It Figures

2 percent

Four of the Ohio's five largest medical malpractice insurers have revised their rates to produce an average decrease of almost 2 percent for Ohio doctors this year, following years of increases, the Ohio Department of Insurance said.

The 1.7 percent decrease in rates follows an average increase of 6.7 percent in 2005, and hikes of 20 percent in 2004 and 30 percent in each of the two previous years. One of the insurers, Medical Protective Co., became the first in six years to lower rates when the department approved a 5 percent decrease in January. A decrease of 3.6 percent from American Physicians Assurance Corp. went into effect Nov. 1, the department said.

15 million

A Las Vegas woman whose son was born in 2001 with cerebral palsy and other health problems has been awarded more than $15 million by a Ramsey County jury. J. Richard Bland, the attorney for the Minnesota Medical Insurance Co., said he would ask Judge David Higgs to set aside the Oct. 26 verdict. Jurors decided that Dr. Samuel Donegan of the Aspen Medical Group and staff at United Hospital in St. Paul failed to react to signs that Meshell Davis and her baby, Dhevyn, were in distress during the birth. Jurors found Donegan 90 percent liable and United Hospital 10 percent.

Source: AP

5 million

Des Moines, Iowa-based Wellmark Inc. has committed $5 million in venture capital to help encourage business development and expansion in rural Iowa communities. The effort is through the Iowa Farm Bureau's Renew Rural Iowa program, which was launched in September and targets communities with less than 30,000 people. Wellmark is the first outside investor to commit to the program. Wellmark's commitment is part of its $25 million, five-year effort begun in 2002 to help start and expand Iowa-based businesses.

Source: AP

17.6 million

A federal judge approved the sale of a Chicago suburban estate that belonged to a jailed insurance executive after a building company and preservationists agreed on how to develop the historic property. The judge okayed the $17.6 million sale a month after Highland Park, Ill., preservationists expressed fears that the Lake Michigan shoreline estate, which is listed on the National Register of Historic Places, could be subdivided and its character lost. Michael Segal forfeited the property as part of his conviction in 2004 for fraud, racketeering and embezzlement. He was sentenced to 10 years in prison and ordered to forfeit $30 million for looting a trust account at his Near North Insurance Brokerage.

Source: AP

'J.A.I.L. for Judges' amendment soundly defeated in S.D.

The American Insurance Association (AIA) and the National Association of Mutual Insurance Companies (NAMIC) said that common sense triumphed in South Dakota with the sound defeat of Amendment E, the so-called "J.A.I.L. for Judges" initiative.

Early returns showed the amendment failing 90 percent to 10 percent.

"The good people of South Dakota sent a clear message yesterday that the radical ideas in the J.A.I.L. proposal are not worth upsetting their state's entire civil justice system," said Steve Schneider, AIA vice president, Midwest Region. "Now, judges, people who serve on boards and commissions, and other public officials will be free toperform their work without fear of harassment or personal liability for making unpopular or unfavorable decisions."

NAMIC state affairs manager Joe Thesing said, "By rejecting Amendment E, South Dakota voters showed their support for a strong and independent judicial system, without which democracy cannot function. We are pleased the voters saw this proposal for what it was, an ill-conceived and illogical measure that would have discouragedcommunity involvement and stunted economic growth."

Amendment E would have created a 13-member Special Grand Jury composed of voters and volunteers selected annually at random who would hear complaints against judges and determine if indictments were warranted. Supporters of Amendment E assumed that judicial immunity is absolute, and that citizens do not currently have recourse for addressing perceived judicial misconduct.

In South Dakota, Supreme Court judges and Circuit Court judges are elected in nonpartisan races and an appeals process exists that is augmented by a seven-member Judicial Quali-fications Commission to review complaints and conduct disciplinary proceedings.

Opposition to Amendment E was strong and vocal. Earlier this year, the South Dakota Legislature overwhelmingly adopted a resolution urging voters to reject the initiative. More than 200 local governmental bodies, including city councils, school boards, county commissions, opposed the Amendment.

More than 40 statewide organizations, AIA, NAMIC, and other national groups all joined the "No on E" coalition formed earlier this year to combat the initiative.

Last week, U.S. Sens. Tim Johnson (D) and John Thune (R), Rep. Stephanie Herseth (D), GOP congressional candidate Bruce Whalen, Gov. Mike Rounds (R), issued a joint statement in opposition to Amendment E. Amendment E was the brainchild of Californian Ron Branson, author of the Judicial Accountability Initiative Law (J.A.I.L.).

Branson brought his campaign to South Dakota in 2005, and with the help of paid signature gatherers, convinced enough residents to sign petitions in support of the J.A.I.L. proposal, which became Amendment E.

Source: AIA, NAMIC

Declarations

Med mal

"Stabilizing measures taken in the last few years by the Ohio Department of Insurance and the Ohio Legislature to reverse Ohio's medical liability insurance crisis continue to show positive results."

Director Ann Womer Benjamin comments on the downward trend in rates by domiciled medical malpractice insurers. Medical Protective Co. became the first insurer in six years to lower rates when the department approved a 5 percent decrease in January. A decrease of 3.6 percent from American Physicians Assurance Corp. went into effect Nov. 1, the department said. The OHIC Insurance Co. increased its rates by 2.3 percent after six years of hikes in the double digits, and the Medical Assurance Co.'s rate revision didn't change its average rates, according to the department. The department said the effort to stabilize rates in Ohio includes a 2003 state law that limits the amount of jury awards in malpractice lawsuits. Insurance companies had blamed high jury awards for higher rates.

Copyright 2006 Associated Press. All rights reserved. This material may not be published or reproduced with permission.

Elected or appointed

"I like the idea of people electing officials and having direct power through their vote ... I'm a populist, but also a conservative and a Republican."

Georgia Insurance Commissioner John Oxendine comments on the debate between elected and appointed insurance commissioners after the recent mid-term election. Oxendine revealed that he had spent $3 million by Halloween in his 2006 bid for reelection, while George Dale, eight-term Mississippi insurance commissioner, currently in his 31st year of service, said he never spent more than $150,000 on a campaign.

Copyright 2006 Associated Press. All rights reserved. This material may not be published or reproduced with permission.

Agenda 2007

"I can't wait to get started."

Indiana Gov. Mitch Daniels said after the election that he would spend the coming weeks outlining specific proposals he will push during the 2007 legislative session, including detailed plans for full-day kindergarten and health insurance for low-income residents. Daniels said he would announce a new infrastructure proposal related to the Interstate 69 extension between Indianapolis and Evansville.

Copyright 2006 Associated Press. All rights reserved. This material may not be published or reproduced with permission.

Supreme Court races have positive outcomes

The goal of fair and balanced courts in states throughout the country was advanced in a number of state Supreme Court elections, according to the American Insurance Association.

