Merger Activity Noted By NAMIC Chairman

By Michael Ha

NU Online News Service, Sept. 22, 3:32 p.m.EDT, New Orleans?National Association of Mutual InsuranceCompanies Chairman John Fisher told his organization's annualconference that during the past year NAMIC has gained new members,but for the industry as a whole the number of insurers in businessis declining.

Industry consolidation shows "no signs of abating, and thatcontinues to affect NAMIC membership counts," Mr. Fisher said,speaking at the opening session of the group's 108th annualconvention.

The past fiscal year saw a boost in mergers and companydissolutions--in all, 28 insurance companies merged, and anadditional six insurers dissolved. "But despite the continuingcontraction in the number of companies, we achieved positivemembership growth?26 new companies joined NAMIC," Mr. Fisher toldNAMIC members.

Based in Indianapolis, the NAMIC trade association counts morethan 1,300 member companies.

Mr. Fisher said the group had seen some success in lobbying forthe use of credit scoring.

On the legislative front, Mr. Fisher noted that theassociation's regulatory affairs staff played an important role indrafting and securing the approval of a model act on credit-basedinsurance scoring, through the National Conference of InsuranceLegislators.

"Approval of this model language created a valuable buffer tomitigate efforts to completely eliminate the use of insurancescoring," Mr. Fisher explained, pointing out that 38 states debatedinsurance scoring so far in 2003, with 12 states enacting language"very close to the NAMIC-drafted NCOIL model." He also observedadditional states are expected to pass the NCOIL model in 2004.

Additionally, commenting on state regulations, Mr. Fisherrecalled that three years ago, the NAMIC board of directorsendorsed competitive ratings as "the cornerstone of stateregulatory reform."

"This year saw several important steps in that direction," heobserved. "NCOIL, the largest organization of state law makers inthe United States, adopted a regulation in support of the principleof competition as the best regulator of property-casualtyinsurance, rather than the heavy and onerous hand of stateregulators."

Mr. Fisher argued this development sends "a clear signal" tostate lawmakers that government officials establishing the price ofp-c products must be changed if the state regulation is to bepreserved.

"This resolution," he added, "comes on the heels of majorpersonal lines rate modernization in New Jersey, Louisiana and NewHampshire. And NAMIC was instrumental in securing the approval ofthe National Council of State Legislatures' resolution and wasinvolved in specific state reforms."

Furthermore, NAMIC also lobbied New York state and collaboratedwith others in the industry to revise securities rating activitiesat the National Association of Insurance Commissioners, Mr. Fishersaid, arguing that these rating activities have become "increasingirrelevant as a regulatory tool, since private ratings firms widelyprovide information on securities credit quality."

At the federal level, Mr. Fisher said NAMIC also helped convincethe U.S. Treasury Department that requirements for the Patriot Actshould not apply to p-c insurance companies. "And the NAMIC federalaffairs staff met with the Treasury Department to mitigate thecompliance requirements of the Terrorism Risk Insurance Act onbehalf of p-c companies," he said.

According to NAMIC, its members underwrite 40 percent--or some$123 billion--of the property-casualty insurance premium in theUnited States.