Alabama says Katrina mediation working

A mediation program launched by the Alabama Department of Insurance following Hurricane Katrina is bearing fruit, says Commissioner Walter A. Bell, pointing to a 90 percent success rate.

"Once the mediation conference is set up, 90 percent of the cases have been settled. That is a strong indication of success," Bell said.

The mediation program was recommended by the Hurricane Insurance Issues Task Force just prior to Hurricane Katrina.

Under the program, consumers meet with representatives of their insurance company along with a department attorney who serves as mediator. The insurance company is required to pay for the cost of the mediation.

If a consumer has filed legal action, then the claim is not eligible for mediation. The mediation is only binding if both parties agree to a settlement.

"We've had an attorney spend most of her time in Mobile this summer and fall hearing mediation conferences," Bell said. "And we will continue to do so until every consumer that wants mediation gets that opportunity."

Currently, the program is limited to storm-related claims, according to Bell.

Fla. orders 15.7% workers' comp cut

A significant drop in workers' compensation claims frequency and a reduction in the cost of claims have triggered a larger-than-recommended decrease in rates, at the bidding of Florida Insurance Commissioner Kevin McCarty.

The National Council on Compensation Insurance had filed for 13.3 percent. However, McCarty ordered NCCI to amend its filing to bring about a rate reduction of 15.7 percent.

McCarty cited disagreements with the methodology NCCI used to project losses and with the trend factors used in the filing.

According to the Office of Insurance Regulation, the overall average rate decrease of 15.7 percent should produce a savings of $400 million for employers, and would constitute the fourth consecutive drop since 2003. The cumulative overall statewide average rate decrease for the period would total over 40 percent.

"This will provide a significant boost to Florida businesses and to our state's economy," McCarty said. "Not only has the 2003 law produced hundreds of millions of dollars in reduced premiums, it is also delivering benefits to employees more efficiently and fairly and has sharply reduced fraud and abuse in the system."

Katrina trial could be moved from Gulf Coast to Oxford

Is fair trial in Gulfport possible given negative press, number of prominent policyholders?

State Farm Fire & Casualty Co. has filed a motion in federal court in Gulfport, claiming it will get a fairer trial somewhere other than the Mississippi Gulf Coast.

Fifty-two policyholders, along with current and former public officials, have urged federal judges to try the Hurricane Katrina insurance case on the coast instead of in Oxford.

But State Farm, in its motion, cites news coverage in The Sun Herald newspaper, "negative" television reports and a "substantial bias" against insurance companies among registered voters surveyed in south Mississippi.

State Farm wants the lawsuit filed by Ed Gemmill, a Biloxi city councilman, moved to federal court in Oxford. If the court agrees to move the trial, lawyers for policyholders said other cases may be tried away from the coast as well.

Seeks other comments

U.S. Magistrate Robert Walker has not ruled on the State Farm motion. Walker is allowing other attorneys with Katrina cases to comment on the issue.

Mayors A.J. Holloway of Biloxi and Billy Skellie of Long Beach, District Attorney Cono Caranna, Hancock and Harrison County supervisors, Jackson County Sheriff Mike Byrd and The Peoples Bank president Chevis Swetman are among 46 coast residents who have signed statements saying they've seen news coverage about State Farm and other insurers and believe insurers can get fair trials in south Mississippi.

Lawyers for homeowners contend Oxford does not have the facilities to support the trials, including public transportation, an airport with direct flights and hotel rooms, particularly during football season.

Federal court personnel have estimated that 1,100 insurance cases are pending. Harrison County Circuit Court has about 300 insurance cases, while Jackson County reports only a handful of lawsuits have been filed. Hancock County courts were unable to say how many insurance cases are pending there.

In the lawsuits, insurers and their policyholders disagree over how much is owed for Hurricane Katrina damage.

U.S. District Judge L.T. Senter Jr. has declared valid the "water" exclusions in insurance policies, meaning the companies are not responsible for covering Katrina's tidal surge.

