Editorial: Make Sense of the Chaos

Huzzah! Everybody and his proverbial brother is predicting that 2009 will be the year the soft market finally starts to harden. Reinsurance prices reportedly were firm during the January renewal period, which presages an eventual trickle-down hardening to general rates.

But while this may seem to signify some long-awaited good news for our industry, the lagging economy might put a major crimp on any potential gains. That's just one of the changes awaiting insurance this year. Another trend that's certain to be ongoing is an intensified government focus on insurance as part of the larger financial services industry. Cases in point: The Federal Trade Commission's recent resurrection of the credit scoring controversy with a data subpoena from several top insurers, and the ongoing General Accounting Office (GAO) investigation of crop insurance. And in mid-January, the GAO publicly came down hard on financial services regulation--including insurance.
While it's unclear where insurance regulation is going, it's certainly not an issue that is going away--either inside or outside the industry. In our October issue, CIAB president Ken Crerar sounded off about the industry's need to accept the reality of some form of federal regulation. This month, PIA president Ken Auerbach presents the counterpoint opinion that independent agents neither want nor need federal oversight.
Insurance doesn't operate in a vacuum. What happens in the world at large ultimately plays out here--although sometimes there's a definite lag time. Chris Amrhein writes about that in his column this month, wondering why the typical ISO policy's coverage terms fail to consider that the demographics of the modern American household are closer to Ozzy Osbourne's than Ozzie Nelson's.
We're living in a time where massive mistakes and miscalculations by so-called experts have turned our economy into a roiling chaos. It's little wonder that politicians and their constituents are calling for changes in financial services oversight.
Although our industry has adamant proponents on both sides of the state-versus-federal argument, it's time for us to do some fence-mending of our own on this and other contentious issues. We'll need that unified front when the political pressure builds.
This month's feature is on personal lines--a business that's proven to be a safe harbor for many agencies during years of commercial market volatility. For most of us, auto and homeowners coverage, like death and taxes, is inevitable. It doesn't matter what point we're at in a market cycle; people still need to protect their properties. Smart producers are finding ways not only to successfully sell this coverage, but to use it as a springboard to cross-sell other lines of insurance and cement relationships with their top commercial customers.
Are personal lines a significant part of your book of business? Drop me a line at ltoops@sbmedia.com and share your ideas on it.

Laura M. Toops,
Editor