Agent says takeovers just part of the game

Bigger companies entering the Springfield market by merger or acquisition do have an impact on competition. But locally owned agencies are not overly concerned.

According to Dave Wilson, a partner in the All American Agency, 4255 S. Glenstone Ave., merger and acquisition has become a way of life in the insurance business.

"This is a competitive business, and that's part of the game," Wilson said. "We'd be tickled for someone to give us an offer on the company."

He added, "This town will always be full of insurance companies no matter who owns them. That's because there's always been a market here for the companies."

Wilson and his partners, Jim Yates and Terry Appenzeller, formerly worked at Metropolitan Insurance Company, forming their own agency in September 1999.

Dick Jackson, president and chief executive officer of locally owned Barker Phillips Jackson, 1500 E. Sunshine St., said his feelings are mixed when it comes to mergers and acquisitions.

"When companies are looking to merge or acquire other companies, they can be predatory, especially when it comes to hiring people," he said. "But the competitiveness of it is good because it makes you work harder and provide better service to your customers."

Jackson said the current trend in mergers and acquisitions began about 10 years ago.

"The nature of this business has changed," he said. "It's a more sophisticated process, and starting your own company isn't as easy as it used to be."

He believes this may be why it can be easier for local agencies to sell out or merge with bigger companies.

He attributes changes in the industry to:

Agents' failure to establish a perpetuation plan. "They didn't bring in someone like a partner, a family member or even a competitor with a plan to keep the company going," Jackson said.

Capitalization woes. "Because of lack of financial management and the thin margins of profit, owners didn't create enough capital to afford the investment for their agencies to survive," he said.

"Computer technology, including software, hardware management and management systems," Jackson said. "It made it harder for the insurance agents when technology (marketing and accounting systems) and the applications software (comparative ratings) came along."

He added, "Now we have to pay for the software and hardware, and getting people trained on how to use it is very costly. Some of the agents were older and didn't want to embrace technology including the computer, the Internet and fax machines."