Policyholders contend insurers are minimizing or ignoring wind damage to avoid paying claims.

The insurance companies say they are paying what is owed under their policies, pointing out that the federal flood insurance program is responsible for covering Katrina's unprecedented tidal surge.

According to State Farm's motion, news coverage has colored opinions of potential jurors in south Mississippi. State Farm said its expert surveyed 3,600 registered voters statewide. In south Mississippi, the survey said, 55 percent of respondents said insurance companies have been unfair, while only 39 percent felt that way in north Mississippi.

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

Final Katrina-battered shrimp boat rescued in Alabama

Shrimp boats were flung far and wide, and literally left hung out to dry near the Alabama Gulf Coast in the aftermath of Hurricane Katrina.

Tara Hutchison, press secretary for Alabama Gov. Bob Riley, said attempts to obtain help from the Federal Emergency Management Agency did not yield a timely response.

"There were 23 boats left on land owned by 22 families who did not have insurance," Hutchison said. "It's an impoverished area and the shrimpers needed to be back at work."

So Riley requested funding from the Bush-Clinton Katrina fund to remove stranded shrimp boats from involuntary dockings on land and return them to their rightful place at sea.

After several trips to Bayou La Batre, Ala., to survey the situation and with $1.6 million in aid from the team of former presidents, the final marooned vessel was rescued last month.

The first boat, the Captain Justin, was returned to water on May 23. The 80-foot boat, Rip Tide, was returned to the water Sept. 23.

Riley said he was very pleased to hear the good news. "It's a great day and I'm glad it's finally here," Riley said. "It could take years for some parts of our coast to fully recover from Hurricane Katrina, but this is another sign that we are moving forward."

It Figures

$20 million

The amount about 400 people should receive from monies held by Lexington, Ky., lawyers who sued American Home Products in 2001 on behalf of users of the fen-phen diet drug. Special Judge William Wehr ordered that funds be placed in a trust for the plaintiffs. Lawyers and consultants had received $106 million collectively from a $200 million settlement and also set aside $20 million of the settlement to create the nonprofit fund. The lawyers received roughly $20 million each. Several clients raised questions about the settlement, and the clients sued the lawyers in 2004, demanding an accounting.

$18 million

Pensacola News Journal that was reversed by a Florida appeals court. The verdict was over a 1998 story a businessman claimed cast him in a "false light." But the 1st District Court of Appeal ruled that Joe Anderson Jr.'s case should have been dismissed because he mischaracterized his lawsuit as a false-light claim in an attempt to sidestep a two-year statute of limitations that applies in libel cases.

$3,000

The fine levied against a Columbia, S.C., company after one of its workers fell to his death in Rock Hill, according the state Department of Labor, Licensing and Regulation. The worker who fell was sitting on a steel beam trying to kick off a loose piece of metal when he lost his balance. He and another employee of Capitol City Erectors did not use a fall protection system while working on Winthrop University's new fitness center.

$220,000

The amount investigators say a Matthews, N.C., licensed insurance agent illegally transferred from the variable annuity accounts of five clients to his own personal account. According to Insurance Commissioner Jim Long, Shawn Robert Blankenship was arrested and charged with nine felony counts of obtaining property by false pretense and is under a $50,000 secured bond at the Union County Jail.

$4 million

The amount of federal aid awarded to Florida disaster experts to map out preparations for two catastrophic Florida hurricane scenarios: the failure of the dike around Lake Okeechobee and the impact of a powerful Category 5 storm in the Miami area. David Paulison, director of the Federal Emergency Management Agency, said that airborne lasers would be used to create maps around Lake Okeechobee where flooding might occur. Planners will use the maps to determine which areas to evacuate and what to do if a breach of the 143-mile Herbert Hoover Dike occurs. About 45,000 people live in flood-prone areas around the lake.

71%

Nationwide's proposed residential property insurance rate hike rejected by Florida Insurance Commissioner Kevin McCarty. McCarty said the filing contained "proposed hurricane rate hikes in excess of 300 and 400 percent for some territories which are entirely unsustainable."

