PLUS Exec Decries Manic Insurer Behavior
The outgoing president of an underwriting group said last week that she has gotten a good reaction from a speech she delivered criticizing the insurance industry for a short-sighted view of the marketplace.
Michelle Duffett said feedback has been "very positive," since she spoke at the Professional Liability Underwriting Society conference in Orlando, Fla., last month and decried "manic behavior" by insurers.
Ms. Duffett, a co-founder of Insight Insurance Services, an insurance program administration firm in Geneva, Ill., said her talk generated some interesting e-mails, including one that called her "a voice in the wilderness."
She told the professional liability underwriters, producers and other attendees that, during the past soft market, the industry had pursued "short-term corporate goals of bigger market share and more premium volume.
"Then [during a hard market], we shift gears and the new short-term goals become significantly higher rates and knee-jerk restrictions on underwriting."
"This manic behavior leads our customers to believe we dont know what were doing, and I think they have a point."
She called on insurers to "take responsibility for the results in our corner of the insurance business and find the wisdom and the fortitude to do it better.
"Underwriting profit should not be a fad of a hard market cycle. Its the product of a long-term view," she said.
The industry, according to Ms. Duffett, suffers from an information gap created because "we have professionals in this business who have only operated in a soft market. This is a generation of insurance professionals who need to learn how to be successful with something other than low premiums."
She advised her audience to "commit to long-term goals in order to keep from being continually frustrated by our short-term disasters."
Ms. Duffett, who related that she has operated in two soft markets and two hard markets, said that members of her firm, at times, have "felt like salmon swimming upstream" when they objected to insurers that pursued volume over good underwriting.
"We were telling agents, These people are crazy," Ms. Duffett recounted.
Now, in a hard market, she said companies give lip service to the notion of good underwriting but dont follow through in a soft market, when their losses are supported by high investment returns.
"Sound underwriting doesnt produce double digit returns," she told National Underwriter.
Ms. Duffett said she would like to believe that the industry gets a little better with every market cycle. She is not sure how to end manic behavior by insurers, "but we sure as heck have to try."
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, December 16, 2002. Copyright 2002 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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