A View from the Press Box

Horror stories are a staple of those who believe that universal health insurance, with strict parameters set up by the federal government, is the answer not only for the tens of millions with no coverage, but even for those fortunate enough to have a policy, yet who too often find themselves left up the creek by outrageous carrier misconduct. Exhibit A is the case of Patsy Bates, whose health insurer dumped her during breast cancer treatments, and who paid the price last month.

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State lawmakers finally took off the gloves this week and joined forces to fight those who believe the federal government would be a better regulator of carriers and brokers than local insurance commissioners, and that industry players should at least have the option to pick their poison and go with a federal charter.

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The courts dealt the insurance industry two huge blows in the past few days, with brokers and top carrier executives convicted in separate trials–one having to do with bid-rigging, the other with cooking the books via a sham finite reinsurance deal. Any way you look at it, the reputation of the business for honesty and integrity took a real beating, and the feds might yet have bigger fish to fry.

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It’s time once again for independent agencies that do an outstanding job selling insurance and providing risk management services to prepare their entries for the National Underwriter “Commercial Insurance Agency Of The Year” award. Click on for details, either if you choose to enter your own agency, or nominate an agency you work with.

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They say the more things change, the more they remain the same. That certainly holds true for insurance. Looking over bound volumes of NU from 1985 (for a good laugh, note my column sketch from back then), seeking background for my column on our former managing editor, Tom Maher, I read our coverage of regulation, tort reform and health care costs in stories that could be reprinted today, with few noticing they were actually 23 years old!

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The captive community was positively giddy with today’s news that the Internal Revenue Service had second thoughts about withdrawing the critical deduction such entities enjoy on reserves for insurance sold to affiliated clients, and rightfully so. After all, it was their intense lobbying and aggressive feedback that persuaded the IRS to back off rather than risk driving the thriving U.S. captive industry offshore.

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I’m very sad to report that Tom Maher–my dear friend, mentor and former NU managing editor–passed away on Feb. 13 at the age of 77. I took over Tom’s position in 1986 when he left to pursue a second career as a freelance writer and marketing consultant. I would never have been promoted without Tom’s support and mentoring, and we remained close friends for over 26 years, swapping stories about baseball and insurance with equal enthusiasm. Read on to learn more about this remarkable person, and feel free to join other friends and former colleagues in reminiscing in the comment section below.

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As if the insurance industry didn’t have a bad enough image problem, the potential fallout should bond insurers lose their Triple-A rating due to boneheaded acceptance of subprime exposures has prompted devastating headlines and a new round of questions about whether carriers are adequately regulated–including calls for Uncle Sam to come to the rescue.

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Is it possible that the property-casualty insurance market isn’t softening as dramatically as some surveys indicate? That’s the question raised because of conflicting reports of pricing activity, with agent-generated surveys showing far deeper drops than one relying on carrier-provided data, which only indicates a single-digit decline. Who is right?

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Do property insurers have an “inherent conflict of interest” when adjusting wind-versus-water damage claims following hurricanes? Sure they do. But the bigger question is, what should Congress do about it?

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