The Worst

This week’s cover of Insurance Journal tells a gruesome tale, if not an unexpected one: the nation’s property-casualty insurance industry suffered its first-ever net loss for a full year in 2001.

There was another “Worst Year Ever” before this one, of course, and one before that. And as surely as the mighty Babe’s heroic home run mark fell first to Maris and then, in rapid succession, to McGwire, Sosa and Bonds, so too this industry record will fall, some day.

And it didn’t exactly sneak up on us either, did it? Sharply lower gains on investments, consequent to declines in interest rates and stock markets were in the wind for some time, as were the steep underwriting losses of 2001, even before the brutal punctuation point of Sept. 11 and its ruinous aftermath.

Then, too, there’s much good to be said about what the market turn and the events of that awful day have wrought in terms of market discipline, a long-overdue return to fundamentals, and a more-than-welcome flight to quality.

For the moment, though, such explanations and rationalizations are small solace. The industry is more concerned with digging out, in a hurry.

At the risk of repeating ourselves, the best place to begin, it seems to us, is passage by Congress of a bill to provide a temporary backstop for terrorism insurance — one that would stabilize a reeling American insurance market and give it needed time to develop alternative solutions; one that would make the government the insurer of last resort for a risk that all concede is uninsurable by any sane underwriting standard by the private market; and, most importantly, one that assures that the nation’s policyholders, your customers, will be made reasonably whole in the event of a likely second attack that would, lacking such a provision, virtually destroy the U.S. insurance business.

Powerful voices in government have been raised in support.

In Congress, Rep. Mike Oxley of Ohio, chairman of the House Financial Services Committee, and Senator Chris Dodd of Connecticut have both championed the legislation, but they do so in the teeth of criticism that the measure would create a convenient “bailout” for an industry which has shown in the past that, left to its own lucrative devices, it can solve its own problems, and in the face too of trial lawyers who would use the legislation to advance their own pet interests. Even President Bush spoke up early this month, but unfortunately at a time when his own political capital has been drained by the crisis in the Mideast.

What’s needed now is a continuation of the kind of grass roots turnout I saw in Washington two weeks ago, when delegates to the Big I legislative conference, 800 strong, lobbied Congress in support of its position on the measure, the same position taken by virtually every major producer and company trade association in the business.

I urge you to add your own voice to theirs. Else, I fear, we’ll be repeating this week’s cover same time next year.