A View From The Press Box

You know the country is getting serious about healthcare reform when Oprah Winfrey puts her considerable media might behind the cause. In an episode aired last Friday--entitled "Sick In America: It Could Happen To You"--the all-powerful Oprah had Michael Moore on the show, along with a sacrificial lamb from the health insurance industry.

Rep. Mel Watt posed what he called "common sense questions" this week about the use of credit scoring by insurers to underwrite and price auto policies. Since good credit scores can help drivers get a cheaper quote on their auto insurance, he wondered: “If I get my credit score up, would it make me a better driver?” He also turned the query on its head by asking whether those with poor credit scores are necessarily worse drivers. Let me know how you would respond, and read on for other interesting issues raised this week.

Ever since Florida Gov. Charles Crist signed legislation early this year to vastly expand the public catastrophe fund’s capacity, while allowing primary insurers to buy discount reinsurance from the state, Tallahassee has been on the industry's case, pushing for anticipated rate reductions they believe is due to homeowners. The fight is getting ugly, and it could get a lot worse before long, with vague charges of collusion in the air.

Let’s say, for the sake of argument, that the Kansas City Royals managed to sign baseball’s best all-around player, Alex Rodriguez, after A-Rod left the New York Yankees as a free agent. Such a high-profile hire would immediately put competitors around the major leagues on notice that the Royals mean business. Perhaps a more appropriate analogy for Lockton’s recruitment of Julian James, formerly director of worldwide markets at Lloyd’s of London—the New York Yankees of the insurance world—would probably involve soccer…say, the signing of David Beckham by the Los Angeles Galaxy.

New York Insurance Superintendent Eric Dinallo has come out with a bold proposal to alleviate the boom-and-bust cycle insurers and consumers must endure on catastrophe-related coverage, suggesting a regulation requiring property writers to put aside part of their premiums for a special reserve fund to help pay natural disaster claims. But even bolder is his call for carriers to go along with his plan regardless of the immediate tax implications.

It's never been easy for the insurance industry to recruit young talent. Unless one has literally grown up in the business--perhaps as part of a family-owned independent agency--it takes a fairly creative sales job to convince new blood to try their hand as an underwriter, actuary, claims adjuster, CSR, broker or any one of a hundred careers in insurance. That quest will only get more challenging as the Baby Boom begins to go bust, warns CPCU Society President Betsey L. Brewer. Read on for her take, and post some of your ideas on how to draw the best and the brightest.

For independent agents, technology has become a critical difference-maker in operating more productively and cost-efficiently. To recognize the efforts of innovative agencies when it comes to technology, National Underwriter--in partnership with ACORD--is launching the inaugural “NU Agency Technology Achievement Award.”

I always get choked up when I read the statement of principles published by the founder of National Underwriter, E. Jay Wohlgemuth, who launched the publication as "Ohio Underwriter" back in 1897. The man who stressed ethics and took the side of the customer long before there were risk managers or consumer advocates to protect buyers is being honored today with induction into the Insurance Media Hall Of Fame. Read on for what Mr. Wohlgemuth still means to NU, and to the industry we cover.

Claims adjusters are stuck between a rock and a hard place. Bosses pressure them to close files—one way or another—as quickly and cheaply as possible. Policyholders—always impatient, rarely up-to-speed about the claims process, and sometimes very angry—want their money now, and the paperwork be damned. But with the proper training, this doesn’t have to be a thankless job. Carl Van--master trainer and claims guru--has been teaching this for years, but I often wonder whether enough people in this cynical, battle-hardened industry are listening.

Never shy about expressing his views on the harsh realities facing insurers and brokers, Dennis Mahoney, chairman and CEO at Aon Global, based in Bermuda, told traditional players straight out during last week's appearances at the ACORD London Forum that more efficient capital market players will bury them if they don't rid themselves of the paper transactions weighing them down, as well as adopt standards for electronic trading. A complete report follows.

Insurers have never been change-friendly, but to still see underwriters, brokers and claims adjusters hauling piles of paper around the market is just ridiculous. Why is this industry so technophobic? What's the downside of going high-tech? After attending ACORD's London Conference last week, I have a feeling the only thing the insurance industry has to fear is fear itself. If you’re not afraid of your own electronic shadow, read on!

In his second bold regulatory proposal this month, New York Insurance Superintendent Eric Dinallo has again challenged the inertia paralyzing the nation's regulatory scene by pitching a plan to jettison the automatic 100 percent collateral requirement slapped on all foreign reinsurers. Instead, he is proposing a far less discriminatory plan based on a carrier's financial strength, as determined by at least two rating agencies. The knee-jerk reaction by some U.S. parties has been to blast the idea as "radical" and "potentially very risky," but I think it's about time somebody acted to crack the ice and speed up the glacial pace on long overdue reform of this archaic restriction set by regulators nationwide.

One of the shockers for me in attending last week's ACORD London Forum was learning about the lack of standardization when it comes to working with catastrophe models. I was also surprised to hear that many companies work with multiple models to hedge their bets. It sounds like the industry is still dealing more with wishful thinking than hard science when it comes to their biggest exposure.

David Sampson has been on the job about two months as the new president and CEO of the Property Casualty Insurers Association of America, but he’ll truly take center stage this week in Boston while presiding over PCI’s annual meeting. This Sampson may be tempted to flex his muscles to steer policy or strategy--which in the insurance industry can be as frustrating as herding cats--but he knows his job requires more diplomatic skills to achieve consensus.

While Bermuda is destined to be a force in the insurance world for the foreseeable future, I tend to agree with those at the recent ACORD London Conference that it's more of a complementary player than a pure competitor to its U.K. rivals. In fact, Bermuda is doomed to see some of its competitive advantage erode over time, and the two are bound to become far more integrated.

I led a trio of daily newspaper reporters covering insurance as their fulltime beat into the lion's den in Boston yesterday, moderating a panel discussion about the industry's poor reputation during the annual conference of the Property Casualty Insurers Association of America. Read on for the insights and keen advice they and many others at the meeting offered this reputationally challenged industry.