A View from the Press Box

Insurers are allowing lawyers to tie their hands behind their backs and gag their most obvious heroes, leaving them defenseless against attacks by their critics and hamstrung in efforts to improve their image. As Exhibit A, I present to you a letter from a reader sharing an interesting personal experience demonstrating the public relations obstacles that insurers face–often of their own making.

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Remember all the talk years ago about how independent agents were doomed to go the way of the milkman, and how consumers would eventually shove the useless middleman aside and buy their insurance either online or direct from carriers? Well, that’s not happening anytime soon, with the latest evidence being Liberty’s Mutual’s bold commitment to the agency distribution system.

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Should New York resurrect its long-defunct Insurance Exchange? That’s the question being posed by Superintendent Eric Dinallo, who is seeking input from the industry about the feasibility and desirability of the idea. I remain intrigued, though skeptical about the timing.

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I was disappointed, given all the rhetoric about bringing change to how Washington works, that President Obama did not tell Treasury secretary nominee Tim Geithner to take a hike when his transition team learned that the person he wanted to put in charge of the IRS had failed to pay his own Social Security taxes. It would be like an insurer naming a new head of claims who had once cheated on his own insurance claim.

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What kind of President will Barack Obama turn out to be, and by what criteria should insurers, agents and brokers, and risk managers judge his administration a “success” or “failure”? The man himself provided a pretty challenging checklist of questions to ask to hold him accountable, and offered a glimpse into his management style in a recent interview.

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What’s amazing to me is not only was even the best of pilots able to land a jumbo jet on the Hudson River yesterday without losing a single passenger and keeping the plane basically intact, but that such crises don’t happen more often in the hectic, high-stressed commercial aviation industry. It’s testimony to the strength of the field’s risk management skills that such horrific accident scenarios are actually so rare!

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The mood was not so much somber as shell-shocked at yesterday’s Property-Casualty Insurance Joint Industry Forum, as you might expect in the midst of the worst financial crisis since The Great Depression, with no turnaround in sight. But all things considered, things could be a lot worse for insurers, and they know it.

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What happens when you raise your insurance rates, maybe even by double-digits, but you don’t see any boost to your top- or bottom lines? That’s what you call an “invisible hard market”–a very clever phrase coined last week in an insightful but disturbing state of the markiet speech delivered by Brian Duperreault, president and CEO of Marsh & McLennan Companies.

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In case you missed the news during the New Year’s holiday, the Federal Trade Commission subpoenaed nine carriers that control 60 percent of the U.S. homeowners insurance market, as part of a probe into how they use credit scores to set premium rates. I doubt they will find any intentional discrimination going on, but will that be enough to keep Uncle Sam from restricting or even banning the practice outright?

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Now that the worst year on Wall Street since the Great Depression is finally at an end, is there still anyone out there who truly believes that people should be allowed to invest at least part of their Social Security funds in the stock market?

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