By MICHAEL G. MANES
Manes and Associates
From the opening lecture of every semester of Finance 3440 (Risk and Insurance) at LSU in Baton Rouge (1988 – 1998) consider: Risk is uncertainty; uncertainty is the difference between good and bad results; good is your dreams, goals, and assets; bad is any contingency that damages an asset or interferes with a pursuit of a dream or goal; management is control; risk management is control of uncertainty, and the purpose of risk management is to maximize the good and minimize the bad.
Please note – the above is so last century. The internet was in its infancy and agencies had a lock on the market – an intermediary was a necessary part of the game. That may not be true tomorrow.
Most of us learned in our early days in this industry about adverse selection defined as follows – “Adverse selection is the tendency of poorer risks or less desirable insureds to seek or continue insurance to a greater extent than do better risks.” (Fundamentals of Risk and Insurance – Emmett Vaughn.) Over time too much adverse selection can bankrupt an insurance company. It can result in too many losses, higher premiums, a run off of good risks, and a concentration of bad risks. It can create a hole the insurer can’t dig out of.
Before you quit reading because I’m telling you the obvious, consider this. The above is the essence of what you do in the business of insurance. What follows is a discussion to stimulate your thinking about what you do or should consider doing in the business of business tomorrow.
My disclaimer follows: Stormy was a friend and a nationally recognized leader in the physician community. He told me often, “Manes, you’re often wrong but never in doubt.” As you read this remember, Caveat Emptor! Let the buyer (reader) beware.
Below are categories of questions you want to ask and answer for yourself as you ponder tomorrow and the day after tomorrow. Consider tomorrow to be five to 10 years in the future. If your reality is that the majority of your team is going to retire tomorrow, does that comfort your clients or distress them? Do they know or will they care to know the voice/name of the provider of information?
Do they even need an intermediary? Remember Google was founded Sept. 4, 1998. The bottom line is: Can you and your organization transition from who you are today to what you need to be tomorrow? Is it time (or past your time) to exit stage left or the perfect time to seize tomorrow?
Who is your customer (prospective customer)? What are their demographics (statistical data relating to the population and particular groups within it)? Psychographics (the study and classification of people according to their attitudes, aspirations, and other psychological criteria, especially in market research) of your marketplace in 2025-2030?
Will your staff, product offerings, carriers, location (physical or virtual) and methods of communication be compatible with your clients/prospects and their shopping preferences? Will they look for 24/7/365 access to you and your team? Will your team be ready, willing and able to meet and exceed their expectations, or is your agency only willing and able to do what you do from 8:30-4:30 and half a day on Friday? Or will the clients be able to access what they need with you or without you? If yes, do they need you?
Will your current target markets still be viable in five to 10 years, or will they have gone the way bookstores, video stores, travel agencies and others have gone? Will malls, box stores, oil and gas production, solo physicians in private practice, or small community hospitals still be around? What will robots do to the work comp premium (commission)? Will there be health insurance available in the marketplace, or will Kamala Harris be president? Will consumer’s value delivery of stuff more importantly than going shopping? Will storefronts be a distant memory?
I could go on, but I won’t. Before you dismiss the above as an old man’s folly, remember when Donald Trump announced his candidacy for president, who laughed? If memory serves me correctly, it was nearly everybody, including probably you. If you are getting chest pains, place a baby aspirin under your tongue and read on.
Could AI, robots, the virtual world and/or global competition lead us to a future that includes 40 percent unemployment? Is a guaranteed minimum income totally insane, or do you think you might embrace this social break through if you’re in the 40 percent?
Our yesterday included us as a melting pot. Will tomorrow see us divided and/or segregated based upon culture, race, language, ethnicity, age, techno-savvy or economics? How many niches could you and your team effectively sell and service in such a segregated market?
In tomorrow’s marketplace what risks are you willing and able to take to survive and prosper? If you are willing to challenge your comfort zone, I urge you to do so. If you don’t change, you stagnate at your own peril.
For the leaders, innovators, and change enthusiasts – tomorrow may see you screaming “Yaba Daba Do!” (Flintstones – Youtube) as you enter the winners circle. For those unwilling or unable to change, I offer the following best hopes for your future, from Roy Rogers and Dale Evans, “Happy trails to you until we meet again.”
MICHAEL G. MANES is the owner of Manes and Associates, a New Iberia based consulting business.