Uncaptive Agency: The Future of Insurance, Ep. 6

Agency acquisitions are more active than ever during these times of crisis and a hardening market, and at this time many are considering whether it’s in their best interest to sell their agency - or acquire books of business from agencies who have fallen on hard times.

Our guest is an entrepreneur and a veteran in the insurance field, and he has a lot to say regarding the future and survival chances of large agencies versus smaller, boutique, virtual ones. There are some fascinating insights you won’t want to miss.

Join me as I discuss acquisitions, start-ups and survivals on my podcast, Uncaptive Agency: The Future of Insurance, with Peter Milnes, CEO of Optisure.

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Tony Caldwell:

Peter, welcome to Uncaptive Agency: The Future of Insurance. The podcast that we're doing on the future direction of insurance distribution in the United States over the next three to five years. The next three to five years we're talking today in October of 2020, right in the middle of the pandemic. Everyone Peter Milnes is my guest today. Peter is the CEO of Optisure, which is an insurance agency organization with a number of outlets all across the Eastern seaboard of the United States. Peter's a serial entrepreneur and is also the founder of Virtual Insurance Pro, which is a BPO or a service provider to those of us in the insurance agency business. But the really cool thing about Peter's business is everyone's located in the United States, and perhaps he'll tell us a little bit more about that in just a minute. Peter welcome, thanks for joining me today.

Peter Milnes:

Thanks Tony. Glad to be here and be able to start participating with you.

Tony Caldwell:

I'm excited. Peter and I know each other from a great program called Strategic Coach. Dan Sullivan is our coach. Peter, Dan inspired me to start the podcast, really is research for a book that I'm planning to write next year, but also is just a way to talk to really bright people who are in the business and thinking about the future. I know that describes you from our previous conversations and the business that you're doing. Thank you again for being with me. You are what I would call a serial entrepreneur in the insurance distribution space. Would you tell everybody just really quickly a little bit about your background and professional experience?

Peter Milnes:

Sure. Thank you Tony. I've been involved in insurance since just about late 79, and just love the business. It's a great business to be in, you get to meet great people, you get to have great autonomy. Over the years I've built a number of insurance businesses on the retail broker side. Primarily a combination of a lot of acquisitions, as well as building with organic growth, and continued focus on some of my other insurance businesses. Both on the investment banking, intermediary side, buying and selling insurance agencies for other folks not my account.

Then ultimately, almost not being able to help myself and starting to collect insurance agencies again and transitioning back into not so much doing direct retail personally, but acquiring entities and books of businesses to start another retail presence. Then ultimately in 16 I decided that I wanted to bring some of our existing folks together, but also broaden our footprint and start to work towards developing a new top 100 US broker. We kicked that off in April of 16, and we're a little bit more than halfway there with a great team of folks as you said, kind of scattered up and down the Eastern seaboard with a big presence in the Northeast and skipping over to Florida there.

Tony Caldwell:

I want to ask you a couple of follow-up questions about Optisure, but before I do that, I just have to observe a comment you made as you were telling us your history, that you collect insurance agencies. I collect fountain pens. I don't know whether your hobby is more expensive or just more profitable than mine, but anyway. As a collector of insurance agencies what are you up to now would you say with Optisure?

Peter Milnes:

We've done a dozen acquisitions of agencies coupled with probably a half a dozen follow on books of business there. We have about 85 folks maybe 90-ish now. About a third of our overall revenues come from the B side of things. The rest of it is kind of the core property and casualty, with a number of not silos, but specialties along the way there.

Tony Caldwell:

Okay. Well certainly you have a lot of experience in the acquisition business, and obviously it's been good to you. Just to start off our conversation about the future, I heard recently that many of the people that are really active in the private equity space, the national brokers and people like that are looking, I guess particularly mid to larger size agencies feel like there's about four years of inventory left, and then I don't know what they're going to do, there's nothing left to buy. My understanding is you're acquiring what I'd consider or call hometown agencies, maybe a little smaller and typical size. Is that fair to say?

