National Underwriter - The many myths that have sprung up about the insurance industry’s ability to handle claims stemming from the Sept. 11 collapse of the World Trade Center have to be dispelled, cautioned Robert Hartwig, chief economist and vice president of the Insurance Information Institute in New York. Very shortly after the terrorist attacks on the United States, insurance regulators and others went to great lengths to assure legislators and the public that the insurance industry was well-capitalized to pay the resulting claims, Mr. Hartwig noted in a speech here during the annual meeting of the American Institute of Marine Underwriters. However, Mr. Hartwig also observed that many misleading numbers have been and continue to be thrown around by people who lack a real understanding of the industry's finances.

National Underwriter - Prediction: 2002 will be better than 2001 for insurers. With a combined ratio this year expected to top 120, virtually no profits, record underwriting and catastrophe losses, declining investment income, shrinking capacity and a recession underway, this is an easy prediction to make. It’s hard to imagine how things could get any worse. Even in the event of another major terrorist attack next year, the much-ballyhooed federal reinsurance backstop should cap the industry’s liability at about $10 billion. Insurers are headed in the right direction for 2002. Caution is the industry’s new watchword. Rates, retentions and limits are up, and the Feds are expected to come to the rescue. But higher prices, limits on exposure and a government backstop are not enough.

National Underwriter - Honest communication and remaining the advocate for the customer are the best ways for producers to handle any conflict between clients with claims against insurers, independent agents suggest. The primary role of any independent agent, they said, is to make sure the customer is being treated fairly by the insurer. However, it is equally important, agents contend, to make sure the agency maintains its reputation for integrity with its carriers. "We do not walk much of a tightrope," explained Karen Oxman, vice president of Gelfand Newman Wasserman in Los Angeles. "There are times where we may disagree with the company, but my goal is that if the insurance company is being unfair to my client it is taken care of. I don’t think [that thinking] jeopardizes my relationship with the carrier."

National Underwriter - The U.S. General Accounting Office is conducting a study of the terrorism reinsurance market, the National Underwriter has learned. Industry sources said they have been contacted by the Chicago office of GAO, which is seeking information on the impact of the absence of terrorism reinsurance coverage in preparation for a House Financial Services Committee hearing, which is expected to take place shortly after Congress reconvenes on Jan. 23. The study was reportedly requested by the Financial Services Committee. The GAO study comes in the wake of the failure of the U.S. Senate to pass legislation creating a federal backup mechanism for the terrorism reinsurance market prior to Jan. 1, 2002, renewals.

National Underwriter - The U.S. Supreme Court is being asked to jump into a legal fight over a demand by a group of claims adjusters for overtime pay, which led to a $90 million jury award, an insurer’s attorney said. The case could trigger even more class-action lawsuits against insurers, in the opinion of Ellis J. Horvitz, founding partner of Horvitz & Levy, the Encino, Calif., law firm representing Farmers Insurance Exchange in the case. The verdict in Bell v. Farmers Insurance Exchange came down in July after a trial in an Alameda County, Calif., court. Previously, in March, a state Court of Appeal had ruled that the trial court did not err in finding in a summary judgment motion that the 2,400 plaintiff claim representatives were not exempt from overtime pay under state labor laws.

Insurance Journal - The Council of Insurance Agents + Brokers released findings from a special benchmarking survey of The Council‘s members. The special survey builds on The Council‘s quarterly Commercial Insurance Market Index by establishing a benchmark for assessing the impact of the World Trade Center attacks on Jan. 1 renewals and the future market. Given major fluidity in the commercial insurance market in the wake of the Sept. 11 attacks, The Council compared the commercial property/casualty insurance market today with market conditions as they were one year ago. In addition, The Council focused on changes in use of alternative market mechanisms in order to meet commercial insurance consumers‘ needs.

National Underwriter - Most insurance companies spend quite a bit of money on attracting a customer, yet when the truth be told, few do much to hold onto that customer. Although this is true for agents, underwriting, customer service and claims across the board, I’d like to address just claims for now. Twenty-five percent of the people who leave an insurance company after a claim leave because of some disagreement on the amount paid, or a concern of a rate increase. Seventy-five percent will leave because of the way they were treated in the claims process. As we travel the country doing our "Awesome Claims Customer Service" class for various insurers (there is a separate class for agents, and yet another for underwriters), we have an opportunity to do a great deal of research as well. It is clear that many claims people do not make the connection between providing great customer service and making their jobs easier.

Insurance Journal - Insurance losses from the Sept. 11 terrorist attacks, the largest loss in insurance history, will have little impact on the cost of auto and homeowners insurance next year, according to the Insurance Information Institute (I.I.I). But the costs of property and liability insurance for commercial businesses are expected to increase, in some cases significantly, due to multiple factors, from rising costs to a broader demand for insurance protection. Insurers are expected to pay at least $40 billion in claims from the terrorist attacks, most of that to commercial businesses. Insurance premiums nationally for private homes and automobiles will rise about six percent in 2002, the same as 2001. Premiums for commercial businesses, after decreasing over the past few years, will increase by about 30 percent on average in 2002, reflecting market forces that existed both prior to and after Sept. 11.

National Underwriter - An estimated $30 billion-plus loss from terrorist attacks will give the p-c insurance industry "a record-poor" year-end combined ratio of 119.9, according to the Insurance Services Office Inc. The Jersey City-based ISO said that the projected 2001 combined ratio--the percentage of each premium dollar spent on claims and expenses--will be nearly 10 points worse than last year’s 110.1 figure. The losses from Sept. 11 alone have deteriorated the combined ratio by 6.3 points for the calendar year, according to an ISO representative, Christopher Guidette. Commercial lines writers, according to ISO extrapolations, could see a combined ratio exceeding 130 for the year. ISO noted that even before Sept. 11, the p-c industry's total first-half 2001 combined ratio was 111.2.

Tillinghast - Going forward, primary insurers may face greatly reduced reinsurance capacity. After a mega-catastrophe, primary insurers reevaluate their reinsurance needs and often seek greater protection. Ironically, at the same time, reinsurers implement tighter risk controls, which tend to reduce the capacity they are willing to offer. We are already seeing the signs of a looming reinsurance capacity shortage.