By Joseph L. Petrelli, President, Demotech, Inc.   Indulge me a brief background to set the tone for our thoughts as to why the key to future success is an understanding and acknowledgement of the factors influencing your success today.   The factors that drive your success tomorrow may not be identical.    With the thirtieth anniversary of Demotech, Inc. on September 9th and having answered the question for three decades, I share the derivation of our company name.  Demotech, Inc. is the abbreviated version of Demographics Technology, Incorporated.  We registered both names but choose to use the shorter form.   As we named ourselves in early 1985, we deserve a bit of credit for seeing then what most see today — demography and technology are driving the United States' and the global economy.  Important to you, as an independent producer or owner of an agency or as an insurer that relies on independent producers, is the impact of demographics and technology. In fact, your success in the future depends on an understanding of them and adapting your efforts to harness, rather than battle, demographics and technology.   I fast forward on technology as you are all too familiar with the race toward a better processing system, customer contact system, lower expense ratio, pricing pressure from no frills, online competitors, automated underwriting templates and the need to do more with less.  However, the demographics of the population of the United States are fascinating.  (I am allowed to say demographics are fascinating because I am an actuary.)  Insurance agencies and carriers focused on personal lines business, please read on; the information is eye-opening. Those of you who already have a focus on commercial accounts should also read on as E&O carriers are signaling what they think of agencies focused on commercial lines.  Although I keep the numbers to a minimum, you will immediately grasp the situation.   Remember our focus here is to create perspective for those independent producers focused on personal lines business including life insurance sales. You are familiar with your direct writing and internet based competitors so here are some of the demographics that you must combat.   Although there is likely to be overlap between the subsets enumerated below, I think you will see the picture.    The population of the United States of America is 320,000,000.  There are an estimated 74,000,000 children under the age of 18 in that number.  There are more than 2,000,000 inmates in federal and state prison.  There are 94,000,000 people aged 16 or over who are not in the workforce.  More than 110,000,000 citizens (approximately one-third of the population) live in a household that is eligible for means-tested programs, i.e., receive what was once called welfare.  An additional 45,000,000 receive non-means-tested federal benefits such as Social Security, Medicare, unemployment or veterans benefits. If it is possible to place political views aside, there are estimates of 11,000,000 undocumented immigrants in the US population total with 50% to 60% of all immigrant households on welfare.    For perspective, the US population receiving means-tested and non-means-tested benefits is 110 million plus 45 million. The total of 155 million exceeds the population of Russia, estimated to be 145 million.    Obviously consumers need disposable income to purchase insurance. However, the demographics of the US are such that the number of adult citizens — consumers or potential insureds — with an interest in purchasing insurance and sufficient disposable income to do so is likely to be a stagnant number of potential insureds. In reality, there may be a declining number of potential insureds. In this environment, what is an agency, producer or carrier focused on personal lines to do given the underlying demographic reality?  Important to you is how or whether your errors and omissions insurance carrier has responded to this situation.   We reviewed recent errors and omissions rating revisions as filed by Utica Mutual Insurance Company.  These documents indicated that secondary rating plan factors related to an agency’s mix of personal and commercial lines business were being revised state by state. The revised secondary rating plan retains a 15% credit to the premium applicable to the agency, subject to certain conditions, when personal lines comprise 81-100% of business.  Similarly, a 5% credit to the agency's premium, subject to certain conditions, remains in place for agencies with a book of business that is 71-80% personal lines. However, as an agency’s book of business moves away from a personal lines focus toward a commercial lines focus, the surcharges have been increased from the prior levels.   The good news is that agencies focused on personal lines of business, ceterius paribis, are likely to have lower E&O premiums than their commercial lines counterparts.  The bad news is that agencies focused on personal lines business are likely to be competing for a decreasing number of personal insurance purchasers.  Clearly, the move from personal lines toward commercial lines is a long term strategic as well as tactical change.  As you contemplate the transition, here are a few thoughts on leveraging today's success for your future success.