Going global Mid-sized brokers join the international marketplace By Phil Zinkewicz
The history of the United States insurance industry’s operations in foreign countries has not been a very long one. As recently as the 1970s, only a handful of insurance companies had offices overseas. You can’t really count American International Group (AIG) among those American insurers with foreign offices, because AIG actually started overseas and then moved into the United States in the 1960s. Chubb, of course, has for a very long time been in the forefront of operating on a global basis; and, to some extent, the old INA, early on, saw the benefits of selling insurance in foreign markets. Back then, the old alphabet brokers—Marsh & McLennan, Johnson & Higgins, Alexander & Alexander, to name just three—giants in the insurance brokerage community, had what was called “correspondent relationships” with large overseas brokers; but not until the 1980s did one of those brokers, M&M, become truly global when it merged with the London-based C.T. Bowring. Others of the large brokers followed. So, during those years, the U.S. insurance industry had a sort of shotgun approach to doing business on the other side of the Atlantic. Today, things have changed considerably. Many of the national insurance companies have overseas operations or, at least, have established strong ties with foreign partners, which gives them inroads into overseas markets. But, what about middle-sized brokers? Are far away places with strange sounding names calling to them as well? Rough Notes posed that question to Jeff Olsen of the Eden Prairie, Minnesota-based J.A. Price Agency, Inc. Olsen describes his agency as middle market with a focus on high-tech firms, medical exposures and construction risks. “We are an independent insurance agency, providing insurance coverage on a national, as well as international, basis,” says Olsen. “We have been in business more than 60 years, and we write all lines of insurance, including: commercial, personal, health, life, employee benefits, professional liability, E&O and bonds.” However, for the past five years, Olsen has seen his international business increasing. “It started out in our high technology risk area,” says Olsen. “We began seeing more of our clients in this area moving overseas, first in the sales arena and then in manufacturing. It became necessary to enter the international marketplace in order to accommodate our clients.” But how does a middle market agency suddenly acquire the expertise to go global? “Simple,” says Olsen. “We rely a great deal on our carriers to assist us in the process. Companies such as St. Paul Travelers, Chubb and CNA have the international expertise to help us service our clients that are global.” That’s one way to go, and the approach apparently works well for Olsen. Other brokers, however, depend upon their relationships with Assurex Global, a privately held, for-profit risk management, commercial insurance and employee benefits brokerage group. Assurex Global combines the experience and local market savvy of independent brokers all over the world, according to its CEO James R. Hackbarth. The brokers are called “partners” because they actually own shares in the company. Only one independent broker per market is invited to become an Assurex Global partner. Partners are selected on the basis of market position, integrity, growth potential, quality and breadth of services. Assurex Global broker/partners can work with each other across borders within the United States and across oceans, according to Hackbarth. If a broker in Singapore has a client based there but with operations in the United States, an Assurex Global partner here can provide the assistance needed to serve the client. Conversely, a U.S. broker who sees his clients open operations overseas can draw upon the expertise of a local Assurex broker in that country. “Assurex provides us with a platform for our overseas operations,” says David Kohl, a principal in the Dallas-based broker, Roach Howard Smith & Hunter. “Almost all of the Assurex Global partners overseas speak English and keep files not only in the language of their own country, but in English as well, so it makes it easier to do business with them.” Roach Howard’s first involvement in overseas markets began about 15 years ago, according to Kohl. “The high-tech industry was among the first industries to branch out overseas and, because of our involvement with high-tech companies, we began providing them with insurance coverage that pertained to their new ventures,” he explains. “At first, they were just selling products, so we provided incidental coverages. But, in the last ten years, we saw that our clients were putting more resources to work in opening overseas offices and manufacturing plants. In a sense, we rode the crest of the wave. As their insurance needs became more complex, so did our determination to meet those needs. Then other businesses that included some of our clients began opening up overseas operations and we realized that, out of necessity, we were becoming global. Moreover, foreign countries, such as England and Germany, were offering tax incentives for their businesses to make acquisitions in the U.S. That provided an opportunity for reverse flow business.” At that point, says Kohl, Roach Howard decided to form its own international desk, solely for the purpose of conducting global insurance business. “But, we wanted to get an idea as to what foreign companies needed from U.S. brokers, so I, along with other Assurex representatives, traveled to England, France, Germany and Italy to establish communications with those companies; and we have continued those communications via e-mail and cell phones. With the technologies available today, the time is right for independent agents and brokers to become really global,” says Kohl. The San Diego-based Barney & Barney is also using Assurex Global as a platform to increase its international expansion. Barney & Barney has been a strong agency in Southern California for many years, but it is only in the last four to five years that it has made a corporate decision to become a strong international player. Craig Tabor is one of the principals of the firm and has personally led the charge, traveling to Europe on a regular basis, and working with his partners and staff to change the self-perception of the firm from domestic to global. “Most businesses today are global, and companies have properties and employees all over the world,” says Tabor. “Through our partnership with Assurex Global, we can provide the insurance products and services that those companies need. Very few carriers today teach brokers how to become international. But, with Assurex Global, when you bring in a client, they’ll tell you what the local trends in a particular country are and what the client needs. It’s a learning process. You’re learning something new every day. This year, we’re going to attend an Assurex Global meeting in Budapest in order to build on the knowledge we have acquired thus far.” When asked how many brokers are really taking advantage of international opportunities, Kohl said “only a handful.” He predicted, however, that more brokers would join the movement. * |
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