Peter Milnes:

We range between a million five and two and a half million of revenue in our typical acquisition. We've got the ability to not take a cookie cutter approach. We can get to know someone, understand what's important, where they fall on the buyer slash seller scale. For some folks, legacy is really important. They want to make sure the agency can continue. For others, it's kind of a hand over the keys and I'm off to go fly, fishing or skiing or sailing or whatever it is that they want to do.

Tony Caldwell:

Well, how do you see the... As you look at the future, the next three to five years, are we going to reach a saturation point from an acquisition perspective? Or do you think this is just going to continue as it's done the last 20 or 30 years and never stop? What's the future of agency acquisition from your perspective?

Peter Milnes:

I have a book similar to you, although mine is still in process, and at least the subtitle of it is called the last chapter. The extinction of America's great or middle market independent agencies. You touched on this a few moments ago when you talked about the depletion of inventory. When you look at the current run rate on deals, at least announced deals, in the last several years, they've been running at six to 700 announced transactions each year. When you step back then and take a look at the 2018 as the latest one I have had access to the market stance database. The average transaction there was a five million dollar revenue agency. When you hold that against the market stance database, you'd say, well, that means there are about 3,600 of those agencies left out there. You don't need a calculator to do the math backwards and say that is indeed a four or five, six year inventory.

There will be a fair number of those that don't transact because they are legacy-oriented, intergenerational, or they have a good spread of age on the ownership side. But I really do think the vast majority of those will be gone. The only real exception that I know of over the past five or 10 years has been the influx of banks coming into insurance and banks exiting insurance, and some of those agencies being bought back. But I think that what happens here is that the middle disappears, and you end up with a whole bunch of jumbo agencies that have phenomenal concentration of revenue and market share. Then you have a whole bunch of small agencies, new agency startups. Typically, people that have had a stint somewhere else and decided this could be a good business move for me. How do I find a way to get started?

Again, going back to that market stance database, when you look at the numbers there, they tell you that out of the roughly 36,500 agencies in the country, something like 10,000 of those are less than $100,000 of revenue. I think the future at least in terms of demographics are the big get bigger. They almost have to, because it's hard for them to move the needle with just organic growth, when you're at 20, 30, 40, 50, $60 million revenue shop. You have to move it via acquisition. But that leaves room for a lot of folks going into startup mode and rebuilding.

Tony Caldwell:

The very big and the very small, and I see similar things happening. I'm curious what you think about, where does that put the insurance client, the insurance consumer, both from a personal insurance perspective as well as commercial? A fewer choices and a real disparity of choice between the behemoths and perhaps smaller local agencies that don't have a lot of resources. Does this whole trend serve the consumer well? How do you feel about that?

Peter Milnes:

You have to divide up the pool based on types of consumers and what they want. I'm a really strong believer that as an insurance agency you can play in a lot of different sectors. A lot of how you play though is based on at the very least the perception of complexity of the product that you're selling. If you take a look at auto insurance for example, there's not necessarily much differentiation at all. For an agency to be able to play in that sector, you have to be able to execute on a transactional basis really well. In contrast, if you look out at types of insurance issues that have a higher perception and probably reality of complexity, that's where you can see I think people getting rewarded for a real value add role, a counseling role. Where their knowledge makes a difference in terms of differentiating themselves from others.

There's a streamlining of the process. There's a higher level of efficiency, and in some ways I'd say perhaps the average consumer today doesn't want to have to deal directly with an agent if they have an alternative way to do it. It's kind of the equivalent of what, when you're working at 6:15 and you answer the phone and whoever's on the other end says, "I didn't really want to talk to you, I just wanted to leave you a voicemail." They want a quick, efficient and have a way to get their problem solved and over and done with and moved on. In the agency of the future you're going to have a much higher scrutiny given to what are the rules for the product mix, the sectors, the client types that I'm going to play with, and try and find a way to add value to?

