While our basic culture has been steady, practically every way we operate has been altered by technology. Technology has been a principle force, driving all aspects of business in every field. Initially computers had a modest effect, providing bookkeeping, payables, receivables and simple data. Few envisioned the revolution that was to come to almost every aspect of business.
For a variety of reasons, including increasing market share and cost reduction, a wave of insurance company mergers dramatically reduced the number of risk takers in the market. Old-line companies disappeared: INA, Continental, Home, Monarch, Maryland, Globe, USF&G, St. Paul, Northern and many others. At the same time, key carriers left the health insurance market: Principal, Mutual of Omaha, Guardian, Coventry, CoOpportunity Health, MetLife, Prudential, US Health and Travelers, leaving the benefits insurance business providers even more concentrated in a handful of providers.
Those that remained were larger and struggled to find alternative distribution channels. Some insurers went direct, while some returned to agency representation. With this consolidation came a retreat, with the companies becoming largely risk takers. So they reduced product enhancements such as loss control engineering, claims advocacy, industry data and metrics.
John Galbraith’s theory of countervailing power caused the growth of large national brokers to face the giant companies. National brokers handling millions in fees and commissions were able to negotiate on a peer-to-peer basis and get additional compensation and concessions.
Acquisitions and mergers removed much of the existing, locally owned agencies. We remain the only large, local, independently owned alternative.
Those driving agency consolidation changed over time.
At one time, banks were the largest acquirers. Today the field is dominated by private equity firms, followed by national brokers.
SilverStone Group met those challenges to remain the preferred source for our clients:
- Substantial investments in computer software, allowing customer interaction and distributing online services and coverages
- Specialization by industry – teams in aviation, distribution and manufacturing, professional liability, healthcare, agriculture, construction and transportation
- Providing client risk metrics and total cost of risk data
- Claims expertise and advocacy
- Loss control engineers to help reduce loss
- Health benefit management and reinsurance for self-insurers
- Captive insurers and loss retention vehicles
- Nelson family and employee-owned company
- London and foreign placement facilities
This ever-changing industry has provided an interesting, exciting and challenging journey.
Joseph Schumpeter, the economist, pointed out over a century ago that the great advantage of capitalism is its process of creative destruction. Old ways of doing business are constantly challenged by innovation in a competitive world.
Finally, we have always believed in giving back to our communities. Our people serve on non-profit boards of many of the area colleges, museums and social service agencies. We believe in giving a substantial part of our profits to help others.
We are grateful for our loyal employees and clients. I am confident that what began as a small, two-person startup will meet the challenges the future will bring.
This article originally appeared in the 2018 | ISSUE ONE of the SilverLink magazine, under the title “John P. Nelson | A 50-Year Perspective” To receive a complimentary subscription to the SilverLink magazine, sign up here.