In 2009, independent insurance agents and brokers faced a “perfect storm” with the economic downturn, premiums at a fraction of what they used to be, and unemployment and home foreclosure rates up. But 2010 may be just as tough, said Kevin Baker of Suhr Risk Services Inc. based in San Jose, Calif.
Speaking as the newly installed president of was the Insurance Brokers and Agents of the West (IBA West), Baker noted that:
- All 80 seats in the California State Assembly and half the state Senate will be up for election this year;
- A new governor and a new insurance commissioner will be elected in California;
- As the federal legislation flounders, state legislators are moving aggressively to consider a single-payer health insurance program for the state; and
- Harvey Rosenfield of Consumer Watchdog is proposing an initiative aimed at prohibiting brokers and agents from receiving fees and commissions and giving the insurance commissioner unprecedented authority to cap and prohibit brokers’ fees altogether.
“Without question, the future will be challenging. I cannot stress enough your involvement with in your association on the local, state and national levels,” Baker told the association’s members at its annual meeting yesterday.
Doug Stewart, interim president and CEO of State Compensation Insurance Fund, had a similar assessment of the coming year. He noted that small business bankruptcies in California are up about 81 percent, versus the national average rate of 40 percent.
“The financial services and workers’ comp industry faces challenges,” he said. “The excesses of Wall Street will no longer be tolerated, and this will affect capital and assumptions of risk.”
Within California’s workers’ compensation insurance system, Stewart noted that premiums are rapidly decreasing, while loss costs are going up. “There’s a challenged system that’s looking for solutions that aren’t easily found,” he said, also noting that insurers and agents are facing more public scrutiny.
Nevertheless, Stewart tried to put a positive spin on the challenges facing the insurance industry in California, and said, “Perhaps the challenges are magnified by the state’s size. If California were a country, it would be in the G8.”
He noted that because of the challenges, the insurance industry has become more transparent and customer-focused, which is a good thing. SCIF, for instance, has invested resources in trying to make it easier to do business with the state workers’ comp fund by publishing an online broker newsletter and launching product fairs for agents and brokers. He also noted that the state is still seeing growth from new entrepreneurs, such as those in the technology industry.
“California’s future is bright, though it’s hard to see it now,” Stewart said. “The green shoots of economic recovery are sprouting.”
Stewart was the keynote speaker at IBA West’s annual meeting, which was held yesterday in San Jose. He was appointed SCIF president in October 2009 to replace Janet D. Frank. Stewart served as the chief risk officer for the past two years under Frank’s leadership.
Was this article valuable?
Here are more articles you may enjoy.
Former Congressman Charged After Collision with State Trooper in Florida 
AIG General Insurance Chairman McElroy to Retire May 1 
UnitedHealth Says Hackers Possibly Stole Large Number of Americans’ Data 
FBI Says Chinese Hackers Preparing to Attack US Infrastructure 
