A View From The Press Box

Is the term "independent agent" an oxymoron? After all, you can't buy insurance from just any carrier when you enter an independent agency office--only from those insurers the agent represents. Is that fact made clear to prospects walking in the door, or to clients who stick around over the years? And in these times of full disclosure, should these inherent limits on carrier choice be automatically revealed to all who do business with agents?

Agencies with the most effective sales organizations that also serve as true risk managers for their clients have until July 6 to enter the National Underwriter “Commercial Insurance Agency of the Year” award program. Read on for more entry details.

Insurance buyers, wary of any return to the days when lucrative contingency fee deals prompted the big national brokers to rig bids and steer accounts, are speaking out against the newest compensation proposals being offered by selected insurance carriers. Independent agents lumped in with their bigger brothers are going ballistic over the criticism. Are risk managers overreacting?

Would homeowners hammered by Hurricane Katrina have fared better with insurers had their carriers been regulated by Uncle Sam? That was the real question driving a panel discussion last Friday in Washington, D.C., that included two carrier associations on opposite sides of the divide, cosponsored by the Competitive Enterprise Institute.

Concerns about broker compensation have not escaped the attention of public-sector risk managers, who fear being cheated out of taxpayer money. However, the question is whether buyers--in the public or private-sector--are up to the job of monitoring their intermediaries' conflicts. Our own Caroline McDonald got an earful on the controversy this week from the outgoing president of the Public Risk Management Association, Katherine M. Peeling.

New York Insurance Superintendent Eric Dinallo crossed the Hudson to visit with NU's editors in our Hoboken office this past Monday to lay out his vision for supervising this industry as well as modernizing the broader financial services sector. You can read all about it by clicking here. However, the new commish also set me straight about his role--and that of his former and current boss, Gov. Eliot Spitzer--in settling $2 billion in leftover World Trade Center claims.

On my blog entry of May 25, I asked you to share with us your war stories about the wildest and most challenging claims you had come across. NU's Matt Brady did some digging of his own, and put together a good compilation of a number of weird cases indeed. We illustrated a few of the tamer incidents with appropriate art--such as a man sitting atop a giant egg to dramatize a battle over liability coverage for a fertility center mix-up. But I decided to leave it up to your own imagination when it came to a rather racy recollection that closed the article. Click here to enjoy the complete account, and feel free to add more such stories to this blog by clicking on "Comments" below.

Insurers have taken a beating in Congress and the press for allegedly dumping claims involving properties damaged in Hurricane Katrina on the National Flood Insurance Program, which in fact might have been wind-related and should have been paid by private homeowners carriers. While two federal investigations failed to come up with any evidence supporting such charges, one insurer testifying on Capitol Hill offered a solution that might make the point moot in future storms. I am curious what you make of it.

Although President George W. Bush's representative made it clear today that he does not want to see the federal reinsurance backstop provided by the expiring Terrorism Risk Insurance Act extended for a decade, let alone made permanent, I say he wouldn't dare veto a long-term extension bill if push came to shove.

Many insurers--perhaps too eager for a long-term extension of the federal reinsurance backstop provided by the Terrorism Risk Insurance Act--have signed off on a proposal in Congress to force the industry to cover not only "conventional" events (if you could call flying jets into buildings "conventional"), but potentially far more devastating nuclear, biological, chemical and radiological attacks as well. I think that's a huge mistake, both philosophically and economically.

In my May 4 blog entry, I asked you all to weigh in on NU's latest "Question Of Ethics," having to do with the ethics of using credit scores in underwriting and pricing. You responded in droves on this hot topic! Click on to read the column by Peter R. Kensicki, professor of insurance at Eastern Kentucky University, as well as a member of the Ethics Committee of the CPCU Society, who boiled down all the comments into a coherent summary for NU's July 2 print edition. Also, feel free to add your opinions right here on the blog.

Insurance officials are bending over backwards to dampen any enthusiasm about industry-wide first-quarter results, but the truth is that despite a softening market and tenuous investment climate, profits are still flowing in at an impressive rate, no matter what carriers say about relative rates of return.

Three finalists have been chosen in the inaugural “National Underwriter Award For Excellence In Workers’ Compensation Risk Management”--a program sponsored by the National Council On Compensation Insurance. Click on to find out the indentities of the winners, and for more information about the award and NU's conference program.