Contestable state Supreme Court elections were held in 16 states in the recent midterm elections. Candidates' judicial philosophy -- the conservative approach of interpreting the law as written versus the activists' attempt to legislate from the bench -- was a deciding factor for business interests active in judicial races across the country, including AIA.

In the Midwest, the election of two fair-minded justices in Ohio is all-important. With the victories of Justice Terrence O'Donnell and appellate Judge Robert R. Cupp, common sense justices now hold a 6-1 majority on Ohio's high court, the AIA written statement said.

"Supreme Court races in Ohio have been hard fought for several years," said John Birkinbine, AIA assistant vice president, Midwest Region.

"Electing fair minded judges has been critical to improving the liability environment in Ohio, and yesterday's results ensure that legal reform in the state will continue to advance."

In other parts of the country the fight for civil justice reform was shown in Alabama, where four contests for associate justice and the chief justice were on yesterday's ballot. The nine-member court, previously all Republican, will now have its first female chief justice, Sue Bell Cobb, a Democrat who is currently a member of the state court of criminal appeals. The other four contests were won by Republicans.

"We're heartened by the voters' decision to maintain a strong strict constructionist majority on the court," said Cecil Pearce, AIA vice president, Southeast Region. "We are hopeful that the new chief justice will also be a jurist in that tradition."

Insurers also had positive results in Kentucky, where the conservative candidate prevailed in three of four contested races for the supreme court. Kentucky's low ranking of 34th in a recent U.S. Chamber of Commerce survey of state judicial climates, along with other troubling trends in the state's judicial system, spurred unprecedented interest by the business community in this year's judicial elections.

The goals of improving Kentucky's legal environment and its economic development potential moved a step closer to being achieved with the outcome of the midterm elections.

Source: American Insurance Association

Did Green Party cost Democrats control of Michigan Senate?

Did Green Party cost Democrats control of Michigan Senate?

One of the main reasons Republicans were swept from power was the Iraq war. Ironically, it may have helped preserve their long-standing lock on the Michigan Senate, an Associated Press story said.

Republicans won the two closest Senate races in the Nov. 7 election by a combined 1,294 votes out of 210,000 cast, giving them a 21-17 majority instead of a 19-19 tie to be broken by Democratic Gov. Jennifer Granholm's lieutenant governor. Both races had Green Party candidates who ran as part of the "Stop the War Slate."

The insurance industry has battled Democratic Gov. Granholm and her administration on rating and credit scoring issues. A hearing on the legality of the use of credit scoring in setting insurance rates took place in October and it remains unclear just what impact, if any, the industry may have had on the outcome of the senate battle.

In Oakland County, peace activist Kyle McBee got 2.7 percent of the vote in a race Republican John Pappageorge won by 776 votes, or two-thirds of a percentage point. Another anti-war candidate, Lloyd Clarke, received 2.5 percent in a Saginaw-area district that Roger Kahn, a Republican, captured by 520 votes, or a half-percentage point.

Voters who went Green of course wouldn't necessarily have voted Democratic and may have backed the GOP, or skipped voting in their local Senate race or not shown up at the polls at all.

Even so, the outcome was especially frustrating for Democrat Andy Levin, who lost to Pappageorge, a former state representative.

Levin said he welcomes the participation of minor-party candidates in elections but only if they truly run a campaign. He said McBee, whom he never met, didn't come to any candidate forums.

Levin said McBee's own roommate ended up volunteering for the Levin campaign because McBee "wasn't doing anything."

"It wasn't even a campaign. It wasn't a real party or individual effort," said Levin, son of U.S. Rep. Sander Levin and nephew of U.S. Sen. Carl Levin. "I wouldn't want to take away having a lot of parties jostling in elections. But it would be nice if you had real efforts."

Clarke, who spent two months dropping campaign door hangers at 6,000 homes in Saginaw and Gratiot counties, expressed a concern of many minor-party candidates: not having full access to the political process.

"I was locked out of every public gathering," he said.

David Sole, a Green Party candidate who ran for U.S. Senate, said his party could collect a much higher portion of the vote if given more access to debates and media. He said Democrats should stop complaining.

In the Saginaw-area race, Clarke said he probably would have voted for the Democratic candidate, Carl Williams, if he hadn't run. He noted that many of his pro-peace friends, once likely supporters, voted for Williams because they feared helping Kahn and the Republicans.

"The votes I got are my votes," said Clarke, who hoped for 1,000 votes but got more than 2,300."They're not Kahn's or Williams'. They're mine."

The Green Party's influence on the Senate districts didn't go unnoticed by the GOP, but Republicans said they also deserved credit for withstanding a fierce Democratic push to win control of the Senate.

Democrats took back power in the state House for the first time in eight years, 58-52, along with easy re-election victories for Granholm and Democratic U.S. Sen. Debbie Stabenow.

Democrats haven't controlled the Senate since 1984, when two Democratic senators were recalled after voting for an income tax increase.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Are the flood gates open for retaliation claims?

Retaliation claims have been on the rise for more than a decade. According to the U.S. Equal Employment Opportunity Commission, only 15.3 percent of the charges of discrimination filed with the agency in 1992 alleged retaliation. By 2005, retaliation claims were included in nearly 30 percent of all charges of discrimination.

The boom in retaliation claims is partially explained by the class of potential claimants. The retaliation provisions of many labor and employment statutes extend to all persons and not merely to those for whose protection the statutes were enacted. Indeed, supervisors and human resource officials are common claimants of retaliation.

The explosion is also explained by the breadth of protection afforded by anti-retaliation provisions. A person can engage in legally protected conduct based upon a good faith belief that an employer has violated the law, even if the belief is erroneous. Retaliation can often be inferred from nothing more than a short proximity in time between the protected activity and the challenged action.

Holding back the waters

Against this tide, several Circuit Courts of Appeal developed jurisprudence in recent years limiting the types of harms which were actionable under anti-retaliation provisions. Five of the twelve Circuit Courts limited actionable harms to "adverse employment actions." The Fifth and Eighth Circuits adopted the most restrictive approach by limiting retaliation claims to serious actions "such as hiring, granting leave, discharging, promoting, and compensating."

These limitations long served as successful grounds for the dismissal of retaliation claims. In the Fifth and Eighth Circuits, summary judgments were routinely granted to employers for retaliation claims based upon lesser employment actions, such as reprimands, critical performance evaluations, menial or arduous job assignments, threats of discharge, and workplace harassment which did not result in constructive terminations. The prospect of dismissal before trial likely deterred many potential plaintiffs and their counsel from filing marginal retaliation claims.

The Gatekeeper's decision

A challenge to the limitations placed upon retaliation claims by these Circuit Courts of Appeals finally made its way to the U.S Supreme Court in Burlington Northern & Santa Fe Rwy. Co. v. White. On June 22, 2006, the Court answered two questions regarding the scope of retaliation claims under Title VII of the Civil Rights Act of 1964 ("Title VII").

