Logical Wishes
Dear readers: Happy new year! Although this wish certainly comes from the bottom of my heart, I have to admit expressing it produces a bit of a hollow feeling in the pit of my stomach–an experience I don't think I've had before. Maybe this is because it's the heart talking and not the head: Reading daily about the fallout from our economic meltdown definitely doesn't help to lift one's mood despite the fresh start a new year normally brings.
However, as a wise colleague once advised me when we were dealing with a difficult situation: Take the emotion out of it. OK, it's time to take a cold, hard, logical look at where we are and where we're going.
No surprise: The two top-of-mind issues for insurers at this juncture are the financial and regulatory challenges that lie ahead. But realistically speaking, neither one is unmanageable. Generally, the insurance industry has been weathering the storm without getting soaked. Yes, depending on line of business and investment choices, some insurers are and will be feeling repercussions. Overall, though, the industry is hanging tough and is maintaining sufficient levels of capitalization.
The core issues are risk management and transparency, both of which insurers have been working on even before the financial alarm sounded. This doesn't mean, however, that the job is done. Improvements are needed in data and documentation. Risk models and governance procedures are a process, not a one-off project. And validation of all of the above is directly related to insurer solvency and consumer confidence. Had there been better execution of such practices in the other financial sectors, we might not be in our current condition.
I was reminded of another positive indicator while I was watching the news one recent evening. Although I wasn't paying full attention, my ears perked up when I caught the reporter saying amid all the job layoffs, insurance still is one industry that is hiring. I decided to check it out a bit further, so I went to monster.com–and right there on the home page was State Farm's logo with a listing for insurance agents and agent service reps. Obviously this is more anecdotal than scientific, but here's what monster.com said about insurance opportunities: "If you're searching for a relatively recession-proof industry that offers challenge, growth, and a strong hiring outlook, try insurance. As the Baby Boomers begin to retire, insurance companies will be looking to hire all types of employees, including sales, finance, accounting, customer-service, HR, and IT professionals."
So, barring additional massive sustained declines in the investment world or some major unforeseen catastrophe, life (and, for that matter, property/casualty) will go on. That said, the staff of Tech Decisions and I wish you a happy, healthy, and, yes, prosperous 2009.
Sharon S. Schwartzman
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