Tony Caldwell:

Historically, complex insurance accounts have been the purview of larger agencies. Among the reasons, first of all, the knowledge that you talk about, the professional knowledge and experience, but also the breadth of carrier representation. The rise of market access companies has really negated to some degree the need for a really intelligent, well-educated agent that you're describing to be in a large agency. You take that idea that okay if you're smart and you've got expertise, you can find a way to access markets for clients. You take the historical thing that drives independent agencies, independence, not wanting to be a part of a large bureaucratic organization where somebody is telling you what to do, which is what these behemoths really cannot avoid becoming really.

If you're a transactional-oriented seller, it seems to me that you have a really limited future, because that's going to be algorithm based and done on the internet or virtual. With all of that in mind, and the rapid loss, if you will, of these mid to large size agencies, do you think there's going to be an increasing number over time of small boutique or niche agencies with one or two or three experts in them that are operating maybe virtually all over the country serving really complex accounts? How does that all look to you?

Peter Milnes:

I think that you're right about that. Having participated in coach you're probably familiar with Bill Bishop and his regional strategic enterprise thought process and book, where he talks about getting focused on client types. I think that's what the growing agency of the future, particularly as they start small and look to expand their reach, I think that's what they will need to do is focus on client types. I think those agencies will become extremely valuable, because they will have a much higher level of control over a client type a client group. I think it won't be transactional based. I think that those relationships will evolve in a fashion where the agent will become the go-to problem-solver irrespective of what the market is doing, who's the hot carrier of the day, who's getting crazy about whatever it is they might be delivering.

Tony Caldwell:

It's not new for agents or agencies for that matter to niche or target market, but the thing else that I've been thinking a lot about, which is that you can be very narrow in your focus, be very broad in your application. Do you think that agents that are not anywhere or everywhere have an existential threat in front of them? If I'm not doing business in 15, 20, 50 states let's say, am I going to be relevant in the future?

Peter Milnes:

Dan's right as he usually is, because it is a transportation face-to-face game-changer. You and I are both pilots, and we historically have had the competitive advantage of we can be in front of anyone in a very, very short period of time. We can get directly to them because of the plethora of airports scattered around the country side. I could be in my Hartford office in 25, 30 minutes. Zoom's changed that on us. I think that that advantage will come back at some level for us, but not like it was previously. Because you go from zero cost, and we know what it takes to make an airplane fly and that's money, apart from the piloting skills right? I think it also ties in a bit to the aspect of the pandemic currently, in that I do believe that there is a drive and a desire at some level amongst any client base for contactless connectivity. The ability to get your information real-time from a client portal. Whether that's coming from the agency or the carrier.

Tony Caldwell:

A group of us coach folks, we created a fundraiser back at the very beginning of COVID back in March and April, whisky from home. One of the guys in coach owns a business called Whiskey Alley in Aiken, South Carolina. He was our expert and hooked us up with great bourbon companies all over the American whiskey landscape. We had a great time drinking bourbon and talking with each other in a virtual cocktail party setting and raised a ton of money for out of work bartenders. It really opened up my eyes to this thing you're talking about, this socialization, which is you know it'd be great to be together all in one place, backslapping and all that, and I guess breathing bad smoke in a bar. But really we had as much fun I think on Zoom as we'd have had if we were gathered someplace, to your point at a whole. Even the way we socialize I think has been radically changed by this new technology.

Anyway, if that's all the case, then it seems like agents that don't massively adopt this are missing the opportunity to get into the backyards of other agents. Because someone's going to be getting in their backyard if they're not. I know five years ago I bought a telepresence robot, put it in the office so that if I was out of town I could come to meetings. Everybody thinks that's really funny, like a gimmick, but it was actually a great time-saver, and it allowed you to be literally in two places at once. We use it still a lot. But you couldn't get anybody on a Zoom call until February or March of this year. What's Zoom? Nobody had heard of it. GoTo Meeting was not working. This is early days, right? Zoom is going to be something completely different five years from now. So anyway, with that in mind, you're requiring agencies, building another large insurance organization for the second or third time. But earlier you said down the Eastern seaboard you had plans to jump across the country and take advantage of this technology in your own work.