Retaliation away from work: The first question asked whether the anti-retaliation provisions of Title VII bar only discrimination in employment. The Supreme Court said no. The Court reasoned that extending the anti-retaliation provisions beyond the workplace was justified because "Title VII depends for its enforcement upon the cooperation of employees who are willing to file complaints and act as witnesses."1

Non-economic retaliation: The second question concerned the level of seriousness to which non-economic harm must rise in order to be actionable retaliation. The Court answered: "In our view, a plaintiff must show that a reasonable employee would have found the challenged action materially adverse." The Court observed that "context matters" and cited two examples: Example 1, A schedule change in an employee's work schedule may make little difference to many workers, but may matter enormously to a young mother with school-aged children. Example 2: A supervisor's refusal to invite an employee to lunch is normally trivial, a nonactionable petty slight. But to retaliate by excluding an employee from a weekly training lunch that contributes significantly to the employee's advancement might well deter a reasonable employee from complaining about discrimination.

The context before the court: Before the Court was a jury verdict which found that two of Burlington's actions amounted to retaliation: A reassignment from forklift duty to standard track laborer tasks and a 37-day suspension without pay.

As to the first action, the Court noted that the jury had before it considerable evidence that the track labor duties were "by all accounts more arduous and dirtier"; that the "forklift operator position required more qualifications, which is an indication of prestige"; and that "the forklift operator position was objectively considered a better job." Based upon this evidence, the Court found that a jury could reasonably conclude that the reassignment of responsibilities would have been materially adverse to a reasonable employee.

As to the second action, the Court rejected the argument that the 37-day suspension was not actionable because the employee was subsequently reinstated with backpay. According to the Court, "many reasonable employees would find a month without a paycheck to be a serious hardship." Thus, the jury's conclusion that the 37-day suspension without pay was materially adverse was found to be a reasonable one.

The Supreme Court let the lower court judgment stand. The price paid by Burlington for a one-month suspension with pay and a dirty job was nearly $100,000.

Impact on other statutes

The importance of the Burlington Northern ruling is not limited to Title VII. Other statutes with similar anti-retaliation provisions include the following:

Age Discrimination in Employment Act, outlawing employment discrimination against persons over the age of 40;

Americans with Disabilities Act, providing employment protections to persons with disabilities and persons known to have a relationship or association with a disabled person.

Family and Medical Leave Act, governing leave from employment for medical reasons, the birth or adoption of a child, and the care of a child, spouse, or parent who has a serious medical condition; and, Employee Retirement Income Security Act, regulating employee benefits.

It is likely, therefore, that the opinion will be relied upon as persuasive precedent in suits alleging retaliation under these statutes.

Open floodgates?

The Supreme Court did more than remove barriers which had previously existed to the prosecution of retaliation claims; the Court articulated a standard which will, at least in the short term, invite rather than deter litigation. The declaration that "context matters" hinders the ability of courts to fashion universal rules for analyzing retaliation claims on summary judgment. The Supreme Court's opinion suggests that an alleged harm may be actionable in some cases, but not others. In the absence of universal rules, some courts may allow questionable retaliation claims to be decided by a jury, rather than by summary judgment. If the prospect of summary judgment is viewed as being less likely by plaintiffs or their counsel, more retaliation claims will be filed.

To be sure, conservative courts such as the Fifth and Eighth Circuits will likely develop universal rules in the future for disposing of marginal retaliation claims on summary judgment. The development of such rules, however, will take time. In the meantime, there will be little to deter the filing of retaliation suits.

Amongst the types of retaliatory conduct which employees will now more frequently complain are the following:

• Arduous or menial job assignments.
• Critical performance evaluations.
• Inadequate training or supervision.
• Verbal or written reprimands.
• Threats of demotion or termination.
• Unwelcome harassment at or away from work.
• Threats or actions involving physical harm or criminal prosecution.

Preparedness Planning

All employers should already have in place a written policy which prohibits retaliation against employees who report unlawful practices or who participate in government proceedings. In the wake of the Burlington Northern opinion, employers are also encouraged to take the following measures:

Initiate retaliation training for supervisors.

Implement codes of conduct for employee interaction away from the workplace.

Require closer scrutiny by management and legal counsel of employment decisions affecting persons who have assisted or taken part in enforcement proceedings or who have expressed opposition to alleged unlawful practices.

This article originally appeared in the October 2006 issue of the PLUS Journal, the monthly publication of the Professional Liability Underwriting Society. It is reprinted here with the permission of PLUS.

Robert G. Chadwick, Jr. is a shareholder with the law firm of Campbell & LeBoeuf, P.C. in Addison, Texas. He is Board Certified in Labor and Employment Law by the Texas Board ofLegal Specialization.

Flying solo now, former Zurich exec 'gooses' agents

A retired insurance industry executive turned turbo-charged motivational speaker told a group of independent insurance agents that they are the greediest people he has ever met.

Ray Thomas, a former Zurich North America Small Business CEO, meant his remark as a compliment, explaining that in order for agents to provide optimum service for their customers, they must make every effort to gain as much business as possible. Only then can they perpetuate a cycle of future business fueled by working capital earned from current business.

Thomas was keynote speaker at the Inde-pendent Insurance Agents of North Carolina annual conference in Asheville recently.

Retired from Zurich in August 2005, Thomas said he relishes his current status as an independent speaker and consultant. He features a cartoon goose on his business card and tosses stuffed toy geese to his audience as rewards for correct responses to his questions.

Thomas said the goose has many qualities that insurance agents should try to emulate, including the ability to be both a leader and a follower, referring to the flock's streamlined flying 'V' formation: "When the leader is tired, he drops back and the next in line is there to fill in."

Thomas' business card also features nine "geese-isms" or bullets of inspirational guidance referring to issues of leadership, honesty, vision, service and honor. For more, visit his Web site at www.RayFlyingSolo.com.

Applauds agents' success

Accusing the media of never reporting good news, Thomas applauded independent agents' recuperative efforts following the relatively catastrophic years of 2004 and 2005. He said since Hurricane Katrina, 3.3 million losses have been settled: "Ninety-nine percent of the auto claims are done and 98 percent of the homeowners claims are done."

He also praised agents' success in commercial lines selling. "As independent insurance agents, you write 80 percent of all commercial lines in the United States," Thomas told the audience of nearly 500. "This is a $467 billion industry -- the underpinning of the U.S. economy." Thomas attributed the gain in productivity to agents' efforts in "harnessing technology -- making this business more of a science than it has ever been in the past."

The key to building a successful business is an agent's ability to understand each generation's potential customer, he maintained, adding: "Make sure you're paying attention."

Based on what Thomas called the recent strength of hard markets, he told his Asheville audience that while the insurance industry typically has a lower return on equity in relation to other industries, that history is about change. "This year we'll match Standard & Poors. The picture is rosy relative to the industry right now."