S.C. may put teen drivers' cell phones on hold

A South Carolina legislator says he will file a bill before the end of the year to ban drivers under age 18 from using a cell phone while driving.

Rep. Lanny Littlejohn says he wanted to extend the ban in his bill to all drivers, but said he got stiff opposition from communications companies.

"These cell phones are unreal," said Littlejohn, R-Pacolet, who introduced a similar bill that died last session.

Sen. Larry Martin has asked the Public Safety Department for statistics that link cell phone use to automobile accidents. But instead of a cell phone ban, Martin supports giving more money to state troopers so they can be more aggressive in stopping people who are driving dangerously because they are distracted.

State troopers have reported 424 traffic collisions in South Carolina since 2002 in which cell phone use was indicated as a primary contributing factor. The wrecks killed one person and injured 191 others, according to the Highway Patrol.

Four states and the District of Columbia have banned cell phone use while driving. Last year, 38 states were considering bills to deal with cell phone use while driving, according to the National Conference of State Legislatures.

Declarations

Time for changes

"When your CEOs are making $26 billion a year, we need to make some changes."

Ginny Stevans, president of Homeowners Against Citizens, a group protesting Florida's skyrocketing insurance costs. She was speaking at a seven hour meeting of the state's Property and Casualty Insurance Reform Committee.

Thanks, Max

"Director Max Mayfield is a trusted leader and a scientist who is passionate about changing outcomes in communities threatened by tropical cyclone activity in the western hemisphere. He is truly an asset, not only to Florida, but to the international community that relies upon his expertise and guidance. On behalf of all Floridians, I thank Max for his service to our state."

Florida Gov. Jeb Bush upon the Florida Cabinet's passing of a resolution honoring Max Mayfield's career in public service. Mayfield has led the National Hurricane Center since January 2000.

House folks

"Unlike the folks who run the House now, these issues will at least be discussed; we will get a vote."

Rep. Gene Taylor, D-Miss., in vowing that a Democratic-controlled House would look into a repeal of the insurance industry's federal antitrust exemption and the creation of government-backed all-perils disaster insurance. Taylor, who lost his own home to Katrina, said "the biggest Katrina fraud of them all" was the insurance industry's declaring that hurricane damage was due to flooding -- a federal government responsibility -- rather than wind, covered by private insurance.

Record profits

"It now appears clear that the industry's record profits in 2004 and 2005, and the exceptional record profit about to be reported for 2006, are due in large part to the years of huge rate hikes in the earlier part of the decade, which were not caused by any accompanying increase in claims or payouts. In fact, inflation-adjusted payouts and claims never increased at all during this period. Rather, this is all part of a well-documented cyclical phenomenon for the property/casualty insurance industry."

J. Robert Hunter, director of insurance for the Consumer Federation of America, reacting to a report indicating that skyrocketing insurance rates of 2000 to 2003 have led to record industry profits but commercial insurance rates have stabilized or dropped in almost every sector, including medical malpractice.

N.C. fire chief: Apex plant chemicals unknown

The fire chief for the town of Apex told a North Carolina state task force that he was prepared to lose an entire city block when a chemical fire ignited an industrial waste recycling plant last month because he didn't know what was inside.

Fire Chief Mark Haraway said he couldn't determine the volatility or type of chemicals in the Oct. 5 blaze that gutted the EQ Industrial Services plant. EQ officials were unable to immediately provide a list of chemicals stored at the site.

"We didn't have an exact inventory (of the chemicals in the facility), but we knew what the potential was," Haraway told the Hazardous Materials Task Force during its first meeting.

North Carolina reporting laws currently mirror federal standards, which require only minor disclosure and reporting.

Gov. Mike Easley formed the panel to analyze the response to the fire and ways to prevent future problems at 10 similar facilities around North Carolina.

A preliminary report is due Dec. 15.