Peter Milnes:

I don't disagree with you that there is a level that this is one component of virtualization. I think that yes we'll have VR headsets, we'll have VR glasses at some point, and you know what it'll be back to Star Wars and Princess Leia holograms ultimately. Where we can mix together and have avatars that interact with each other, and we're not fussing with the headset and the controllers and things like that.

Tony Caldwell:

I don't know how much people really understand this technology in terms of how far along it is. But a couple of years ago, I was at Abundance 360, which is a technology conference basically on the West Coast. Tony Robbins was supposed to speak to us, but he had a previous engagement somewhere on the East Coast, so he came as a hologram. They told us he's going to be there as a hologram. They were apologizing to us because he was going to be there as a hologram not in person. So anyway when he came out on the stage, I was about, I don't know, 50, 75 feet from the stage. For about five minutes, I thought they're putting us on, he's really here. They're kidding us, this isn't right. He threw his arms out like this, and he went out of the cone of whatever he was in and his hands disappeared, and that's the first time I realize he's not there. There was no way that it wasn't 100% as good as if he'd been there in person.

I just think one of the things that all of us have to do, whether we're in a boring business like insurance distribution, the agency business or something really exciting is understand that that stuff's coming really fast. How do agents begin with baby steps to adopt? I mentioned that I got a telepresence robot, now we're on Zoom. Our good friend, Matt Masiello is releasing a book next month as a matter of fact, on virtual insurance agencies and how to move your agency towards virtual. But you mentioned it earlier, and I'm curious what you think are the practical steps for 2020, 2021 maybe looking forward to 22 and three, for the average insurance agency to grab technology and use it to lower costs and increase productivity, market position and competitiveness. What are the things agents need to be thinking about and then doing?

Peter Milnes:

I've actually thought a lot about that because there is a mind shift that has to become present for that to happen. On the Optisure side of things, not that I had any impending vision of a pandemic, but in building the company, out of the gate I had made the decision that we are going to be completely cloud-based because I wanted scalability. I wanted to be able to do a bolt on and have it be seamless in a very, very short period of time. On March 15th I think, we took 80 to 90 people remote overnight. There were very, very few hiccups other than with those folks that had said that they had tested at home, but hadn't really tested it fully. Part of that mind shift that we've implemented at Optisure has been the formation of concentric digital transformation teams. Where we've got people focused on if you see a piece of paper ask yourself why and how it can be eliminated. But go beyond that, to think about the process that's behind the production of that piece of paper, and how do we go about changing that?

A quick example. When we acquire someone, frequently we'll pick up another insurance carrier, and we have to go through the recontracting process. Well, the carriers are starting to get it in that by and large, many of them have shifted to Adobe Sign or DocuSign for digital signatures. But they've eliminated the piece of paper but they haven't dealt with the process. Because they want to send that contract update to me digitally, and they don't think in terms of enabling someone else to participate in the process, because as it hits your in-basket, they're looking for, okay, they want the EIN number of the old agency, the new agency, they want the transfer day. They want all the contact info. If I were going to do that personally there's a half an hour to muddle along through this, and they haven't even thought about giving you the ability to upload a canned form.

I had one carrier two weeks ago where I said to one of the folks, "Listen, I'm not going to get pinged by another Adobe Sign document from them. You tell them to print the damn thing out and email it or fax it to us, and we'll parcel out the pieces internally and deal with it that way." That's part of what I'm talking about from the mind shift standpoint. The other thing more broadly though that I really am a big advocate of you're getting paid and you will get paid in the future for sure, mostly only for that value add counseling role. If you're going to do that, you need to break down the agency as it exists now into multiple pieces. I think in terms of the Native American legend of the buffalo, where no byproduct goes unused there, you think in terms of the tools that are available now, today that people could begin implementing. You have the market access aggregators, you're intimately familiar there in terms of how to get a smaller agency clout with carriers or appointment with carriers.

