Steve Piontek was here when I arrived at NU back in 1981, and he retired on April 30, a day short of his 30th anniversary. I have always admired Steve for his relentless honesty and integrity, as he time and again boldly challenged conventional wisdom in the industry.

Steve was never afraid to speak truth to power, whether in his lively magazine columns, or more recently via his blog (http://lifeandhealtheditor.com/). His signature moment came when he ran an editorial back in the mid-1990s calling for insurers to support gun control efforts for the health and safety of their policyholders.

The insurance industry can be a conservative bunch, and the howls of protest were loud when this editorial ran (picked up by the following week by my publication–the property and casualty edition of NU). We even received a death threat credible enough to warrant police protection.

However, Steve did get a pat on the back in the form of a letter from none other than Sarah Brady, wife of James Brady, who was shot during the attempted assassination of Ronald Reagan in 1981. Mrs. Brady praised the “courageous” stand Steve took against popular opinion among his readership. This episode is just one example of how Steve told his readers what he thought they needed to hear, never just what they wanted to hear.

Steve could never be mistaken for an apologist for the insurance industry. But while he riled his readers regularly with controversial views, his principles echoed those of our founder, E.J. Wohlgemuth, who wrote over a century ago that “NU believes the best interests in the insurance business are served by taking the stand of the public,” adding that the industry “can only be successful if conducted on the basis of the truest and best service.”

Mr. Wohlgemuth went on to say that this stance “has kept NU from being a mere paid organ of special interests. Its policies are based on the broad foundation of good citizenship and the recognition that insurance…exists primarily not for the people who are engaged in it, but for the people whom they serve.”

Mr. Wohlgemuth would have been proud of the way Steve sustained his legacy in his stalwart stewardship of one of NU’s flagship publications. It has been an honor and privilege to serve with him.

For two years now, I’ve been telling anyone who’ll listen that the industry’s lousy reputation is, for the most part, undeserved, and that carriers must take ownership of the problem and start touting all the good they do for society.  Then along came Bob Hartwig’s recent speech at the 50th anniversary celebration of the Insurance Institute for Highway Safety, which pointed out that insurers don’t get enough credit for all the lives they save and injuries they help people avoid.

(The speech by Mr. Hartwig, president of the Insurance Information Institute, formed the basis for NU’s Nov. 2 cover story, which will be available online later today at www.property-casualty.com. I’ll add a direct link when it goes live.)

Besides pointing out how many lives have been saved and injuries avoided because of the outstanding efforts of IIHS, Bob hailed the Institute for Business and Home Safety, which is working on its most ambitious project yet—the construction of an Insurance Center for Building Safety Research.

Bob also noted how workers’ comp insurers have helped make the workplace so much safer, as demonstrated by the continuing drop in loss frequency.

Last but certainly not least, he even cited the industry’s most fundamental concept—loss-based underwriting and pricing—for altering the risk management mindset of Corporate America, resulting in safer products, buildings and other goods and services.

The problem is most “civilians”—those outside the industry—aren’t aware of all the industry does to promote safety.

In my stump speech on “The Insurance Industry’s Reputation and Its Impact On The Bottom Line,” I suggest a TV show featuring insurers in action, with tongue only partially in cheek. But I am starting to think this could be a really good idea.

There is a reality TV show for everything these days. We’re grown way beyond “Survivor” or “The Amazing Race” to stick a camera into every aspect of life. Niche programs such as “Cake Boss” on TLC–featuring Buddy Valastro of Carlo’s City Hall Bake Shop, right around the corner from our office here in Hoboken, N.J.—are drawing loyal audiences.

Sometimes, these programs can get pretty bizarre–such as “Hoarders,” which A&E pitches as “a fascinating look” at people “whose inability to part with their belongings is so out of control that they are on the verge of a personal crisis.” So who’s to say an insurance reality show wouldn’t draw viewers?

In my speech on reputational risk, I urge insurers to take TV news crews into catastrophe areas with adjusters to show how they help people recover and rebuild their lives, often cutting checks on the spot from their mobile offices. That could easily be pitched as a reality show, “Masters Of Disaster,” with the happy ending being the restoration of homes and businesses—another popular theme in this genre.

I imagine IIHS could provide some pretty provocative video of crashes, showing how the organization’s work helps save lives and prevent injuries. Cars with a good rating from IIHS could be prime advertisers—promoting the relative safety of their vehicles.

IBHS might consider something similar on the non-auto property side, featuring the work that will be done at their new research facility once its doors are open. FM Global, with its own state-of-the-art property risk management lab, could play a part on the program as well.

Shows like this might not only be entertaining, but would portray the industry in a new and far more positive light—as people who care about their customers, and who go above and beyond to make sure we’re all safe and financially secure.