Copyright 2006 Associated Press.

Honesty is the best insurance policy

Why government should require insurance policies to declare what is NOT covered

I have introduced legislation in the U.S. Senate to make future insurance policies easier for consumers to understand. The "Honesty is the Best Insurance Policy Act" calls for requiring insurance companies to state in plain English and big letters exactly what their policies do not cover.

Most insurance policies are long, complicated and written in legalese. In addition to the policy itself, just about every month, your insurance company probably sends you page after page of addendums and changes to your various policies, also lengthy and complex.

My bill won't do away with all this intimidating language and paper, but it will require the companies to include up front a very unintimidating, user-friendly "non-coverage disclosure" box as part of the policy's documentation.

In this box policyholders would find a concise re-statement of all conditions, exclusions and other limitations to the policy's coverage -- all clearly written in type twice the size of the policy's main text.

We Mississippians in particular know why having clearer insurance policy language is so important.

Thousands of Hurricane Katrina's victims saw their homes heavily damaged or destroyed, only to learn their insurance policies were practically useless.

Obviously this bill won't help those of us whose homes were damaged or destroyed by Hurricane Katrina and who now are negotiating with our insurers or confronting them in court. But by clarifying policy terms and stating them up front, this act would increase consumer confidence in future insurance products and even reduce litigation for both consumers and insurance companies.

In fact, it actually would reduce costs to insurance companies. As policies are clarified, fewer consumers would sue insurers citing obscure policy terms which are subject to interpretation.

More importantly, it could save consumers billions of dollars. If all Katrina homeowners had been adequately insured, total payments to them would be about $100 billion. Instead, Katrina homeowners suffered about $65 billion in unprotected losses, a number that will likely increase when damages are fully and accurately assessed.

This plan has already garnered endorsements from consumer groups, including the Consumer Federation of America and the Consumers Union. It would require no cost to taxpayers, and the costs to insurance companies would be negligible -- requiring only some additional ink.

Enforcement would be administered through the Federal Trade Commission's Division of Financial Practices. The federal government already is heavily involved in insurance regulation through the National Flood Insurance Program which insures more than $700 billion in assets through more than four million policies. Clearly there is precedent for the federal government to be involved with insurance regulation.

The Honesty is the Best Insurance Policy Act won't solve the current questions about insurance coverage in south Mississippi and other areas of the country. But Katrina has clearly shown the need for better communication among insurance companies, lending institutions and consumers.

Folks buying insurance want and deserve policies that are honest and straightforward. Having a simple explanation of policy provisions is good for consumers as well as insurers, and it should be a standard part of all insurance policies.

In anything we do, honesty is always the best policy. That applies to the insurance industry, too.

Sen. Trent Lott, R. Miss., welcomes questions or comments about this column. Write to: U.S. Senator Trent Lott, 487 Russell Senate Office Building, Washington, D.C. 20510 (Attn: Press Office).

Crist, Davis promise different insurance plans for Fla.

Florida gubernatorial hopefuls Charlie Crist and Jim Davis agree that three challenges facing the state are skyrocketing homeowners insurance rates, rising property taxes and public schools that some rank among the nation's worst.

That's where the similarities end. Each is taking different approaches to the problems, leaving voters to decide which candidate -- if either -- can solve the two big pocketbook issues and who has the right approach on education.

"Clearly people are upset about insurance and clearly people are upset about property taxes, but I'm not sure that the candidates have carved out clearly discernible differences," said Matthew Corrigan, a University of North Florida political science professor.

The candidates do have plans, and they are very different, but in the world of sound bites, 30-second ads and one-minute debate answers, voters face a difficult task to figure out which plan they prefer.

In a 10-minute conversation with reporters on insurance, Democratic U.S. Rep. Davis used the words "stand up" or "stood up" 11 times, as in, "As governor, I will stand up to these insurance companies. Charlie Crist had his chance. He didn't, I will."

"What's that mean?" Corrigan asked.