You think about policy checking and how and when that gets done, and when it's appropriate to get it done. Some component of that is routinely being offshored. You think about the client contact aspect of it for what I characterize a differentiation between reactive service and proactive service. Reactive service that's what our Virtual Insurance Professional, the insurancepro.com does. Through the magic of a cloud-based automated call distribution unit, or hot transfers. It gets matched up, an incoming call from a client gets matched up with the appropriate person from a knowledge set standpoint and a familiarity with an agency standpoint.

That is not just transparent, it's invisible to an agency client calling into an agency. You think about the ability to outsource accounting. In all of these aspects and we could cover a lot more, ones that traditionally an insurance agency got started because someone was good at selling, and they sold a whole mess of insurance. All of a sudden they realized they had to service that right? They went from doing something that they were good at their unique ability, building a relationship and providing insurance advice. Now all of a sudden they have to deal with accounting. They have to deal with hiring. They have to deal with supplies. They have to deal with benefit programs.

Tony Caldwell:

Well you know if someone is able to master that process, this cutting up and outsourcing, they're going to do really, really well because they're going to avoid years and years of aggravation of trying to learn how to be a master of many things and a manager of many things. But they're also going to grapple with something that I see is coming in the three to five year timeframe that we're talking about, which is that agencies are going to have to cut their expenses to not only make a profit, but to be competitive. I see that coming for a couple of reasons. One is, insurance company cost pressures are relentless. Some of the things that drive their profitability are being relentlessly taken away. In fact, there's an arms race going on right now among insurance carriers for technology themselves.

Those who speed, being able to produce the business and all that is driving and is creating insurance companies. Some are haves and some are have-nots. There's a lot of carriers that are stuck in manual processes and all kinds of things that are inefficient. They don't have the capital to rapidly keep up with other carriers who are making these great strides in their own efficiencies. That cost pressure is going to always be reflected at the agent level, because at the end of the day we're an easy target for cost-cutting. Two thoughts about that. One is to your point, outsourcing is more efficient also less costly. With that in mind, and I know you're in this business, but what are the things that a typical agency should look at from outsourcing first? If there's one, two, three to get started, what are the baby steps?

Peter Milnes:

I don't disagree with you at all on the carrier service center side of things. I think that, again, there is a component of most agencies, businesses where utilization of a service center makes a difference. When you think about agencies, every agency principal that I've ever met in my life when you ask them what makes them different, they'll all say we give good service. No definition to it.

Tony Caldwell:

If that were true, there would be no company service centers. Insurance companies as you know got disgusted and finally to the point where they said, okay, there's a lot of money, if they're not going to do it, we're going to have to do it for them.

Peter Milnes:

I think service centers are a component. Our VIP operation is the equivalent of an all carrier service center because the feeling there is that we deal in relationships every bit as much if not more than dealing with policies. There's no one carrier that really is going to deliver across the board there. You have to come up with a mechanism to figure out how to service the pieces that don't fit there one way or another. I think also you need to have a way to take advantage of economies of scale at the carrier side of things, which is what you deliver to a lot of the agencies that you work with. Then I think there is the general transactional inefficiency built into the current process today.

One of the phenomena that I think is really interesting is so much money flowed into InsurTechs in recent years. So much of that money just burned up, because their initial premise was that they were going to disrupt the agency client relationship. Along the way they found out that's not such an easy thing to do. However, what the smart ones, the ones that didn't completely run out, or the ones that figured out how to raise another round, they pivoted. They took a lot of what they've learned and have redirected it to finding ways to disrupt or transform is a better word, the inefficiencies between client, agency and carrier. That's a spot that we're looking at a lot for finding ways to take cost that doesn't otherwise add value out of the system.

Tony Caldwell:

Agents tend to think about the top line all the time. We're really focused on selling a new deal, adding new commission, making a better deal on profit share, all that's revenue. We've been talking about the other part of the income statement, which is the expense side and how really important it is. I had a friend 20 something years ago, we were on a hunting trip and I was really excited about how fast the business was growing, I was talking about all that. He said, "Tony, I don't give a bleep about the top line. The only thing I care about is growing the bottom line, and everybody in my organization is incentivized to do that." It really is like getting slapped upside the head with reality, because that's the truth right? If you focus on growing the bottom line, who cares about the top line? What do you think the implications are going forward over the next three to five years for how people are going to be compensated?

