Carrier Trade Group Forms In California
By Mark E. Ruquet
NU Online News Service, Jan. 5, 3:50 p.m. EST?A handful of small to mid-size insurance companies in California will be forming a carrier association in response, in part, to the planned merger between the Alliance of American Insurers and the National Association of Independent Insurers.[@@]
The association, to be called the Pacific Association of Domestic Insurance Companies (PADIC), is being formed to address the needs of the few remaining domestic insurers in California, the association said.
Pete Gorman, the executive director of the association, formerly the vice president and western regional manager for the Alliance of American Insurers, said there are less than a handful of domestic carriers left in the state. He said 20 to 30 years ago there were over 100, but competition and the precarious workers' compensation market have all but eliminated many of them.
Member carriers will be domestic California carriers doing their business through independent distribution channels, he said.
In a statement, Peter Cazzolla, chief executive officer and president of Capital Insurance Group based in Monterey, Calif., who led the effort to form the new association, said the group would begin operation at the beginning of the year.
"We have lost many domestic insurance carriers in recent years because they are especially vulnerable to state CAT exposures as well as excessive competition and regulation such as prior approval," he said. "They know their markets well, enabling them to price them fairly, but often don't have the multi-state risk dispersion of larger multi-state insurers. Their disappearance is a real loss to the consumer, the business community and the state's economy."
PADIC, he said, will focus on delivering this message to the state's legislators and regulators that more regulation adds to burdensome high costs on small businesses and policyholders.
About a dozen companies are committed to the association, 8 plan to join and another four seriously are considering membership, Mr. Gorman said. The first meeting of PADIC is to be held in the next couple of weeks, he added. A headquarters has not been set up, but it is expected to remain in the Bay area, he said.
In early December, the Alliance and NAII announced plans to merge the two organizations and form the Property Casualty Insurers Association of American (PCI), to be headquartered in Des Plaines, Ill. Completion of the merger is awaiting a vote of members scheduled for this week.
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