Fear was the most prevalent topic at the IIABA conference in Washington, with inflation, the deepening recession, federal regulation, health care reform and swine flu among the bogeymen raised.
Indeed, the most popular giveaway in the exhibit area was not the iconic Aflac duck (spiffily dressed in a jacket and tie), but the bottles of hand sanitizer, courtesy of Liberty Mutual, as most folks traded fist bumps rather than shook hands to avoid passing germs.
The biggest concern cited, however, was the fact that Uncle Sam is printing money like there's no tomorrow to jump-start our moribund economy. The CEO panel addressing the Independent Insurance Agents and Brokers of America didn't pull any punches about the possible impact.
Liberty Mutual's outspoken president, Ted Kelly–never one for sugar-coating–spoke with disgust about how Washington is responding to our economic woes. "We're looking at double-digit inflation in a few years with these deficits," he said, arguing that "inflation is a much bigger threat long-term" to our national well-being.
"It's not just all the money we're printing," he lamented. "There is just no political will to raise taxes or cut spending, so the only alternative is inflation."
XL Capital CEO Mike McGavick chimed in that underwriting discipline is more important than ever with inflation looming, threatening to devalue the dollar. "Your worst nightmare as an underwriter would be to underprice with inflation coming down the road," he warned.
The panelists were also rattled by the heavy hand the federal government is exerting to keep AIG and major banks from falling by the wayside. Mr. Kelly was especially agitated about Washington dictating who manages a private company.
"The federal government is running roughshod right now in firing CEOs," he said. "We need Washington to step back and let the free market operate again"–and if that means certain companies go under, so be it, he implied.
Mr. Kelly had the sound bite of the day on this point: "Capitalism without failure is like religion without sin. It just doesn't work," he insisted.
He complained bitterly about how an insurer that writes too much business in one line or region and is subsequently overwhelmed with losses goes out of business, period. "We aren't going to be bailed out of bad underwriting decisions, so why are others being bailed out of bad investment decisions?" he demanded to know. "It makes no sense."
Mr. McGavick added he was "appalled by the notion that in order to fix these company failures, they have to be propped up by the unlimited resources of the federal government," which, he said, "terribly skews the competitive landscape."
As for federal oversight, it appears the only point the entire industry agrees on is its fear of dual regulation, with both the Feds and states having a say over insurer operations. Yet most say that could end up being the case, giving the industry the worst of both worlds.
Health care reform also generated its share of terror, with Mr. Kelly delivering the second-biggest sound bite of the day. He warned that should a single-payer system be established, or if creating an optional government plan inevitably leads to that result, the amount of cost-shifting to other medical bill payers–such as workers' comp and auto insurers–could be overwhelming.
"At some point," he conceded, "it might come to the point where it just makes sense for us to just let the medical portions go."
Scary times, indeed!
Sam Friedman is NU's Editor In Chief. He can be reached by e-mail at sfriedman@nuco.com, or go to his blog at www.NUSamSoapbox.com.
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