Peter Milnes:

I think it's a redeployment, and it's not going to be a completely successful redeployment. Because when you dissect in an insurance agency, you've got about a half a dozen levers that you can pull to make a difference relative to what ends up on the bottom line. [Inaudible 00:33:47] top line, you can sell more, you can find a way to get higher commissions, better commissions, additional commissions out of the carriers. What I see typically is 50 to 55 at the low end, 65 to 70 to 75 at the high end there. Then from an occupancy cost standpoint, most of the time you'll find somewhere around four to five points. I think that's going to change in the future, because I think one of the things COVID has taught us is that we can exist in a hybrid model, and we don't need as much space.

I'm not a believer that we're going to eliminate all occupancy costs from an office standpoint, because I think that there, I said this earlier, I think Zoom works great for a small group or one-on-one. I've been in some meetings post-COVID or of course since the start of COVID, where with a half a dozen people, nine people, the dynamics, the speed of reaction, the speed of brainstorming and creativity is just not duplicated yet by a video equivalent. But when you consider that as you look around you pick the source, agency universe, best practices, CIC benchmarking. I think the general consensus is that a plain vanilla non-super specialized agency is going to ultimately with, well-run is going to achieve a margin of somewhere around 30 points.

That makes you go the difference between a 10 point agency and a 30% EBITDA margin agency, you really have to focus in on that comp and benefits level. I'm not saying that you slash there per se, but you've got to do a combination of balance and productivity enhancement. It only makes sense to take folks out of the lower level transaction activity, and find ways to get them redeployed to that value-add counseling role that I just keep preaching about. Because people will pay for that, customers will pay for that, and feel good about paying for it.

Tony Caldwell:

I remember back at the beginning of my agent career, I was selling commercial insurance. It frustrated me to some degree that somebody else was determining my compensation. For example, I couldn't receive a commission and charge a fee for services, you could pick. Agents have been scared to death of fees and going away from a commission model for a long time. But I wonder if that time isn't coming. Where if you feel really good about the services and the value that you're creating and understanding that you know what you might be worth 20, 30, 40% of whatever the carrier's charging, and deciding to forgo commission, eliminating that from your agreement.

In fact, I wondered why online sellers haven't been doing that already, just eliminating the commissions from their deals with carriers, and then on transactions and saying, hey, buy an auto policy for $7.50. To me it's coming, it's got to come. Why Scott Trey and all these others could do it in securities and you can't do it in insurance, which would really upset the apple cart at the economics of transactions somewhat. Anyway, just curious what you think about in terms of agent compensation over the next three to five years. Is it going to stay static, change, radically change? What do you think?

Peter Milnes:

I think it is more likely than not to radically change. Again, I think you've got to parse out the products there. Part of that change I think gets driven by some further level of product commoditization. Warren Buffet came out with the idea of this free policy, and we haven't seen a lot about that. But the idea of something that becomes simpler and is a one size not fits all, but one size fits a certain group. That's an area that I think you'll see a lot of erosion. I know from my prior readings that in 1950 they wrote $30,000 of premium in 1950 dollars. By 55, that had increased to $83 million, and by 1960 that had increased to three quarters of a billion dollars in the homeowners line. That's the equivalent in a 10 year timeframe with kind of the tipping point in the middle, that's the equivalent of like six billion dollars in today equivalent. I can see that that could be repeated with a variety of product lines where again there's little differentiation.

In doing that, a lot of money is going to disappear out of the system from an agency perspective there. I think another problem with the question that you raise is that insurance continues to be regulated at the state level. When you start to think about commission versus fee, on the one hand in most states you can indeed charge a fee, but you can't charge a fee for what is supposedly included in the commission on the policy. There's no easy way to get a hybrid model. Even though it might take you thousands of dollars to place a commercial policy with issues, collectively we have to figure out a way to deal with the idea of segmenting out the compensation for specific pieces that's all bundled in now.