Thomas predicted that this year's property and casualty industry combined ratio would be the best in 51 years. The impact of reserve changes based on the 2005 combined ratio has prompted CEOs to "firm up balance sheets, bolstering reserves and creating stronger balance sheets," according to the former Zurich executive.

Highlighting the value of attaining superior agency performance, Thomas presented a list of contributing factors: talent; profitability; organic growth or retention; stability of carriers; and productivity.

A business plan is among the ingredients of success, in his view.

"You have to have a business plan -- you can't fly by the seat of your pants," Thomas said. "Agents who have a vision and a mission supported by a business plan are more profitable. And you must realize the power of new and renewal business -- you have to do both well."

Thomas advocates recruitment, replacement and retention of talent, emphasizing the importance of a quality work force.

He also urges independent agents to reinvest in the balance sheet, relinquish stock gradually and leverage benchmarking to understand and increase an agency's value.

IIABA president: contingency commission crisis threatens agents

For a small to midsized independent insurance agency, contingency commissions can determine whether the business survives, according to many within the industry.

That explains why Alex Soto, a Miami agent who is also president of the Independent Insurance Agents and Brokers of America, was very passionate about preserving contingency commissions when speaking at the Independent Insurance Agents of North Carolina annual conference in Asheville, N.C.

"We have a crisis that threatens each of us in this industry," Soto said. "It can affect our livelihood and the profitability of every independent insurance agent."

The practice of accepting commissions over and above those typically built-in to insurance policies has made headlines with multi-year investigations by attorneys general, several high-profile public hearings, various legislative initiatives and class action settlements. Agents are now battling the most recent settlement involving Zurich Insurance that could effectively affect contingencies and mandate disclosure by thousands of agents of all compensation.

Soto and the IIABA contend that illegal practices by certain large brokers to obtain contingency commissions should not be confused with the legal practice of earning and legally accepting the payments.

Red to black

"Half of all agencies in the U.S. depend on the extra amount of income brought in by contingency commissions to move profit and loss records from red to black," Soto said. "It determines whether we are profitable or not."

The investigations begun by New York Attorney General Eliot Spitzer in 2004 focused on large brokers that were accused of bid-rigging and false-quoting in order to obtain business and contingencies. Soto said wrongdoings by a few of the "mega houses" that were manipulating the marketplace with selective placement of service agreements triggered a discussion that suggested that contingency commissions are bad in any context.

Soto said he wholeheartedly agrees that the parties should be punished for committing illegal practices to garner contingency commissions, but stresses that earning contingency commissions through ethical means is not a crime. He said small independent insurance agents are being subjected to guilt by association for doing what businesses of all types nationwide do on a common and recurring basis.

Insurance agents regard the commissions from a different perspective than do some outside the industry. Robert Hunter, director of insurance for the Consumer Federation of America (CFA), calls the practice "perverse."

"Incentives should be eliminated," Hunter said. "If an independent agent can't stay in business without contingency commissions, they should get out of the business."

CFA's Hunter

Hunter, former Texas insurance commissioner and federal insurance administrator under Presidents Ford and Carter, said there are several large insurers that do not pay contingency commissions to agents or brokers and urges consumers to search them out when shopping for coverage.

In a CFA press release issued in January 2005, Hunter said, "Most insurance agents are honest, but if the compensation system provides an incentive for bad behavior, it is likely to occur."

But Soto insists that the infusion of legal contingency commissions into small businesses -- inherent to retail sales businesses of every kind -- allows independent insurance agents to work harder for the consumer. With more capital reserves in an agency's coffers, more resources can be exploited to provide better service for customers, Soto said. He testified on behalf of the IIABA at the Senate hearing in November 2004.

"We beat back onerous legislation," Soto told North Carolina agents, referring to a tabling of legislation that would eliminate all contingency commissions across the board. "Fortunately for us, it's easier to block bad legislation that it is to enact good legislation."

At the North Carolina conference, Soto echoed the words he offered as testimony during the Senate hearing nearly two years ago:

"Contingency agreements are legal. They reward excellence, as they do in every other promotional transaction in the United States. They are good business practices and they do serve a legitimate purpose. It creates an incentive for the agent to be a good front-line underwriter in the selections of risk and it also 'incents' the agent to be a good risk manager in helping the client to put in place measures that will help them reduce their losses. When that occurs, everybody wins. The client wins, because on an ongoing basis, fewer losses will translate into less expensive premiums in the future. The insurance company pays less claims and they share a little bit of that profit if, indeed, the lower losses are there."

Power shift in the political landscape

Although it took a little time for all the votes to be counted, the 2006 midterm elections saw a wave of Democratic candidates wrest control of both houses of Congress, gain a majority of the governorships and take control of more state legislatures than they have in a decade.

In the U.S. House of Representatives, Nancy Pelosi (D-8th Calif.) will likely become the first female Speaker of the House. She and the Democrats have made it clear that while Iraq is the number one issue on the agenda, other issues for the Democrats include raising the minimum wage, a new prescription drug plan and an end to the ban on stem cell research. Furthermore, the committee leadership will change and will reflect the priorities of their new chairs. For example, it is likely that Rep. Barney Frank (D-4th Mass.) will lead the House Financial Services Committee, and Sen. Chris Dodd (D-Conn.) will chair the Senate Banking Committee.

With Democratic majorities in the House and Senate, we'll likely see action on a number of insurance issues. In particular, extension of the Terrorism Risk Insurance Act (TRIA) and reforms of the National Flood Insurance Program (NFIP), which have in the past received widespread Democratic support. In addition, insurance regulatory reform has been a subject of interest to Rep. Paul Kanjorski (D-11 Pa.), who is slated to become chairman of the House Financial Services Committee's Insurance Subcommittee.

In the states, Republicans lost their hold on six governorships and now control power in 22 states compared to 28 for the Democrats. In these states where there has been a change at the governor's mansion, we may see new insurance commissioners appointed. Additionally, in California, Republican Steve Poizner won the race for insurance commissioner and will have tough regulatory issues to deal with, including prior approval, auto rating factors and auto repair costs.

The governorship in Colorado went to Democrat Bill Ritter. Democrats also increased their majority in both the House and Senate. For the first time in nearly 50 years Democrats control Colorado's government. The Democrats' sweeping victory will impact key industry issues including no-fault auto insurance reforms, credit scoring, workers compensation reforms and tort reform. Governor-elect Ritter, former Denver district attorney, has already announced his support for medical mandates on auto insurance.

In Florida Attorney General Charlie Crist (R) won the governor's race to keep that office in Republican hands, while former NationsBank Florida President Alex Sink (D) won the post of chief financial officer, placing the first Democrat on the cabinet since its reorganization. With these changes, it is too early to determine if Commissioner Kevin McCarty will be reappointed.

Party control in the Indiana Senate remains unchanged with the Republicans controlling the majority. While there was no tsunami, the Indiana House will be controlled by the Democrats. However, we do anticipate this change will force the insurance industry to intensify its lobbying efforts to move regulatory modernization and taxation reform forward.