What do you folks think? What insurance reality TV shows might you suggest?

(The hilarious cartoon accompanying this post came off of the blog www.realitytvworld.wordpress.com.)

Rating agencies took a well-deserved beating last week when they were called on the carpet by state regulators wary of trusting their assessments going forward.

Millions depend on the judgments of these agencies—not just insurance regulators, but buyers of coverage as well as investors. The only tangible asset rating agencies have is their credibility. Without that, their pronouncements are worthless.

The National Association of Insurance Commissioners put rating agencies on the hot seat at their meeting outside of Washington, D.C., because regulators depend on outside evaluations to determine insurer risk-based capital requirements.

The hearing, convened by the NAIC’s Rating Agency Working Group, was designed to learn how insurance departments had come to rely so heavily on these firms, what went wrong, and what if anything can be done differently.

The regulators came away clearly dissatisfied with the status quo, but still uncertain about what to do about it.

New York Deputy Superintendent Michael Moriarty testified that because of its limited resources, the NAIC Securities Valuation Office essentially took a shortcut by delegating its oversight responsibilities to rating agencies.

As reported by NU’s Phil Gusman, Mr. Moriarty explained that if a security was rated by a nationally-recognized agency, the carrier did not have to file it with the SVO. “The rationale at that time was fairly straightforward,” he said, citing the reliable track record of rating agencies.

However, Mr. Moriarty conceded to his colleagues that under the circumstances, it’s obviously time to reconsider this relationship, given the collapse of highly-rated mortgage-backed securities and other overly-risky derivatives.

But is any change in standard operating procedure feasible, especially given the pressure on state budgets?

At the hearing, SVO Managing Director Chris Evangel testified his office could conceivably rate securities now evaluated by rating agencies. But he also warned the cost might be prohibitive.

Mr. Evangel also cautioned that even if the NAIC does decide to take over securities evaluation in-house, such a “sea change” could not be accomplished overnight, still leaving regulators at the mercy of the rating agencies in the interim.

Before regulators make this monumental decision, they first are seeking to determine whether the failure of rating agencies to red-flag toxic securities and derivatives was because they misunderstood and therefore underestimated the risks involved, or whether an inherent conflict-of-interest in how ratings are granted has damaged the credibility of agencies beyond repair.

Neither conclusion does credit to the rating agencies—whether they were clueless or corrupted still makes continued reliance on the integrity of their assessments problematic.

The rating agencies are facing other challenges. California Attorney General Edmund G. Brown Jr. sounds like he’s already made up his mind about them. He subpoenaed Standard & Poor’s, Moody’s Investors Service and Fitch Ratings to determine whether the trio violated California law by “recklessly” giving “stellar ratings to shaky assets.”

But insurance commissioners have not made up their minds. They gave interested parties until Oct. 7 to submit comments.

Part of their dilemma, I imagine, is that in their hearts they realize they cannot take on this enormous responsibility—particularly in the middle of a crippling recession. But will they be able to take the rating agencies at their word that they have reformed whatever problems there were? Blind faith is what got them into trouble in the first place.

Fool me once, shame on you. But fool me twice, shame on me. That’s what the regulators need to keep in mind.

 What do you folks make of this?

For one thing, despite all the blathering about how “The Government” should not be mandating us to do (or pay for) anything, the fact is we already are mandated to pay lots of fees for our own (and for society’s) good.

For example, I am appalled to hear anyone from the insurance industry complain about government mandates because I don’t recall hearing a peep of protest about state mandates that drivers carry auto insurance and that employers cover their people with workers’ comp. When insurers stand up and argue against those long-time “mandates,” I’ll take any criticism of a health insurance mandate–for individuals and employers–more seriously.

Indeed, health insurers should be the ones shouting for mandates, and agents should be right behind them. Millions of potential prospects would be created overnight!

Complaints from “civilians” (those not in the insurance business) about coverage mandates are similarly bogus. After all, Social Security and Medicare are two of the most popular government programs ever, even though both are financed by “mandates.” You don’t have a choice about either. Taxes are withheld from everyone’s salaries to help finance our retirement and eldercare medical expenses. So, what’s the big deal if another few bucks are taken out to assure universal health insurance?

As for the employer mandate, if the number being bandied about now as the “penalty” for not providing coverage for workers holds up in the final bill–8 percent of payroll–that would be a bargain for most of those firms already covering their employees. Indeed, one of the fears of critics is that this might backfire. Many employers might gladly pay the 8 percent tax and let workers fend for themselves, because that would cost a lot less than what they are paying now in private insurance premiums.

