In a span of two days, I received three articles casting considerable doubt on insurance companies’ reputation and credibility. The first was a Newsweek article (2-25-25) citing a study done, but never made public, for the Florida Department of Insurance. The study showed how insurance companies were moving money from their Florida subsidiaries to parent companies rather than leaving money in these subsidiaries, adding to surplus and theoretically their stability. I did not r

The standard market insurance industry, due to its sloth, greed, incompetence, whatever other applicable descriptive, is a categorical failure in providing the value it was created to provide. That is not one opinion of a consumer advocate group. It is a fact reported by the industry itself. Here is the proof: According to the Aon/Ponemon Institute 2024 report, “Intangible Versus Tangible Risks Comparison Report”: The average Probable Maximum Loss (PML) of information (i.e.,

I read an article in Carrier Management in which the author advocated for a distribution model that “…emerges as the best of both worlds.” “In an industry facing high policyholder churn…” The article involved independent agents, and I know independent agents and their results extremely well. For decades, the normal client retention rate has been 90%, give or take two percentage points depending on the line of business and state. That number excludes non-standard auto, which

First, when you see mutual companies reorganizing to gain better access to capital, this generally means they’re out of operational surplus. It might also mean executives have figured out this might be a way to make a lot of money. Based on the carriers reorganizing, my assessment is most just need an influx of capital because they’ve lost so much surplus. How did they lose so much surplus? Every carrier’s story is unique but quite a number incurred huge investment losses whe

I met a man last week who has a seriously complicated insurance situation. He owns five different businesses that are quite different kinds of businesses, involve travel to multiple continents, share employees and equipment daily, and some employees have their own businesses but may use his equipment. About 10 years ago, his teenage son had an accident and his captive insurer of 25 years nonrenewed him lickety-split. We all know teenage drivers are accidents waiting to happen

Considerable research, articles, and fodder for politicians’ “business is bad” sound bites have originated from consumer companies shrinking their products while keeping prices the same. The theory is that if prices don’t increase but the product shrinks, consumers won’t notice or won’t be as upset. The price per ounce increases nonetheless, but creative packaging might mitigate the blowback. Just to satisfy my intellectual curiosity, I’d like to see how much this “creative”

In the fantastic book, The Secrets of Consulting by Gerald Weinberg, the author humorously describes common mistakes consultants make (and mistakes to which their clients should pay attention). One of his classic stories involves consultants and grocery stores. He calls it Rudy’s Rutabaga Rule. Seriously, you need to read any book that has a Rutabaga Rule! The story goes like this: A grocery chain asks a consultant to help them improve profitability. The consultant identifies

This is the hardest market since 1987-1988 and that was a casualty hard market. I do not have any idea when such a hard property market existed in history. Hard markets are always caused by a shortage of surplus. Hard markets are not caused by one or two years of poor loss ratios. In 2023, insurance companies made record profits. Lack of profits is not the problem, no matter what your carrier is telling you, unless your carrier is especially incompetent. When companies run sh

A lot of entities want to pierce the corporate veil, and none of them have your best interests in mind. Multiple government entities have new, and some old, options for piercing the corporate veil and your clients’ corporate veils. As their broker, you can help protect them, but protect yourself too. A lot of entities want to pierce the corporate veil and none of them have your best interest in mind. Multiple government entities have new, and some old, options for piercing th

A friend in a major city with no material extraordinary fire or flood catastrophe risk, PC 3, low crime, and upper middle-class neighborhood, advised his homeowners premium had tripled in the last five years. The carrier wants another 20% this year. He’s never had a homeowners claim. That kind of rate increase makes zero sense, unless the carrier itself has financial issues. Needing to increase rates 300+% in five years means the actuarial models used five years ago were fail

Insurance is an awfully old product. Standalone insurance policies not attached to contracts or loans were sold in Italy in the 1300’s. But reference to insurance dates all the way back to the Hammurabi Code from around 1750 B.C.! You might think that after 4,000 years, people selling and buying insurance would know what they’re selling and buying. But they don’t. Not really, only superficially. This is not just my opinion. I’ve surveyed hundreds of people in the insurance wo

“If you waste your time talking to the people who don’t listen to the things that you are saying, who do you think’s gonna hear?” This line was written by Kris Kristofferson, one of the great songwriters of the last several generations. I am fairly confident the context in which I hear him sing this song is not the context he intended. I hear it in the context of a consultant’s advice. And I hear that consultant’s advice from two perspectives. The first is from the perspectiv

“It’s what they don’t tell you that matters.” The person, an esteemed expert, who emailed me this quote was referring to insurance company shenanigans, illusory coverage, and maybe fraud. The easiest analogy is E&O (errors and omissions/professional liability). Most E&O classes cover errors, mistakes that agents make (do you ever wonder why the policies are professional liability policies but in E&O classes instructors advise agents to never classify themselves as professiona

“You’ll never accomplish anything if you care who gets the credit.” Gerald Weinberg, The Secrets of Consulting “It is amazing what you can accomplish if you do not care who gets the credit.” Harry S. Truman “A man may do an immense deal of good, if he does not care who gets the credit for it.” Father Strickland (1863) When I was young, I remember my grandmother planting seeds, both literally and figuratively. She liked a good garden (best snap beans ever), but she was also pl

Sometimes I just have to find some humor. Have you ever wondered if some material percentage of insurance executives attended a Monty Python marathon and left thinking they had a attended a management training program? If you Google, “Monty Python management training course” you will see somewhere near 2.2 million results! So maybe it’s possible and based on the ridiculous statements I’ve been seeing, I’d say this conclusion is almost guaranteed! For proof, consider their fam

What does it really mean when a carrier says they need to increase rates by so much? Let me translate: It means they screwed up. They either need better actuaries or, assuming the actuaries made the appropriate rate recommendations in the preceding three years, their management team needs to listen to the actuaries. The fact is someone screwed up. It might be worth asking who got fired when the carrier announces these kinds of rate increases. Why would a carrier need a 22% ra

In some states, nail technologists (people who do manicures) must complete 600 hours of training and education prior to earning a license. P&C agents only need 40 hours give or take, depending on the state. For perspective, each fingernail gets the equivalent of more education than is required for agents in total! I have lost fingernails in accidents, but so far, the value of a fingernail has never come close to the value of my home. However, agents with only 40 hours of educ

Agents are facing ERISA exposures they don’t even know exist. And their E&O policies likely do not provide coverage. Most people think of ERISA relative to retirement accounts. However, ERISA was expanded to health insurance around 2020. Much of the ensuing litigation involves excessive fees as related to self-funded health plans. I am not an expert on this issue by any means. However, I have solid knowledge of most insurance agents' lack of knowledge in this space and their

This was the headline from Insurance Law360: "Lawsuits filed by Colorado homeowners and businesses against their insurance companies for coverage of wildfire losses are a symptom of a broader underinsurance problem in a state where climate change now..." I'm sorry but this is not the issue. Climate change is a red herring. As an almost lifelong resident of Colorado and a 35-year veteran of the insurance industry including at one time being an underwriter whose state was Color

Hint: Old-fashioned fiscal management and regulatory fiscal management are good places to start. I recently analyzed the homeowners loss ratios for the top 60 writers of homeowners in one of the more difficult homeowners states. I note this is one of the "more" troubled states because reality is that quality homeowners insurance is becoming incredibly difficult to obtain and if obtained, the price is ridiculously high in probably at least half our states. I am not some consum