As expected, New York Attorney General Eliot Spitzer was victorious in his governor's race. Economic development is a key priority for Spitzer and a healthy, competitive insurance market is an integral component of successful economic development efforts. Spitzer has also identified reforming New York's dysfunctional workers' compensation system as an important element of his economic development plan. Workers' compensation reform is a priority and we look forward to working with Spitzer to achieve this goal as well as other measures to promote a healthy competitive insurance marketplace in New York.

Oklahoma Governor Brad Henry (D) won re-election and Insurance Commissioner Kim Holland (D) weathered a serious negative TV campaign to prevail in her race. Republicans managed to hang on to control in the House and picked up a few seats in the Senate to achieve a tie in that chamber. The Republican gains in the Senate may provide a slightly better chance to pass UM/UIM legislation that was blocked by the trial bar in the Senate this past session, but passage of this bill will still be difficult.

With the changes brought by the 2006 elections, it will be important for the insurance industry to have a strong voice on Capitol Hill and in the state houses across the nation. Decisions made by legislators and regulators have profound impact on insurance industry's ability to operate efficiently and effectively. It is vital that elected officials understand the role insurers play in the nation's economy. Insurance is one of the most heavily regulated -- and often times misunderstood -- industries in the nation. Because lawmakers cannot be experts on every issue, particularly one as complex as insurance, this is why it is so important for insurance professionals to participate in the political process.

As citizens, every one of us has an obligation to ensure that our elected officials are fully educated about all aspects of the laws they are considering. One vehicle that insurance professionals can use to communicate with state and federal lawmakers on key issues that impact the industry is the Property Casualty Insurers Association of America (PCI) advocacy Web site (www.insurersforaction.org). This Web site is designed to help property/casualty insurance professionals become politically aware, actively involved and have impact on public policy.

Michael Gilhooly is director of state political affairs for the Property Casualty Insurers Association of America (PCI). Gilhooly has wealth of experience advancing insurance industry issues with public policymakers. He manages PCI's political involvement programs and strategic communications with public policymakers.

1 IN 4 IN U.S. SAY FINANCIAL, PERSONAL INFORMATION STOLEN

More than one in four Americans say their financial information or personal information has been stolen, sometimes by someone they knew, according to a recent survey.

The study done for Experian, the credit rating agency, found that about 19 percent of consumers report that financial information, including a bank or credit card number, has been misused. About 14 percent say they've had personal information such as a Social Security number or birth certificate taken.

"Combined, 26 percent of Americans report being the victim of one type of theft, while 7 percent report experiencing both," the study said.

The survey, conducted by The Gallup Organization, also found that some consumers were more likely to be victimized than others. Among the prime targets were college graduates, those with annual household income of $75,000 or more, people residing in the West, and Americans between the age of 30 and 49.

The study also found that about one-fifth of those who suffered the theft of financial or personal data knew the person who stole their information.

Ty Taylor, an Experian executive, said "securing personal and financial information should be part of a person's lifestyle."

Among the ways to do this are shredding sensitive information, never giving personal or financial data to an unknown source, and keeping track of the information on credit reports.

Experian, based in Costa Mesa, Calif., is a division of the Dublin, Ireland-based Experian Group Ltd.

Copyright 2006 Associated Press. All rights reserved.

Commercial premiums, except coastal property, continue to fall

Commercial insurance premiums fell slightly in the third quarter of this year, representing a continuation of the trends that occurred in the past two quarters, according to the RIMS Benchmark Survey, which surveys current policy renewal prices as reported by corporate risk managers.

Property insurance was the only line of business that increased in the third quarter, by 1.7 percent. This modest rise in average property insurance premiums masks the sharp increases that continue to affect businesses with properties in regions exposed to hurricanes and earthquakes. Conversely, property owners in regions not prone to natural catastrophes continue to enjoy falling premiums.

"The situation remains grim for property insurance buyers in Florida and along the Gulf Coast, and earthquake coverage is skyrocketing in California," said Joseph Restoule, RIMS Board of Directors. "It doesn't appear as if property insurance premiums in these areas will improve any time soon, but the upside is that risk managers are getting relief in other lines of insurance."

In the first half of 2006, the property and casualty industry reported an underwriting profit of $15.1 billion, a 31.8 percent increase over the same period in 2005, and it may report record profits for the full 2006 calendar year, pending any major catastrophes. Policyholders' surplus, the measure of insurance industry capacity, grew 2.7 percent. Advisen forecasts that this additional capacity may fuel competition within the industry that would encourage insurers to decrease premiums.

"Unless you own property on the coast or along a fault line, it's increasingly a buyer's market, and market conditions should continue to improve for risk managers," said David Bradford, editor-in-chief at Advisen. "It looks likely that 2006 will be a banner year for the property and casualty insurance industry. A profitable year will encourage insurers to further cut prices."

Directors and officers and general liability premiums decreased by less than 1 percent in the third quarter, though competition for small- and mid-size D&O accounts remained intense. Workers' comp premiums dropped by nearly 3.4 percent, reflecting the impact of reform measures in large states such as California and Florida.

Employee crime is big threat to small companies

More than one in three (36 percent) private companies, many of which were uninsured, experienced an employee theft averaging nearly $350,000 within the past five years, according to research by the Chubb Group of Insurance Companies. And more companies may now face a similar situation as they execute plans for staff reductions and budget cuts -- actions which tend to motivate employees to steal.

"It's the perfect storm," said Gregory Bangs, manager of the crime unit at the Chubb Group of Companies. "Despite corporate America's emphasis on a more ethical business culture, employee crime continues to drain corporate coffers by an average of six percent each year. Furthermore, many more employees may steal from their employers as a large number of private companies take actions that typically unsettle employees."

According to the 2005 Chubb Private Company Risk Survey, 31 percent of companies plan to outsource major functions or operations, 21 percent plan to reduce their workforce, and 20 percent plan to reduce or eliminate some employee benefits this year.

"Larger firms may be able to absorb the financial shocks of employee crime, but smaller firms may be faced with financial disaster. Surprisingly, our research shows that more than two-thirds of private companies do not buy crime insurance," said Bangs. "Regardless of size, strong risk management and ethics programs can help companies reduce the potential for white-collar crime, and insurance can help them recoup some of the losses."

To help businesses create risk management plans to prevent workplace fraud, Chubb has published a Guide to Preventing Workplace Fraud: Taking Action to Reduce Business Crime Exposure. It can be downloaded at:

www.chubb.com/businesses/chubb3331.html.

"The guide is a good starting point for all companies, especially smaller firms that may not have access to this type of expertise," Bangs said.

Improving efficiency and valuation through automation and outsourcing

Revenue growth, the quality of a book of business, the caliber of producers, strategic drivers and the overall level of client service -- these are the typical considerations that affect an agency's profitability and valuation. But one of the most important and under-addressed factors affecting an agency's valuation is expense management. Principals not paying enough attention to overheads and profit margins are not maximizing the value of their businesses.