Of course, in a grim economy like this, with everyone praying to keep their jobs, employers could probably get away with cutting out their health plans and leaving workers at the mercy of the market–government plan or not. But once the economy turns around–and it will–those who offer generous health benefits could use that as a competitive advantage to lure the best and brightest to their firms.

That is, unless the reform program taxes so-called “premium” health plans that cost more than some national benchmark, discouraging employers from offering more generous options.

As for those firms not providing health coverage for employees, it’s time to get on board. You can’t have it both ways–arguing against any government health plan to cover the more than 47 million without any insurance, but refusing to participate in the employer-provided health benefits system.

I frankly wasn’t thrilled with President Obama’s rambling defense of the need for reform the other night, but I give him credit for keeping the pressure on Congress to deliver a bill this year, as well as for scoring some key points.

One came in response to a lame question from one reporter–who basically suggested, what’s the rush? President Obama reminded the nation that 47 million or more have no coverage and are in an understandable hurry to get affordable insurance, while the rest of America sweats it out hoping they won’t lose their jobs so they can afford to keep the coverage they have.

He also noted that “the default position in Washington is inertia,” reminding everyone that “nothing gets done in this town without a deadline.” He’s right on both counts.

President Obama also scored by acknowledging the fact that while everyone is afraid (and some are threatened) by change, the status quo is even worse. We’ve got to make a change in this shell game of a health care system, including insurance.

Yes, the economy is bad, and the timing may not be perfect. But if not now, when?

What do you folks think?

This won’t be a slam dunk, as anyone who has visited their doctor lately can attest. Have you seen the rows of file cabinets in most doctor’s offices, or caught a glimpse of the rag-tag assortment of handwritten documents spilling out of your file when you sit down for your annual physical?

Or how about all the paperwork you have to fill out every time you see a new doctor, take a test at a new facility or have work done at a hospital? We’re drowning in paper, and every individual and institution has their own style when it comes to forms–even though everyone is after the same information, starting with who insures you.

It would be great if ACORD could lead the way here, at least from the insurance industry’s side, in standardizing the forms used to secure critical data from patients, and hopefully getting that information into an electronic format so that it can be shared by various practitioners and facilities.

While standardization on the p&c side was no walk in the park, and single-entry, multi-company interface remains the Holy Grail of the business, standardizing health insurance and medical forms would be even dicier, if only because it’s such a politically-charged issue.

Then there are the privacy and confidentiality elements to consider. Those are considerable hurdles by themselves.

But still, ACORD could enter the arena and become one of the most important players in the health care reform debate if they would take on this incredible–and incredibly important–challenge.

While standards will not “save” the health care system, establishing electronic records within the medical and health insurance communities would be a major step towards cost-control and better risk management. It could actually save lives, not just money.

Is ACORD game?

What do you folks think?

The weather service predicts a “near-normal” hurricane season, citing a 70 percent chance there will be at least nine named storms.

If they are wrong, however, and we get past Ana, Bill, Claudette, Danny, Erika, Fred, Grace, Henri, Ida, Joaquin, Kate, Larry, Mindy, Nicholas, Odette, Peter and Rose to get to Sam, we’re all in big trouble. (We’d be in an even deeper fix if we go beyond Hurricane Sammy to Teresa, Victor and Wanda!)

In commenting on the property and casualty insurance industry’s first-quarter results earlier this week, Insurance Information Institute President Bob Hartwig cited lower cat losses as one of the few bright spots in an otherwise grim report–down $600 million (or 17 percent) from a year ago to $2.9 billion. He noted that the second quarter has been relatively quiet as well for disaster losses.

However, David Sampson, president of the Property Casualty Insurers Association of America, warned against “a genuine risk of complacency that could have disastrous consequences.”

Mr. Sampson is absolutely right in his calls for everyone to start preparing NOW for a potentially catastrophic storm.  

“The hurricane season has just started,” he pointed out, while reminding everyone that “it just takes one storm” like Hurricane Andrew, Ike or Katrina to “disrupt millions of lives and cause tens of billions of dollars in damages.”

He threw down the gauntlet, declaring that “now is the time for all of us–insurers, regulators, legislators, businesses and consumers–to take the steps that need to be taken to make sure we’ll be prepared when the next big storm hits.”

While Mr. Sampson’s logic should be self-evident and compelling, it amazes me how quickly we all fall back into old, bad habits when it comes to risk management, loss control and mitigation.

Lawmakers in particular have notoriously short memories. Just look at the mess in Florida in terms of cobbling together an effective cat insurance system, and the failure of Congress to address the need for a national cat fund of some sort.

In any case, as “cool” as it might be to have a monster storm named after me, I’ll be glad if Hurricane Sam never takes shape, and if it does, that it steers clear of the U.S. shoreline.