Kind of becomes the equivalent of 4:45 on a Friday afternoon a pick up truck screeches into the parking lot, and out jumps a guy with a hammer hanging off his belt and he runs on in and says, "I need to buy a certificate of insurance". He doesn't want coverage, he just wants something to wave to the general contractor so that he gets paid. That's the type of segmentation and you have to wonder, well, that's all he's going to buy? Do we want to just sell that to him? If so, what do we want to be paid for it?

Tony Caldwell:

I don't think this is an easy topic at all, and it's certainly one that agents don't like to even think about much less talk about. But it just seems to me that with all of the fundamental underpinnings and assumptions around the agency business that are going to be challenged as we go forward because of the necessity of it being challenged. But as we think about wrapping up, just curious, you've had a 40 year career in this business, you've worked at all kinds of parts of it probably as well-rounded experience status you can have. I know that you're an optimist and an entrepreneur because you're building a brand new business right now. With all that said, what's your level of optimism about the future of the independent agency business model and distribution system as compared to say the past? Better days ahead of us than in the past, or are we all going to be looking backwards in five years looking for the glory years?

Peter Milnes:

I think insurance has been a lifestyle business for many people. It used to be that you had to work hard to screw up an insurance agency if you got one up and running. That's not the case anymore, there are a lot more challenges. It's a lot more capital intensive, the complexity of products is greater. The education sources for gaining that product knowledge, they exist, but in a different fashion. Building those educational blocks are neither as easy in some ways nor as frequent. There I'm talking about the disappearance of the great carrier schools that trained so many people so well in the business. I think that those folks that are lifestyle agents, lifestyle business owners, their future is not so great. They're the ones that aren't reinvesting. They're not continuing to develop a skillset. The age demographics is such that they just don't want to do it anymore.

I think that's driving a little bit of a stampede right now in terms of exit in the business, because you have the double whammy of COVID, coupled with the prospect of an uncertain election and tax change. It's like the stampede last seen in 1986 Tax Reform Act, right? Just people heading for the exit. There is a sea change, a new set of rules of what you need to do to be successful. I think they will be. I think that I'm less worried about the InsurTechs taking our clients away from us, or frankly even trying to become a traditional insurance carrier model. Because I think all too frequently as those people built their business plans, the reality of the pricing of our business was lost on them. Because we are one of the few industries where we price our product before we really know what it costs, and we have to worry about volatility of catastrophic events on top of that swinging the cost markedly.

But I do remain optimistic. I think it's a great business with great people. I think that if you figure out the right set of rules for the market segment that you personally, individually decide to have your organization play in, that you can do really well. Because there is a of complexity left in the industry, and eliminating the transactional efficiency won't make that go away. People need to be guided through that in the same way that people at some level need to be guided through filling out their own tax returns. I'm still upbeat because I'm going to make sure we're in the category of what do we need to do to keep playing this game?

Tony Caldwell:

Your last comment just made me think about the fact that my CPA is located in San Diego, California, and I'm in Oklahoma City. I use that CPA firm because of their specialization in entrepreneurial business system because of their talent, expertise. It's irrelevant to me that they're there. We've been doing business together on the phone and via email for years, Zoom is just adding to that. Just as a reminder that if we're professionals, we have a future. It's a different future than what we've got, but it's a really exciting one. Peter, thank you for joining me today. This has been a fascinating conversation. It's obvious that you think really deeply about these subjects, and your insight is keen and helpful. I've enjoyed the conversation and I really do appreciate you being with us. Everybody Peter Milnes, Optisure Group and thank you so much. Look forward to seeing you again at coach on a call or maybe in Chicago.

Peter Milnes:

In person will be great when we get back to that Tony, I've enjoyed the afternoon thank you.

Tony Caldwell:

Thank you. I'm talking to independent agency owners about this all the time. If you'd like to have a more personalized conversation, click on the button or the link in the description and we'll make that happen. You can also reach out to me at tonycaldwell.net/contact.