CPCU Society Weighs Self-Regulatory Option for P/C Industry to Help Restore Public Image Hurt by Brokerage Issues

The property casualty industry’s leading educational society is weighing what role to play in helping the industry restore its image after months of charges about bid rigging and contingent commissions.

A presidential task force of the Society of Chartered Property Casualty Underwriters is researching what if anything the CPCU Society should do. Among the questions it has been asked to weigh is whether a self-regulatory body like the Insurance Marketing Standards Association now operating in the life insurance industry would be a useful model for the property casualty industry. It is also considering what role the CPCU organization should play in any industry image-restoration effort.

CPCU President Don Hurzeler has asked the task force to report in time for an April 14 board of directors meeting with recommendations, he told Insurance Journal.

“We will look at the IMSA model,” Hurzeler said. “I’ve asked them to do some fast work before our April board meeting, such as look at an IMSA-type organization and if we are the right people to be involved.”

IMSA, formed in 1996, is a voluntary, nonprofit standards-setting organization for life insurers. Member companies are required to demonstrate a commitment to high marketplace standards by implementing certain policies and procedures. IMSA calls its seal “tangible proof that a company adheres to specific, stringent market conduct principles.”

Calling the current brokerage scandal a “wake-up call” for the property casualty industry, Hurzeler urged the industry not to ignore it. “Let’s heed the call,” he said.

Hurzeler maintained that the industry is “horrified” by the illegal activity that has been uncovered. He said that it’s unrealistic to think there would never be criminal behavior but that organizations can catch it if they continually reinforce the importance of high standards. “You have to remember that you are talking to a parade, that people come and go, new people join,” he noted.

Hurzeler is noncommittal about whether IMSA is a good model for the property casualty segment or what role CPCUs might take on. But he is certain about what the challenge is. “Companies have to make sure that everyone understands what ethical behavior looks like. We have to clear up any lingering doubts about ethics. I believe that 99.9 percent of the industry is ethical but this event will require us to make sure that the message is clear. Companies will need to audit or monitor behavior.”

This is an edited version of a longer report that appears in the March 21, 2005 edition of Insurance Journal East. The complete report includes more on the CPCU role in ethical issues and an interview with IMSA’s Executive Brian Atchinson.