Likewise, Republican Attorney General Crist often over simplifies the property tax issue.

"I'm for lowering property taxes, my opponent's not. That's inconceivable to me," Crist said at an Orlando stop. "He thinks we ought to help government, I think we ought to help people."

Here's the gist of what the candidates have proposed on insurance:

Crist wants to eliminate Florida-only subsidiaries of national insurance companies, saying that while companies like Allstate and State Farm complain about losses here, the parent companies are making huge profits. He also wants to force companies who sell auto and life insurance in Florida to also sell property insurance if they sell it in other states.

He believes the state should also lower the threshold at which insurance companies can tap into the state Catastrophe Fund. Right now, the fund helps bail companies out once they've paid $5.3 billion in claims. Crist wants that figure dropped to $3 billion, which would limit potential risk for companies.

Davis has proposed creating a $20 billion Hurricane Premium Protection Fund that would pay homeowners up to $500,000 for storm losses, leaving private insurers to cover only the remainder of damages and creating a more competitive market for insurers. The fund would continue to grow during light hurricane seasons, and would roll over into the following year, allowing the state to increase its coverage from season to season.

Personal characteristics

Some question whether the election will turn on insurance or any other issue.

"Issues probably aren't nearly as important this time around because at least on the surface, there aren't big differences in the goals of the candidates," said Aubrey Jewett, a University of Central Florida political science professor. "The issues are more in the margins of how to do it, not what they're trying to do."

That leaves many voters deciding on who they think will be a better leader and on personal characteristics, he said.

"They want somebody they like, they trust and who they think can be a good leader," Jewett said.

Another factor will be who can actually get the Legislature to act. That edge goes to Crist. With Republicans outnumbering Democrats by a 2-1 ratio in the Legislature, Crist has a better chance of getting his priorities passed, particularly since Republican leaders openly criticize Davis' proposals.

"We're into cutting taxes, we're not into bringing back taxes that we already cut," incoming Senate President Ken Pruitt, R-Port St. Lucie, said about Davis' idea of restoring the intangibles tax on stocks and bonds. "It's dead. The nail is in the coffin. It's gone and it's going to be gone forever."

Pruitt also doesn't believe Republicans would go along with Davis' insurance plan. "That's not doable. That's just not going to happen," said Pruitt, who added that he fully supports Crist's insurance and property tax plans.

Incoming House Democratic Leader, Dan Gelber of Miami Beach, said Republicans will have to consider Davis' plans or explain to voters why they didn't take up proposals that would save them money. "If they don't, then I guess in '08 there will be another tsunami -- a political windstorm."

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

Litigation trends continue to mount worldwide, report says

Insurers face five times the average number of lawsuits than other economic sectors

Insurance companies are the litigation champions confronting an average of 1,696 lawsuits, spanning from product liability and environmental class actions to directors and officers claims, and even coverage fights over hurricanes and terrorist attacks, according to a new survey of corporate litigation trends from international law firm Fulbright Jaworski LLP.

In its third annual survey of corporate litigation trends -- pulling data from 422 in-house law departments worldwide -- Fulbright found that U.S. companies face an average of 305 pending lawsuits internationally. For large U.S. companies -- those with $1 billion or more in annual gross revenue -- the number of lawsuits soared to 556 cases, with an average of 50 new disputes emerging each year for close to half of them.

Although the majority of those cases are in U.S. courts, the tide of international disputes is rising -- more than one-third of companies said that up to 20 percent of their dockets originate in foreign venues, proof that U.S.-style litigation is going global.

U.K.-based companies surveyed reported an average of only 178 cases -- 63 in the U.S.

No segment of the American economy was spared a weighty litigation docket more than insurers. Insurance companies, historically the object of disputes brought by policyholders and class action claimants, had more than five times the average cases pending than the next highest sectors -- energy (364), retail (333) and financial services (300). More than half of insurance company counsel reported taking on 50 or more new lawsuits in the past year. Seventeen percent of insurers reported having more than 50 lawsuits pending with at least $20 million at issue. By contrast, only 6 percent of energy companies reported more than 50 suits in the $20 million or greater range.