Agencies have historically been valued using a variety of standard valuation methodologies, including comparable transactions, discounted cash flow analyses and the use of market multiples applied to an agency's net revenue and EBITDA (earnings before interest, taxes, depreciation and amortization). Although market observers tend to quote price-to-revenue multiples as the "rule of thumb" for valuations, the more pertinent and accepted measurement is based on price-to-EBITDA multiples.

"The higher an agency's profitability -- measured by its EBITDA margin -- the higher the correlated EBITDA multiple that would likely be achieved in a third-party sale," said Lou Caltavuturo, vice president of Hales & Company, a firm specializing in mergers and acquisitions and valuation services to insurance brokers globally. "This means agency principals need to exercise a disciplined expense management philosophy both to maximize the firm's valuation and also to motivate them to explore and adopt new technologies and services to improve profit margins for the long-term."

"Agencies, in general, have not done a good job of managing expenses and seeking out efficiencies in their operations," reinforces Greg Thompson, president of Thomco Insurance. "We need a better model. Most buyers will not come in and make an agency more efficient. They'll be looking to improve cash flow through higher revenues."

That better model is built on driving productivity by better deploying and utilizing people, processes and technology infrastructure, and calibrating this powerful combination to more sophisticated market segmentation. The ability to underwrite and find markets is important. But an agency's total productivity as defined above is key to its viability and future success.

Infrastructure and automation

Many agencies today remain heavily reliant on paper, but there is a definite and on-going trend towards moving to a paperless environment and automating processes that previously were extremely time-consuming and challenging to audit.

IT infrastructure determines how information is input into the agency system, how it is analyzed and utilized, and how it is transferred between customers and markets. Due diligence is necessary to find systems that don't get in the way, but rather facilitate speedy communications and allow data manipulation to provide a deeper understanding of the agency's client risk profile.

Optimizing technology use, though, depends not only on the system, but also on how the system is used. Developing a culture focused on continuous process improvement and training staff to fully utilize system features allows productivity enhancements to flow through both to the top and bottom lines, thus enhancing the agency's profitability and valuation.

Market segmentation

A second way to improve agency productivity is to improve the agency's bind-to-quote ratio by ensuring that marketing and sales efforts focus on prospects most likely to purchase the agency's offering at a profitable margin. This "market segmentation" helps ensure the highest return on marketing and sales expenditures. Done well, it requires ever-deeper understanding of the needs, risk profiles and demands of the agency's target clients to better frame the service offering, positioning and messaging that resonate for them.

But for an insurance agency market segmentation is about more than getting the most out of marketing and sales dollars. It's also about accurately assessing risks. The most forward-looking agencies -- particularly managing general agencies -- are developing predictive models and risk-scoring templates to achieve industry-leading underwriting results. Predictive models crunch huge volumes of historical data to identify possible indicators of loss. And scoring templates create a more rigorous and analytical approach to individual risk selection and pricing.

Jeremy Hitzig, CEO of The Distinguished Programs Group, a New York-based program manager specializing in real estate, commented, "We've spent more than a year developing proprietary scoring and predictive models. We believe that these efforts will ultimately yield superior risk selection, improve loss ratios and allow more accurate and competitive pricing on our portfolio of risks."

Getting more out of people

The greatest potential impact for improving margins and productivity concerns the agency's most critical resource: its people. Most agencies' biggest expense is people and it is not uncommon for 65 to 80 percent of an agency's operating expenses to be payroll and benefits related. Exploring ways of doing more business with the same people is, therefore, a preoccupation for many agency principals.

For instance, the average CSR spends more than 50 percent of the time processing documents and less than half of that time communicating with, or visiting, clients. Freeing staff from processing work translates into their spending more time potentially writing new business, improving overall customer service and completing renewals on a timely basis.

For this reason, many agencies are looking for creative ways of growing their platforms. One approach is remote staffing. There are two basic models. In the first, the agency directly employs U.S. staff members who work from home. A second approach is to engage a company that specializes in remote staffing.

Offshore remote staffing

In the remote staffing model, the agency is able to leverage educated professionals from emerging countries like China or India, who are trained on the agency's system. The advantages to this approach includes: time difference, scalability, and cost savings. Employees working in China or India function like a night-shift and thus enable agencies to function virtually around the clock. There is a ready supply of university-trained employees motivated by the opportunity to work in an international environment as part of the U.S. insurance industry. Plus, there is significant cost savings to employing staff in China or India versus their domestic counterparts.

Typically, agencies are able to save 40 to 60 percent on payroll costs and start to see significant returns on two common measures of agency productivity and profitability: revenues per dollar of payroll and earnings per employee.

Agencies with high processing loads that follow consistent rules and can be captured in a set of workflow procedures are good candidates for the remote staffing option. The types of tasks that agencies typically outsource to remote staffing specialists include application entry, policy checking, loss summaries, proposal generation, endorsements, MVRs, inspection reviews, certificate and policy issuance, rating, invoicing and claims reporting.

By combining new staffing strategies with the right IT infrastructure and market segmentation, agencies are able to dramatically improve not only their competitive advantages but also their long-term agency prospects and valuation.

Dan Epstein is chief executive officer of ReSource Pro LLC (www.resourcepro.com), which provides remote staffing for insurance managing general agencies and retail agencies.

Commercial lines prices up 7%; carriers reap benefits of higher renewals

Stock Prices:

Commercial lines stock prices were up 7 percent through the first nine months of 2006. In October, insurers reported dramatic changes from 2005 third quarter earnings that were dominated by catastrophe losses and have since reaped the benefits of renewal price increases on Southeastern United States business. The St. Paul Travelers Companies Inc. (NYSE:STA) reported net income of $1.043 billion for the quarter ended Sept. 30, 2006 compared to $162 million for the same quarter in 2005. The company also reported impressive net written premium growth of 4 percent from the prior year quarter. STA contributed the growth to strong retention rates and the aforementioned renewal price increases in the Southeast. CNA Financial Corporation (NYSE:CNA) reported much of the same strong results as St. Paul Travelers and their peers. Net income for the third quarter of 2006 was $311 million compared with $6 million for the same period in 2005. CNA also experienced very healthy growth in premiums. For the nine months ended Sept. 30, 2006, the company had net written premiums of $5.342 billion compared to $5.190 billion for the same period a year ago. Ohio Casualty Corporation (Nasdaq:OCAS) was not as fortunate in the area of premium growth. Net premiums written decreased 2.6 percent from the prior year quarter. The company contributed the premium decrease to lower in-force policy counts and rate reductions in their personal lines segment.

