Agents Mourn Kemper Loss
Independent agents who have done business with Kemper Insurance for years–even decades, in some cases–might have to scramble to find a safe haven for their clients after a deal to sell off Kemper's core lines to a new firm backed by venture capitalists fell through.
One potential home for the orphaned accounts is The St. Paul Companies, which bought the right to seek renewals of Kempers commercial business. The St. Paul is certainly excited about the potential of the deal, noting that it might have an inside track on getting the former Kemper accounts because many of its agents represented Kemper as well.
But there is bound to be some serious dislocation here, and that is a real hassle for agents and clients in an already tight insurance market.
Kemper will retain some of its specialty lines and its services unit, but it will be a shell of its former self. Agents openly mourned the loss of the carrier when asked about the disappointing news.
This development is troubling, and not only because some 1,000 Kemper workers who might have survived if the original plan to dispose of the business came to fruition will now lose their jobs (although some will move over to The St. Paul). It is also a shame because so many independent agents spoke highly of Kemper, raving about its long history as a carrier with an impeccable financial reputation.
Kemper's loss might be The St. Paul Companies gain, but there are some valuable lessons to be learned here as well.
The failure of a company as highly regarded as Kemper should put agents on notice that no placement can be taken for granted these days. Agents cannot become complacent in this turbulent market.
Agents must pay careful attention to the behavior, finances, ratings and direction of each of their key carriers. They also must be sure not to place too many of their clients' eggs in any one company's basket and be prepared to move substantial books to a safe harbor at short notice if similar failures occur in this treacherous economy.
Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 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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