Editorial: Penny wise, pound foolish

At this writing, the U.S. economy is wondering whether the Obama administration's newly signed stimulus package will really jumpstart the economy. Although there are no guarantees, at this point it seems that doing something is preferable to doing nothing (and if we can fork over more than $700 billion of taxpayers' money to the banks, I guess we can distribute almost $800 billion to projects that might inject some jobs into the economy).

And while Swiss Re can hit up Warren Buffett for a loan (hey Warren, we could use a couple of bucks over here, too), the rest of us have to rely on whatever business is still out there to stay in business ourselves.
The scary thing is, more businesses--and people in general--are starting to think of insurance as a luxury. In CIAB's Commercial P/C Market Index Survey, 59 percent of the agent/broker respondents said their commercial customers are cutting back on insurance. Same goes for personal lines. The correlation between the unemployment rate and uninsured motorists is notorious; the Insurance Research Council projects the percentage of uninsured drivers to increase from 13.7 percent in 2007 to 16.1 percent in 2010. A.M. Best reports that policy sales by U.S. property and casualty insurers declined for a second straight year in 2008, the first back-to-back decline since the 1930s.
The irony is that although companies can save money by trimming coverage during tough times, they also are more at risk during economic slumps. Studies of complaints filed with the EEOC since 1967 show a strong correlation between bad economies and employment discrimination charges--a real exposure in today's layoff herd mentality. Add to that an increase in shareholder-initiated and securities class action lawsuits, pollution exposures, medical malpractice and all the other risks, and saving a few quick bucks on insurance can wind up costing businesses big bucks. This should be a key selling point for any agent and broker, no matter where they're doing business.
This issue launches the first of our three new annual regional focuses. This month we look at the East Coast and how your peers in the region are faring. Check out our Web site at agentandbroker.com for the rest of the story.
You'll also notice a new logo on these pages in celebration of our 80th anniversary this year. Our big retrospective issue is coming up in July, so stay tuned!