Litigation part of culture

"Perhaps even more than our two previous studies, our new survey reveals how thoroughly litigation is woven into U.S. corporate culture -- the sheer number of cases and huge slice of spending taken up by lawsuits make abundantly clear that litigated disputes are a fundamental part of doing business," said Stephen C. Dillard, chair of Fulbright Jaworski's global litigation practice.

"Of course, litigation is not always defensive," he added. "The great majority of companies report initiating lawsuits in order to enforce contracts, safeguard intellectual property, block monopolistic behavior, and achieve other valid business objectives that require them to take assertive legal action."

Seventy percent of the in-house counsel surveyed confirmed that their companies initiated at least one new lawsuit in the past year as plaintiff.

Half of participating U.S. counsel said their companies separately faced at least one new arbitration and one new regulatory proceeding in 2005-2006, on top of their litigation caseload.

As lawsuits have multiplied -- brought by shareholders, regulators, consumers, employees and competitors -- so has another related event: the internal investigation. Nearly two-thirds of the U.S. companies interviewed by Fulbright reported that their companies had launched at least one such probe in the past year necessitating use of outside counsel, a certain byproduct of Sarbanes-Oxley legislation, as well as the recent mega-scandals of Enron and WorldCom.

That litigation is an everyday fact of life for American corporations is borne out by findings from companies of all sizes and industries. Ninety-four percent of U.S. counsel said that their companies had some form of legal dispute pending in a U.S. venue. For 89 percent, at least one new suit was filed against their company during the past year.

Businesses are not expecting litigation trends to ease up. One third of all companies, and nearly 40 percent of $1 billion-plus firms, project the amount of litigation to increase next year.

Cost of litigation

U.S. companies report spending 71 percent of their overall estimated legal budgets on disputes. Nearly 40 percent of those surveyed reported at least one $20 million suit commenced against them in the past year. Two percent faced 50 new suits or more involving at least $20 million in claims, or more than $1 billion worth of new disputes on the table for some large companies.

For billion-dollar-plus corporations, the costs of litigation are especially significant. Large U.S. companies commit an average of $19.8 million to litigation, approximately 58 percent of total average legal spending of $34.2 million. More than two-thirds of large companies surveyed reported at least one new suit involving $20 million or more in claims; 17 percent faced a minimum of six suits in the $20 million-plus range.

The generally high cost of dispute resolution in the U.S. has not been lost on the rest of the world. For more than half of foreign counsel surveyed, "high legal costs" was cited as a top concern about litigating a dispute in the U.S.

While smaller companies are hardly litigation free, the weight is considerably less. Companies with revenues under $100 million reported only nine cases pending on average. Counsel at American small businesses say their average dispute spending totaled only $178,000.

Participant overview

In-house counsel from 311 companies headquartered in 29 states participated in the survey. In addition to U.S. respondents, Fulbright surveyed law departments in 22 other countries, including the U.K., Canada, Mexico, Japan, Brazil and elsewhere in Asia, Europe and Latin America. Eighty-two percent of U.S. participants held associate general counsel or more senior positions, including chief legal officer and chief litigation counsel.

Fifty-two percent of U.S. respondents work for publicly-held companies; a similar percentage represent companies with gross revenues of $1 billion or more. Of the remainder, 28 percent were middle-market firms with sales between $100 million and $999 million and 22 percent had less than $100 million in revenues. For the full survey results, go to: www.fulbright.com/litigationfindings

Ease of doing business can make the strategic 'profit' differential

Let's start with three basic ideas about property/casualty insurance distributed through independent agents and brokers -- a sector with more than $200 billion in written premium annually.

1) P/C insurance resembles a commodity, with few competitive differentiators. By and large, competitive price, product, and commission are basic tickets of entry to this marketplace. Independent agents and brokers don't want to represent carriers that can't provide these three basics.

