Insurance Execs: Congress Failing Our Industry

His comments yesterday came during a panel at the Independent Insurance Agents & Brokers of America's annual conference in a discussion moderated by Bob Rusbuldt, CEO of the Alexandria, Va.?based group.

Explaining the immediate impact on the economy, Mr. McGavick said insurers must set their prices by anticipating that "there will be no TRIA in place and that the government fails to protect us."

Mr. McGavick said the industry must be prepared for another attack to prevent severe dislocations in markets. He added that he was not optimistic about passage.

"Already, passage is not looking good," he said, adding, "This is a mess we've got."

Ramani Ayer, CEO of The Hartford, headquartered in Hartford, Conn., said in seeking passage of the TRIA extension, carriers are looking for retentions equal to what was paid out by them in the attack on the World Trade Center. "We are not asking for more."

He said the greatest resistance they are encountering is among Conservative Republicans, who have failed to understand the gravity of the situation and the amount of accumulated exposure companies could face in another terrorist act of mass destruction.

He called on agents, brokers and Mr. Rusbuldt to help work at educating legislators on the complexity and economic implications of this issue.

Mr. Ayer also addressed the issue of asbestos tort reform and said that the bankruptcy process is saddling carriers with the bill for asbestos claims payments long after the incidents, calling it a tax on the system that insurers continue to pay.

He said the only hope to stem the tide of payments is for passage of legislation acts at the federal and state levels.

Ron Pressman, CEO of Kansas City, Mo.-based GE Insurance Solutions, said the asbestos payments amount to two percent of the gross national product, and echoed Mr. Ayer's comments that this is a tax on the United States.

"We need a level playing field," he said, calling it "unconscionable" that the latest session of Congress has not voted a measure to provide relief.

Mr. Pressman criticized Congress for not acting on an industry proposal that would have created a $145 billion fund for victims of asbestos. He said the next best hope would be passage of a bill setting medical criteria for asbestos injury payments instead of "this out of control system."

On the subject of insurance rates, Mr. McGavick said the market is in transition searching for the right price and rate.

Mr. Pressman said the greatest challenge for the industry was from loss cost inflation, noting that medical insurance is contributing substantially to the problem. He said companies had a lot of ground to catch up on from the 1990s soft market, and the result from those years may have brought "a return to sanity" for carriers when it comes to rate.

Greg Murphy, CEO of Branchville, N.J.-based Selective Insurance, said agents should not be focusing on price when it comes to retaining customers, but should instead concentrate on gaining attachment points with their clients to "make it more difficult to move their business."

Bill Berkley, CEO of W.R. Berkley Corp., based in Greenwich, Conn., agreed with Mr. Pressman's assessment that loss cost inflation is the number one concern for carriers. But on the issue of retaining customers, he said, "few think about price; they want protection. We need to meet that customer's expectation."