M&A Activity:

Only a scattering of commercial lines deals occurred during the third quarter. The largest deal was Royal & Sun Alliance Insurance Group plc finally announcing the sale of its non-core United States business. Arrowpoint Capital Corp., a newly formed Delaware company owned and operated by existing senior management and outside directors of Royal & SunAlliance USA, announced that it entered into a definitive agreement to acquire all R&SA USA business currently owned by Royal & Sun Alliance Insurance Group plc of London. Arrowpoint Capital will be led by R&SA USA President and CEO John Tighe and his senior management team. Arrowpoint Capital management will purchase 100 percent of the interests of Arrowpoint General Partnership, the U.S. holding entity which currently owns the R&SA U.S. business, for $300 million of deferred consideration. With the closing of the transaction, the London Group will contribute $287.5 million of additional capital to the U.S.-regulated entities. Separately, Republic Companies Group Inc. (Nasdaq:RUTX) announced a definitive merger agreement in which a subsidiary of Delek Capital Ltd. would acquire all of the outstanding shares of Republic's common stock for $20.40 per share in cash. This is a premium of 25.5 percent above the closing price of Republic's common stock of $15.22 per share on Aug. 3, 2006. Delek Capital is a subsidiary of Delek Group Ltd., a conglomerate domiciled and publicly traded in Israel.

Capital Raising:

Allied World Assurance Company Holdings Ltd. (NYSE:AWH) launched its successful IPO in July. The Bermuda-based specialty insurance and reinsurance company raised gross proceeds of $344 million. The net proceeds from the offering will be used to repay a portion of the company's bank loan and for general corporate purposes.

LMC Capital LLC is a national investment banking firm focused exclusively on the insurance industry. Services include qualified, industry-specific advisory relating to mergers and acquisitions, capital raises and valuations. The firm may be contacted at 704-943-2600, by e-mail at Info@LMCCapital.com or visit the firm's Web site at www.LMCCapital.com.

Attract high-end sales with personal insurance shoppers

The future of personal lines is about picking sides. Today's average auto and homeowners policyholder is shifting from the middle ground to one of two consumer extremes: low service or high. The former considers insurance to be a commodity and buys from the best marketer at the most competitive price. The latter, who are much fewer in number, are willing to pay for much higher levels of service and protection. Soon, you too will have to pick a side.

The low end

Low service clients believe that price is king. They value premium savings over personal attention and as a result expect only a reasonable level of post-sale service. The millions of consumers who hold these values are increasing in number daily. One reason is because many insurance carriers are now directly marketing to the once-dreaded driver aged 18-to-24. Why? Because as today's young people buy their policies on the phone, by mail, and online, without interacting with an agent, they'll have been trained from youth to bypass agents for their adult account. If you elect not to compete for this business, then you have only these alternatives: fight for sales with other agents in the shrinking middle, or take the high road.

The high end

Targeting this market demands a solicitation style that is distinguished from the above.

Still, keep in mind that these insurance consumers aren't merely the well-heeled. Often, they are individuals who simply enjoy personal service and a feeling of exclusivity; much like flying first-class instead of coach. They are willing to pay for extra protection and attention if it satisfies their vision of value.

Department stores meet this need by providing their customers with the services of a free personal shopper. As a result, they enjoy higher-end sales and more repeat business. Many entrepreneurs have also started fee-based shopping services. They bill an hourly rate to physically shop for their customer's clothes, gifts, groceries, etc. And their clients aren't just harried executives, they are also regular folks who prefer to let others do the buying for them, or at least gather the research needed to make a decision.

The personal shopping service path already exists, so why not follow it? It offers advantages to both the insurance buyer and seller, plus it helps to lock out the competition by making your office appear to be indispensable.

To be marketable, a personal insurance shopping service can't simply be what you normally do with a new label attached to it. It has to offer desirable benefits and present an upscale persona. At least one licensed agent is required with the drive and personality to grow the idea; someone who is a skilled communicator and a real people person. The perks that you offer may or may not include actual rate comparisons among carriers, as the "shopping" aspect centers on the meticulous identification and provision of selected coverages and services. Pricing is a secondary consideration.

Here are some basic examples.

Free services to high-end insureds: An in-person needs analysis, broadest attainable insurance contract with plenty of upgrades, an annual account overview report, a home replacement cost survey with updates, physical organization of the family's myriad policies, etc.

For-fee services: Video inventory of the family's possessions, back-up storage of major property receipts, periodic jewelry and art appraisals in cooperation with experts, retirement planning, annual driver and credit reports, etc. (Any fees charged are subject to applicable insurance department regulations.) Note: It's necessary that your office be each client family's only insurance professional for this approach to succeed.

Easy sources of prospects

Check the phone book and Web to find personal shoppers in your area. These firms already do business with the type of client you seek. They are also usually small operations that may welcome an alliance with you. Ask them to refer their clients in exchange for recommending their services to your insureds, subject to privacy policies and regulations. Also seek out similar arrangements with the area department stores and malls that provide free or for-fee personal shoppers. Buy links or banner ads on the Web site of each personal shopping service near you. Check the People/Promotions announcements in the business section of your daily paper for leads. Send each desirable prospect a handwritten note congratulating him or her on their promotion. Then follow up a week later with a personal letter that introduces the service. Once you snare just one top exec at a local firm -- his peers, and especially his direct underlings, are relatively simple targets to approach.

Conclusion

In the future, personal lines will be sold as either a commodity or as a service. The middle ground is rapidly disappearing. Select your side and focus marketing efforts at one end of the spectrum or the other. Your only real choices are quantity or quality.

Alan Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the 1001 Agency Ideas book series and other popular P/C sales resources. He may be reached at 800-724-1435 or by e-mail at: shulman@agencyideas.com. His Web site is www.agencyideas.com.

Where are all the young guns?

Look around you. Take a long look at the folks in your agency or company. And then break out your calculator.

What is the average age of your employees or colleagues? What percent of your firm's workforce were already adults when the Challenger crashed, and how many were still in Little League? What percent of your staff are likely to retire in the next 10 years? And how many are still checking the "24-35" age box on forms?

These are not idle questions. Nor are they intended as a glib assault on older workers. Mature professionals are invaluable to our industry, offering the experience, judgment and insight that only comes with time. Indeed, at the tender age of 54, I feel like I have not yet hit the pinnacle of my career.

But I worry.

This year, the oldest Baby Boomers are reaching age 60. More than 10,000 turn 50 every day, and the youngest are turning 42. Within the insurance industry, the average shareholder age among Best Practices agencies is 54, which means the best of the best will be retiring within the next 10 to 15 years. Who will take their place? There is a dearth of young talent entering our ranks, an ebb in the flow of bright men and women to follow our lead and inherit our roles. And that scarcity will have a detrimental impact on all of us -- agents, companies and, eventually, the customers we serve.

What is at the heart of this talent shortage?