2) The buying decision is largely made by the agent rather than the policyholder. After all, prospects looking for insurance use the independent agency system because they want the agent's expertise and connections rather than buying coverage directly themselves.

3) Ease of doing business (EDB) in every aspect of the carrier-agent interface is profoundly important to independent agents because it directly affects their productivity and profitability, as well as their quality of work life.

This means service -- EDB -- is a primary competitive differentiator between carriers.

Since EDB is a key strategic issue, knowing how well you and your key competitors perform is critically important for effective management. But what is EDB?

For the past four years, we have been measuring EDB performance industry-wide. We identified 10 EDB Factors, including traditional carrier-agency interface issues such as claims, underwriting, policy services, technology, and marketing support. They also include more subtle issues such as the carrier-agent working relationship and their impact on the agent-policyholder relationship. We asked independent agents and brokers across the country whether EDB is critical in their buying decision, how important each of the 10 EDB Factors are to them, and how the carriers they represent perform against those factors.

Finally, we asked agents what carriers could do to make it easier to do business with them. Over the four years of the survey some 10,000 agents have provided nearly 50,000 ratings of carriers.

Here's what we've found.

• Industry-wide there are significant gaps between how important agents said each of the EDB Factors is and the performance ratings they gave carriers on most of those Factors. There is opportunity for improvement.
• Interestingly, there has been relatively little change in industry-wide performance over the years. One standard measure is the EDB Index -- literally the gap between Importance and Performance ratings weighted by the Importance. Over the past three years the Index has shown a very small, steady up-tick.
• There is a great deal of individual variation in performance from one carrier to another. We see the EDB Index for different carriers range from lows in the '60s to high-performing mid-'90s. The EDB Performance chart shows EDB performance ratings for three different carriers. Notice how Carrier A, a moderate performer, shows moderate performance across the board and an overall EDB Index of nearly 85. Carrier B turns in a strong performance, even exceeding expectations on Factor 8. Carrier C rates at or above 90 on 3 Factors while falling into the '60s on the first 3 Factors.
• Within a carrier there is also often significant variation across demographics, such as geography, respondent role, line of business focus, agency size, and other areas. And even though there has been little industry-wide change in performance, some carriers have improved while others have gotten lower ratings.
• In the sales process -- from inquiry and rating to underwriting -- agents want better technical, organizational, and personal support in moving quickly from a prospect to a policyholder. One agent summed it up this way: "Quick response and flexibility are the main reasons we write new business with carriers."
• Agents want fast and fair "post-sale" support -- such as policy issuance, amendments, renewals, billing, and claims services -- in order to retain customers.

What carriers should do

Gaining the competitive advantage that comes with being easier to do business with doesn't happen without awareness, commitment, and effort. Our experience is that it doesn't have to include the huge price tag some may expect either. To lock in agents and build a sustainable advantage, to capitalize on EDB strengths, and to overcome EDB vulnerabilities, carriers can take these seven steps:

• Measure EDB performance; if it's not measured, it's not likely to be well managed.
• Benchmark EDB performance against key competitors.
• Assess how EDB performance affects your business results.
• Decide which factors are most important to address in 2007.
• Communicate the importance of EDB throughout the management team, ensuring the organization as a whole is aligned -- and acts on -- this strategic edge. This extends to how individuals as well as departments, functions, and processes affect EDB performance.
• Set EDB performance goals and interim business targets, track against those targets, and hold management accountable for achieving them.
• Build short and long term plans to achieve EDB goals.

Nearly 50,000 carrier ratings over the last four years show relatively little change in EDB performance which represents a stable industry benchmark. For those who recognize the strategic importance of EDB and focus on improving performance, there is plenty of opportunity.

Nort Salz is principal and co-founder at Deep Customer Connections Inc., a Massachusetts-based consulting firm. DCC helps carriers gain and sustain business by being easier to do business with. He can be reached at: nort.salz@deepcc.com