IIAA Exec Sees Silver Lining In Market
Honolulu
Recent dramatic changes in the insurance market will make it harder for clients to obtain insurance, but independent agents should see this as an opportunity to solidify relationships with companies and clients, an association executive said.
"We are in for a very, very rough ride," said Robert Rusbuldt, chief executive officer of the Independent Insurance Agents of America, during a panel discussion at the IIAA Hawaii InfoXchange. "What had been a good hard market has evolved into an emerging bad, hard market," he said.
Agents, however, should use this time as an opportunity to display their competitive advantage in finding coverage for clients, he said, adding that there could be a "silver lining" in new market realities.
There was no doubt left about the hardening direction of markets after Ernie Lausier, president of Encompass Insurance of Chicago, Ill., and Salvador J. Ricciardone Jr., senior vice president, business insurance group field operations for Kemper Insurance of Long Grove, Ill., both addressed the agents, agreeing that things have changed since the terrorist attack of Sept. 11.
Both said insurance companies will be looking at more product exclusions in the future and will be examining their risk exposure much more carefully than in the past. Companies, they said, will be carefully assessing how much risk they can feel comfortable with and moving away from some lines.
Some insurance, such as blanket property coverage for buildings, may not be available in the future, Mr. Ricciardone said.
More companies will ask more questions about the risks, he said, and rate increases on commercial policies may run as high as 50-70 percent.
The panelists said that they saw some markets reflecting the insurance crisis of the 1980s.
Housing insurance was a particular problem back then, Mr. Lausier said. Some things need to be done now to improve that market, such as building safer houses and having less regulation over that portion of the industry, he said.
While markets continue to harden, insurers should not take advantage of the situation by cutting agents commissions, Mr. Rusbuldt said. Agents will be working harder for their clients and "this is not the time to be cutting commissions."
The panel agreed that the current state of doing business is too slow. Banks, they noted, can get answers quickly on new programs, but insurance companies often wait months for an answer.
Mr. Rusbuldt said the IIAA is supporting a group of reforms that would allow for the quickening of decisions for companies, but would still retain the state oversight of insurance. He cautioned that if the decision-making process were federalized, it would bring on a whole new set of regulations and investment obligations the companies would not be happy with.
"Be careful what you wish for," Mr. Rusbuldt said.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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