Several factors at play

Poor image. The insurance industry has long been burdened with a dull, negative reputation, and young people in particular are unenthusiastic about our field. Sure, some days are more interesting than others but, overall, insurance is a great gig. There are an abundance of different opportunities to suit virtually any personality or skill set. We are given the opportunity to work with a variety of clients, and we can do so from virtually anyplace in the country (or the world). And insurance has provided a very nice life for all of us. Unfortunately, few people realize these facts.

Few programs. Only about 30 U.S. colleges or universities offer insurance as a major or minor, compared to the ubiquity of accounting, marketing and other business curricula. As a result, our industry is not top of mind among most students. InVEST, a leading school-to-career program, is trying to overcome that lack of training through a hands-on curriculum taught in high schools, community colleges and vocational institutes.

Apathy. Truth be told, no one seems to be worried about this shortage of qualified personnel. I sometimes hear company CEOs or other industry leaders bemoaning it -- but not really working on it. Agents often complain about it, but there isn't much effort made to reverse the trend. Indeed, agencies overwhelmingly recruit producers from other agencies or insurance carriers, and few have a perpetuation plan for their firms -- two clear indicators of our system's inadequate pursuit of new talent.

Ours is an industry deserving of a future. We owe it ourselves to perpetuate our businesses and to protect our clients' future with a new generation of bright, skilled men and women.

Act within your community, your state or on a national stage. Contribute your ideas, your time and your resources to this search for quality.

Patrick C. Moore CPCU (pmoore@antalek-moore.com), is chair of InVEST, the premier insurance industry-education partnership, and is principal of Antalek & Moore, an independent agency in Beacon, N.Y.

Democratic Congress OK for industry traditionally tied to Republicans

The new Congress may be blue on Capitol Hill, but insiders say that's not necessarily a bad color for the insurance industry.

"The more things change, the more they may remain pretty much the same," said National Association of Professional Insurance Agents' Executive Vice President and CEO Len Brevik. While at first glance, some might be tempted to conclude that Democrats controlling the House and the Senate will be a negative for the insurance industry and for independent insurance agents, that may not be entirely the case, Brevik said.

Charles Symington, senior vice president of government affairs and federal relations, for the Independent Insurance Agents and Brokers of America, maintains that a Democratic Congress just sets the bar a little higher when it comes to convincing federal policymakers to make positive changes for the insurance marketplace.

"Generally you'll see the Democratic Congress be more consumer-driven," he said. But "a lot of the issues remain the same ... insurance regulatory reform, terrorism insurance, flood insurance reform, crop insurance ... the issues don't change."

Dennis Kelly of the American Insurance Association says his group isn't worried about the new blue Congress. "We wouldn't view it as something we cannot work with," he said. Kelly said the industry just may have to adjust a bit, and do more work to make their case known on important issues.

The election result didn't catch many by surprise. "You are hearing a lot about this being a tidal wave, but it's an expected tidal wave quite frankly," said Ben McKay, senior vice president of government relations, for the Property Casualty Insurers Association of America.

While blue, some Democrats joining the nation's Congress might differ from their fellow Democrats in D.C. on issues. "When you look at many of the newly-elected Democrats, some are more moderate," Brevik said.

Also, some of the veteran Democrats the industry will now work with are friends.

"Some who are in line for leadership positions are well-attuned to the importance of the insurance industry to the American economy, such as Rep. Paul E. Kanjorski, D-Pa., the most senior Democrat on the House subcommittee overseeing the insurance industry. Rep. Kanjorski has a keen appreciation of the key role played by Main Street insurance agents in assuring continued prosperity. And in contrast to campaign rhetoric, Rep. Barney Frank, D-Mass., who is in line to be chairman of the Financial Services Committee, has had a good working relationship with outgoing Chairman Mike Oxley, R-Ohio."

Senate committee

On the Senate Banking Committee, Sen. Christopher Dodd, D-Conn., is likely to become the chairman. "[H]e is sensitive to insurance issues," Kelly said. "Now this does not mean that he is an industry guy or will do whatever the industry wants, but he was a leader on the terrorism insurance issue, and has shown leadership on other insurance priority issues," Kelly added.

"In short, it is not a foregone conclusion that the insurance industry will necessarily fare less well in the new Congress," Brevik said.

Key issues at stake

Of top concern to insurers and agents are terrorism insurance, flood insurance reform, and, of course, insurance regulatory reform.

On regulatory reform, several proposals are currently on the table. "You have the targeted federal legislation approach that was utilized in the surplus lines bill that passed the House overwhelmingly, and on the other side you have the Optional Federal Charter" or the National Insurance Act, notes Symington.

Symington believes the debate over federal regulation will continue in the new Congress, however, those in the insurance industry who might be looking to the federal government for deregulation of the marketplace will be looking in the wrong place.

"I believe that [a Democratic Congress] will hurt the case for an optional federal charter, and that those large companies pushing for that proposal need to be very careful of what they wish for because it may look like less of an optional proposal and more like a mandatory federal regulatory solution," Symington added.

"If insurance companies are pushing federal regulatory proposals in this environment, they may not get the optional charter; they may get something along the lines of increased oversight by changes to the McCarran-Ferguson Act," he warned.

Partisan issues not a problem

Terrorism insurance is also hot on the minds of the industry, but holds bipartisan support.

"The good news for the terrorism insurance buying community is that this issue has received broad support in the past in both the House and Senate and from both Republicans and Democrats," said PCI's McKay.

Symington added that the chances of another extension of the Terrorism Risk Insurance Act might actually increase with the new Democratic controlled Congress.

"Chris Dodd, who will become the chairman of the Senate Banking Committee, he's been a strong supporter in the past of the terrorism insurance program, as has Barney Frank, who will now be the chairman of the House Financial Services Committee," Symington said. "In the past there have been some conservative Republicans that have raised questions about the need to continue the program."

Another non-partisan issue is reform of the National Flood Insurance Program.

"The NFIP has to be addressed this year," McKay said. "The borrowing authority needs to be increased so you can look for early action at least on that side of it. It has been the intent of Congress so far to attach programmatic reforms to any increase in the borrowing authority. We don't see any reason why that would change."

Closer to the center

Overall the 2006 election has moved Congress closer to the center on issues, according to PIA National Senior Vice President Patricia A. Borowski.

"This election has brought in more moderates on both sides of the aisle," Borowski said. "That tends to permit a more balanced consideration of our issues. Historically, insurance has fared better during times of centrist, results-oriented leadership."

Floor time

No matter the insurance issue, McKay said the industry may find it tough to get "floor time" during the first 100 days or so.

"Iraq is going to take all the oxygen out of the room and issues such as flood that have to get passed, we're gong to have to really fight to get floor time and committee time," he said. "They are talking minimum wage, they are talking investigations, they talking rolling back tax cuts."

Kelly noted that even after the leadership is settled and priorities are set, the industry still has needs to be met. "We still need an economic safety net for terrorism insurance. The industry still needs regulatory modernization ... those are our priorities."

And priorities must be addressed, regardless of which party controls Congress.