For an industry that everyone claims is boring, there never seems to be a dull moment, as the following account of the 10 most significant property-casualty insurance stories of 2006 demonstrates. Let me emphasize that this list is completely my own and totally subjective. I invite readers to suggest any major developments that I might have overlooked. Click below for my top 10 picks, followed by an overview of the year in review.
Without further delay, the following are my personal picks for the Top 10 Insurance Stories of the Year! (I will post a recap of each over the next couple of weeks for your feedback!)
#1: Mother Nature Gives Insurers A Break
#2: Will Insurers Resist Temptation To Cut Prices?
#3: Insurers May Yet Drown In Flood Claims
#4: Agents Battle Brokers Over Contingencies
#5: P-C Industry Suffers From Split Personality
#6: D.C. Power Shift Could Benefit Insurers
#7: Buffett Takes Gamble With Equitas Deal
#8: NAIC Collateral Plan Stuns Reinsurers
#9: Carriers Irked By Rating Agency Demands
#10: Hartwig Tapped To Speak For The Industry
All things considered, 2006 was an outstanding year for the industry.
To begin with, there were no hurricanes after two record catastrophe seasons in 2004 and 2005—the first time a non-event was my story of the year.
In addition, there were no major revelations coming out of New York Attorney General Eliot Spitzer's office--although the impact of his probes into bid-rigging and contingency fee abuse still reverberates throughout the industry, and his Election Day victory for the governorship means he'll be picking the Empire State's next insurance superintendent.
While the market kept softening--outside of catastrophe-prone property exposures, that is--the industry is reporting skyrocketing net income. The financial windfall has prompted charges of price-gouging, but insurers certainly would rather defend record profits to the public and policymakers, than have to explain soaring losses to shareholders.
Of course, problems loom--as always.
Court challenges threaten to punch a hole in the industry's flood exclusion, and its denial of Katrina claims has key politicians from both parties gunning for insurers.
Meanwhile, insurer and broker groups are badly split over such key policy issues as the need for a national disaster reinsurance fund, federal regulation and producer compensation. Still, although unpleasant, these conflicts appear to be manageable.
Last January, I peered into my crystal ball and predicted what the 10 most important stories might be this year. How did I do? Not too shabby!
First, I said Mr. Spitzer would win the governorship in a landslide, and that Lloyd’s would name a new CEO. (I didn’t need to be psychic to tell you that.) I also predicted that Hank Greenberg would “beat the rap”--and so far, he remains innocent until proven guilty. (See “Fallen Giant?” on page 5.)
I said AIG would settle with Mr. Spitzer (they did), that any market rebound would fall flat (it did, with a thud), that the NAIC would dodge a bullet on federal regulation (it has--for now), and that insurers would reap a fortune if the hurricane season turned out to be milder than expected. (Ka-ching!)
However, I also predicted that any flood suits would be foiled, because “contract law just isn’t on their side.” Ah, well. Nobody’s perfect (although if insurers prevail in the New Orleans levee appeal, I’m home free!)
What lies ahead for the industry next year? Check out my Jan. 1, 2007 blog entry for my predictions!
Comments (1)
Your Top 10 News stories for 2006 made me think about how and why some important things will never make your annual list.
This is because, while they may have greater impact than almost anything on your list, the issues are triggered by a soft event rather than a court case, weather, a terrorist plot, etc.
Over the next 10 years, we will be struggling to find and keep good people with pressure like none of us have ever experienced before.
At a time when customers are more demanding than ever, we will be faced with a chasm that is deeper and darker than most of us know. And it's not just a Baby Boom thing.
To further complicate matters, the Boomers who are just beginning to retire (we're just beginning to clear the edge of the cliff) are the same group that first purchased and used legal contraception.
Birth rates of parents who were Boomers plummeted like never before, taking the availability of knowledge workers starting now through the next 10-15 years down yet another notch.
I think our industry needs to address these issues as a whole as opposed to company by company. We focus on the numbers to no end, and I believe we need to swiftly pay similar focus to human capital, especially as it relates to making decisions that impact the policyholder experience.
This is a catastrophe that can be avoided, but we don't
have a forum for rebranding our industry so as to attract and or retain our fair share of the best and brightest. I am wondering if your readers have any ideas.
Posted by Bernard | January 15, 2007 1:28 PM
Posted on January 15, 2007 13:28