I was speaking with a COO regarding carrier strategies. He is knowledgeable and one of those people who tries to do things the right way the first time. Our conversation ended with him commenting that too much slack still exists for carriers to get real about the need to improve their operations. His comment bothered me and I started to protest. Any halfway knowledgeable carrier executive, board, investor, or regulator should see that substantial improvements are required now

I saw a headline stating that Florida building codes are at the root of Florida's property insurance problems. I doubt that building codes are the root of the problem, but are they a contributing factor? Prior to Hurricane Andrew that wiped buildings clean of their foundations for miles, Florida's building codes were weak. Considerable angst was expressed among all concerned parties regarding the inadequacy of Florida's building codes. The state's politicians, to their credit

For those of you who are not affected by the near freezing of the property insurance market (think of Florida primarily, but also southern Louisiana and the entire Gulf Coast, large parts of California, and large portions of the Intermountain West), you may not realize how many property insurance carriers have been declared impaired or insolvent over the past twelve to eighteen months. There are many, but the number seems to vary depending upon how you count them and whether

Susanne Sclafane, the editor of Carrier Management, wrote a great article many months ago about an interesting insurance study that turned out to be fake (https://www.carriermanagement.com/features/2021/08/27/225570.htm). This is a story well worth reading. A follow-up regarding the same subject was reported in other non-insurance publications. A particular carrier seems to have supplied the data, which was categorically faked. The data was not just wrong; it was proven to be

As I write this article, I have been working in the insurance industry for 35 years. Throughout those many years I have reviewed and analyzed carrier production documents, either when I worked for a carrier or when I review/analyze/reconcile them for my agency clients. Carrier production documents are the monthly and annual, scorecards of how well an agency is performing for a particular carrier. These documents are supposed to be easily understood by an agency's staff so tha

Insurance carriers are experiencing serious angst today relative to their future with their distributors. Too many distributors have grown too large for the carriers to order around. Too many agencies have been acquired by larger agencies which is forcing many regional carriers that purposely avoided contracting with aggregators and serial acquirers to now contract with them. These entities pose several material problems for carriers. A couple of key issues are their compensa

I recently read the Opinion of an Idaho Supreme Court case that reversed a lower court ruling which favored the Defendant, an insurance company. The issue involved UM/UIM coverage. The situation, as I interpreted their ruling, was pretty simple. The Plaintiff carried minimum UM/UIM limits of $25,000. They were hit and injured by another driver who carried minimum liability limits of $25,000. The at-fault party's insurance company paid $25,000. The Plaintiff then turned to the

I was talking to a friend with extensive insurance industry experience ranging from underwriting to actuarial to system design, and he asked this question. "Are insurance rates legitimate?" Subsequently, I was talking to a carrier executive who expressed his frustration with a competitor who lost billions (yes -- literally billions) over the last ten years because his company insisted on pricing that at least makes a modicum of profit, but as a result lost business to another

A few months prior to initially drafting this article, a semi-famous economist, Janos Kornai, died. He was famous for explaining why socialist economies, which are heavily planned economies, do not work. He was also famous for making the connection between the failures of planned economies and the failures of businesses with too much capital or political capital protection. I found his analysis as to why planned economies fail, proven to be correct time and time again, to be

In 2021, according to A.M. Best, the U.S. property & casualty industry grew its surplus to exceed $1 trillion for the first time. That seems like quite a bell weather moment and yet I have not seen any huge headlines touting this landmark achievement. Now, not all carriers grew their surplus. The insurance industry is an industry of carriers that have plenty of surplus and carriers that really do not have enough from a perspective of a "going concern having much of a future p

All kinds of "Insurtechs" exist from claims Insurtechs to sales Insurtechs to data consolidation/analytics Insurtechs to certificate issuance Insurtechs to agency/broker Insurtechs to carrier Insurtechs. The problem, and this is a major risk factor not to be taken lightly, is that transparency is severely lacking with many Insurtechs relative to what they really are. An agency using an Insurtech had better know if the "Insurtech" is a carrier, a broker, a legitimate broker, a

A number of large mergers and acquisitions have occurred recently among carriers, presenting an opportunity to analyze the parties involved. My conclusion, which correlates with decades of research in almost all industries, is that most large M&A's involve companies that have run out of other options. The old adage, "When you run out of all other options, merge" is still relevant. The average growth rate of the companies that were buying or selling was 23% less than average o

In "The Sun Also Rises" by Earnest Hemingway, one person asks the other, "How did you go bankrupt?" Bill asked. "Two ways," Mike said. "Gradually, then suddenly." Carriers go broke slowly, so slowly that sometimes agents and carrier executives may fail to see the decline. Then suddenly -- but it's always obvious to those looking and not in denial. In the last two weeks (relative to the date of the original draft of this article), two minor P&C carriers were taken over by stat

"When much of the global economy locked down last year, insurers, facing estimated losses of more than $100 billion globally, reached straight for their red pens to strike pandemic coverage from all new business policies." Reuters, May 10, 2021 (as reported in Business Insurance). $100 billion is an awful lot of money, but not when you look at it in context. In the United States, surplus increased in 2020 to almost $800 billion all by itself. In other words, the United States

Insurance is becoming obsolete on many levels. One measure is how many claim dollars and even claims per GDP are being paid. The number of claim dollars per GDP dollar has been declining steadily, excluding Auto PD, for the last fifteen years and is now about 15% less. Claims per $1,000 of NPW have decreased too. The average claim per $1 million dollars of GDP has decreased by about 30%. Insurance is just not as important if claims are not incurred or covered. The best way to

I am honored to have clients who endeavor to be the most professional and ethical agents and brokers possible. I have noticed that many are tired. They feel like they are pushing a Sisyphean boulder. The playing field is not level, favoring the unethical and stupid. Here are a few examples where carriers and regulators might assist, and in doing so, assist the public. 1. Rebating. "What's in a name? That which we call a rose. By any other name would smell as sweet." --Shakesp

Flood claims are awful. If you have ever had or dealt with water damage, much less a flood, you know the damage and repairs never seem to end. A house burns down and is rebuilt. A house floods and where does one even begin tearing down and then rebuilding? A reasonable person might think humans would avoid building in flood-prone areas, right? We all know that if a government provides subsidized flood insurance, at least in our society, people will definitely build in areas c

Why not just give everyone contracts and pay everyone more? In all seriousness, why not? With exceptions for a couple of national carriers and maybe five prominent regional carriers, it is an open secret that carriers pay networks more and that, with most networks, anyone who joins gains access to any available carrier. Therefore, carriers are basically advertising that it is far easier for agencies to join networks to get access to anyone and everyone and get paid more as a

From A.M. Best (December 11, 20), "Allstate agent sales dropped 8% this year after the carrier changed how it distributes its products, according to Chairman, President and Chief Executive Officer Tom Wilson." "Saying he didn't know if 'we need 10,500 offices in the future,' Wilson said doing away with such expenses could help lower rates and invest in helping agents to gain more business." "The company increased commissions on new business and lowered it for renewals and is

Recently, a carrier announced it was selling one division of its company because the stock market was not giving the company full credit for that division. That is a standard line that is sometimes true and sometimes wishful thinking. This particular division of this specific company achieved pretty much nothing in the last ten years relative to growth. Their average growth rate was about 2.5%, which is less than the average annual rate increase, meaning they were actually go