

Specific markets that have shown strong signs of tightening up include workers’ comp and commercial auto. “In some cases, nursing home liability is almost unattainable-that’s gotten really hard,” Roe added. “Higher limits of both property and liability are starting to tighten. We have an aviation division; aviation pricing is firming and the markets are consolidating there…In general, especially in more of the metropolitan areas, we’re seeing much more of a tightening than in the rural areas.”

Roe said that market changes also depend on the dominance of national carriers versus regional carriers. “There are a lot of regional carriers that write business and are dominant, but I’m not sure that they have the overall book of business or the knowledge to know if they’re making money or not,” he said.

As an example of some of the changes that have accompanied price increases, Roe described speaking with a standard company that had been writing a particular risk since 1952. “They’ve just now decided to get off of it,” he related. “It’s not a class of business they feel they can do anymore primarily because of the severity of the exposures…The companies are really class selecting as much as anything today.”

However, the best news is that, overall, there has been significant growth in the MGA circle. “It’s a really unusual market…not at all changing like it did in the mid-’80s, when we were undercapitalized,” Roe said. “We’re still overcapitalized, but the marketplace is changing again by product and by company…Every MGA that I talk to is growing.”

Topics Excess Surplus Insurance Wholesale