View this article online: https://www.insurancejournal.com/magazines/mag-declarations/2009/12/20/159128.htm
Climate of Understanding
“Insurers have dealt with the impact of extreme weather for centuries. Mopping up the aftermaths of a hurricane or cyclone is second nature to us. Above all, we understand people’s attitudes to risk and – on a daily basis – advise them on how to reduce their vulnerability.”
—Lloyd’s CEO Richard Ward, speaking at an ancillary meeting of the Copenhagen Conference on Climate Change.
Risks Have Changed
“The risks confronting business today are new, complex and increasing. The old answers just won’t cut it. Before our government bailed out Citibank, AIG and General Motors, most of us thought those things could never happen – but they did. The world has changed dramatically in the past decade. It’s a dangerous place full of new and complex risks. But are we doing anything differently today? I don’t think so.”
—Joe Plumeri, chairman and CEO of Willis Group Holdings Limited, calling on corporate leaders to address the risks facing business at the start of a new decade. Plumeri delivered his remarks at Town Hall Los Angeles.
Nothing Improper
“There is nothing inherently improper about an incentive-based compensation arrangement between an insurer and the producer, but due to the differences in each insurer’s compensation arrangement, a potential conflict of interest may arise when an insurance policy that would earn the producer the greatest compensation for its sale is not the most for the customer in terms of coverage, service or price. This may create an incentive for the producer to recommend that policy to the customer.”
—The official explanation of the latest draft of a New York regulation on agency compensation disclosure that is likely to be put into effect in January. The regulation allows agents and brokers to accept incentive pay from insurers that is tied to volume and production, but requires them to give customers who request it detailed information on this income.
Bailout Holes
“Treasury fit the enormous investments in these insurance companies, huge proverbial pegs, into the small round holes of eligibility for the bailout program.”
—From a report by Special Inspector General Neil Barofsky that is critical of Congress for allowing the participation of two big insurers – Hartford Financial Services Group Inc. and Lincoln National Corp.—in the government’s $700 billion financial rescue. The taxpayer investments in the two companies went to support their insurance businesses, not the small thrift institutions they acquired in order to qualify for the bailout, according to the report.