The insurance industry has never been able to produce the ROE that most other industries can give to stockholders, which has to cause a decrease in capitalization over time. With further pressure from competition, natural disasters, already heavy regulation, and now from political grandstanders like Spitzer portending even heavier regulation, in time the private sector won’t be able to afford to offer insurance products. The private sector could be regulated out of business, leaving it up to the states to take over.
I read this as doom for the Claims Departments and for the commercial policyholders who already abdicate too much responsiblity for outcomes to the carriers. Heavy case loads just got heavier for the Adjusters as staffing levels will surely be cut or, at best, remain stagnant. Result? Higher loss payments and stagnant (read “cautious”) approach to claim management in all lines, particularly WC.
You’ve got to love the characterization of contingent commissions–a decades-old practice that rewards producers and companies alike by encouraging more attention to safety, profitability, and retention–as “unsavory”. Like most things that have evolved into standard practice by gaining wide acceptance by policyholders and industry participants, the payment of contingent commissions ultimately gets everyone more focused on what matters, and works to hold costs down for premium-payers. Spitzer’s attack on these commissions will result in unwarranted disruption, an upward spike in costs, and higher prices. What is “unsavory” here is Spitzer’s political grandstanding and broad-brushing of the insurance industry as “corrupt”.
Is it really “news” that increased rate competition, combined with fines and costs associated with investigations cause a reduction in profit?
The insurance industry has never been able to produce the ROE that most other industries can give to stockholders, which has to cause a decrease in capitalization over time. With further pressure from competition, natural disasters, already heavy regulation, and now from political grandstanders like Spitzer portending even heavier regulation, in time the private sector won’t be able to afford to offer insurance products. The private sector could be regulated out of business, leaving it up to the states to take over.
I read this as doom for the Claims Departments and for the commercial policyholders who already abdicate too much responsiblity for outcomes to the carriers. Heavy case loads just got heavier for the Adjusters as staffing levels will surely be cut or, at best, remain stagnant. Result? Higher loss payments and stagnant (read “cautious”) approach to claim management in all lines, particularly WC.
You’ve got to love the characterization of contingent commissions–a decades-old practice that rewards producers and companies alike by encouraging more attention to safety, profitability, and retention–as “unsavory”. Like most things that have evolved into standard practice by gaining wide acceptance by policyholders and industry participants, the payment of contingent commissions ultimately gets everyone more focused on what matters, and works to hold costs down for premium-payers. Spitzer’s attack on these commissions will result in unwarranted disruption, an upward spike in costs, and higher prices. What is “unsavory” here is Spitzer’s political grandstanding and broad-brushing of the insurance industry as “corrupt”.