Is competition good for business?
In short, the answer is yes. But lately, a spate of mergers and acquisitions has reduced the pool of carriers from which insurance professionals can choose when placing clients. That shift has been especially pronounced when it comes to health insurance. In fact, the American Medical Association says the onslaught of deals in the healthcare realm could change the top carriers from the Big Five to the Big Three, creating real competition issues for brokers. What’s more, the AMA, which represents physicians and medical students in the US, says the combined effect of these deals could even be in violation of the country’s federal antitrust laws.
Three insurance professionals told Insurance Business America how these mergers are impacting their businesses.
“The various mergers and acquisitions are not affecting us right now. There are a handful of [publicly held] national brokers that are on the acquisition trail, and we have bumped into them occasionally. They’ve tried to make some inroads with us ... but I still have my practice.
I think the good agencies understand the marketplace quite well. As a business, let alone an insurance agency, brokers need to stick with the core competencies that made them successful. It doesn’t mean that they can’t amend those core competencies; we’re constantly tweaking things here and there, trying to see what the next curve will be. That’s just smart business.”
Mark G. Wheatman
President and CEO
Wheatman Insurance
“Not yet. I think we’re just waiting for some of the results to fall out. Most of what I do is in the senior market. For example, I have Humana as a carrier, and they were just bought out by Aetna, but I probably won’t see any changes from that until it passes regulatory processes – so probably 2017 or 2018.
I don’t think it will change too much of the coverage, especially in the Portland, Oregon, market; Medicare Advantage is one of the most deeply penetrated markets in the nation, so there is a lot of competition. I’m hoping Humana will keep their name recognition and most of their plan designs, but maybe streamline some of their back-end processes.”
Eddie Besaw
Managing broker
Senior Solutions NW
“Competition is a good thing. Any time one entity controls too much market share ... there should be concern. As an independent agent, I like options. This allows me to access multiple markets to find the best coverage and price available for my clients and their specific needs.
When those options are diminished, it can certainly affect my ability to compete and place clients. The way in which mergers are managed and executed can have a high impact on client relations across the board. If the execution is not smooth, client relations suffer, and it can become difficult to get things done, such as underwriting transactions.”
Edward Yates Jr.
Vice president
Yates Insurance Services
