Category Archives: Education

Fourth of July

Before the Brits among us slide off to hide under a rock for the July 4 holiday, it’s time to present our annual Independence Day fact file. The Census Bureau reminds us that in July 1776, there were an estimated 2.5 million people living in the newly independent nation. This July 4, the nation’s population is a burgeoning 307 million. The Census Bureau also puts the dollar value of trade between the United States and the United Kingdom last year at $112.4 billion, making the nation’s adversary in 1776 its sixth-leading trading partner today. Another key Fourth of July fact is that 78 million Americans said they have taken part in a barbecue during the previous year. It’s probably safe to assume a lot of these events took place on Independence Day. Whether you’re planning on celebrating the holiday lounging by the swimming pool, renting a car to visit family, or having a barbecue, check out I.I.I. tips for a happy and safe holiday!

Credit Scoring Hearing

Insurers’ use of credit scoring and its impact on consumers will be the subject of a public hearing to be held tomorrow by the National Association of Insurance Commissioners (NAIC) in Arlington, VA. The hearing will focus on three key issues: an explanation of what constitutes a credit-based insurance score; an explanation of how insurers use credit-based insurance scores; and a discussion on how current economic conditions have affected policyholder premiums related to credit-based insurance scores. Dr. Robert Hartwig,  president of the Insurance Information Institute (I.I.I.)  will be among those giving testimony at the hearing. Check back on the I.I.I. Web site for a copy of Dr. Hartwig’s testimony. Check out further I.I.I. information on credit scoring.

A Risk Management Failure?

The financial crisis resulted from a system-wide failure to embrace appropriate enterprise risk management (ERM) behaviors, rather than a failure of risk management as a business discipline. The assertion comes in an executive report from the Risk and Insurance Management Society (RIMS). RIMS notes that when we look for a cause of the current financial crisis, it is critical to remember that organizations failed to do a number of things:Â  

  • truly adopt an enterprise risk management culture.  

  • embrace and demonstrate appropriate enterprise risk management behaviors, or attributes  

  • develop and reward internal risk management competencies, and  

  • use enterprise risk management to inform management decision-making in both taking and avoiding risks.  

RIMS believes that the 2008 financial crisis is a call to action for enterprise risk management to demonstrate its value, but that to be effective it must fundamentally change the way organizations think about risk. “When enterprise risk management becomes part of the DNA of a company’s culture, the warning signs of a market gone astray cannot go unseen so easily. When every employee is part of a larger risk management process, companies can be much more resilient in the face of risks,† it notes. What do you think?  

Victim or Victor?

Amid discussions of how insurers are weathering the financial crisis and economic downturn, a key message emanating from the 13th annual Property/Casualty Insurance Joint Industry forum is that the insurance industry is not doing enough to promote its contribution to society and the economy. The comments came during the experts panel View From the Outside Looking In. Sam Friedman, editor in chief of National Underwriter, noted that too often the industry allows itself to be victimized, letting its detractors dictate message rather than taking them to task. He gave the example of the media focus on the fewer than two percent of claims that were in dispute after Hurricane Katrina rather than the 98 percent of claims that were settled. Connecticut Insurance Commissioner Thomas Sullivan agreed that there is a need to better educate the media and others on insurance issues: an Insurance 101 if you will. Panel moderator Charles Chamness, president and CEO of the National Association of Mutual Insurance Companies (NAMIC) made the point that with all the other challenges facing the industry, it’s tough to fit in public relations as a priority. Do you agree with these comments and what do you think can be done to improve the industry’s reputation with the public? For more on this story, check out National Underwriter’s January 14 online article by Phil Gusman. For more on how insurers’ support of the economy goes far beyond their core function of helping to manage risk, check out the I.I.I. online publication A Firm Foundation.  

Credit Scoring Resources

The Federal Trade Commission (FTC) decision to order nine homeowners insurers to provide information on the use and effect of credit-based insurance scores in homeowners insurance is a reminder of the continuing need for insurers to explain why they use credit information in personal lines underwriting and exactly how it works. The FTC is seeking the data to complete a study of credit-based insurance scores and homeowners insurance, as required by the Fair and Accurate Credit Transactions Act of 2003. Insurance Information Institute (I.I.I.) background information on credit scoring is available online. The following responses to the FTC have been issued by the American Insurance Association (AIA), the Property Casualty Insurers Association of America (PCI) and the National Association of Mutual Insurance Companies (NAMIC).  

Women and Finance

Farmers Insurance has launched a new Web site for women called Take Away the Worry. The site recognizes women’s growing influence in financial matters. Nine out of 10 women participate in or direct the financial decisions that affect households and the site is designed to provide easy-to-use financial information and fiscal insights. Organized around five life-stage categories – Singles, Single Parents, Couples with Kids, Couples without Kids, and Empty Nest and Beyond – the site offers numerous topics appropriate to each life stage. For example, Couples with Kids includes career planning, college planning, financial issues, home and auto, raising a family, and retirement. The site also includes a resource center with additional online links providing further information. Check out today’s online article at Insurance Journal for more details on this initiative.

July 4 Tips

Tomorrow is Independence Day and as our regular readers know this is the time of year when us Brits living in America generally head for the hills. For the record, the Census Bureau puts the dollar value of trade last year between the United States and the United Kingdom at $107.2 billion, making the nation’s adversary in 1776 its sixth-leading trading partner today. For those of you planning on enjoying picnics, parades, concerts and fireworks, the I.I.I. has some useful tips to help make your holiday weekend even more pleasurable. Check out I.I.I. car rental insurance and  grilling safety tips for more information. Have a happy and safe holiday!  

Journalism Award Hoax?

For those of you who read us regularly, you may remember last August we outlined a detailed rebuttal from I.I.I. president Dr. Robert Hartwig to the September 2007 Bloomberg Markets cover story “The Insurance Hoax† that had claimed insurers use secret tactics to avoid paying claims (see our August 30, 2007, posting). Since then, we’ve noted many times that the article’s premise and facts were unsound and that the insurance industry has an excellent claims-paying track record. The I.I.I. is therefore dismayed to learn that the same Bloomberg Markets article has been named a finalist for the Deadline Club Daniel Pearl Award for Investigative Reporting sponsored by the New York City chapter of The Society for Professional Journalists. It seems unfitting for an article replete with so many factual and arithmetic errors to be up for an award named after a courageous journalist. The I.I.I. has written a letter to the Deadline Club expressing its concerns. Fellow insurance blogger Sam Friedman of National Underwriter takes a similar view.  

Leadership Forum

Saturday marked International Women’s’ Day (IWD) and March is Women’s History Month  in the U.S. With that in mind, we’d like to highlight an event being held later this month and spearheaded by the Association of Professional Insurance Women (APIW). The first-ever Women’s Leadership Forum will be held at the Yale Club in New York City on March 27. Co-hosts include some of the most prestigious professional women’s organizations in the city, including 85 Broads (an independent network of women investment banking professionals), Financial Women’s Association (FWA), National Association of Insurance Women (NAIW) and National Association of Women Lawyers (NAWL). Keynote speaker will be Professor Linda Carli, Ph.D., a visiting associate professor at Wellesley College and co-author of Through the Labyrinth: The Truth About How Women Become Leaders. For registration information check out the APIW site.

Agency Best Practices

Insurers increasingly use multiple distribution channels to sell their products, so an annual best practices study just released by the Independent Insurance Agents & Brokers of America (IIABA) is worth reading. The 2007 study shows that overall agencies are doing much more with fewer people and show an organic growth rate that is much stronger than expected. The new crop of best practices agencies were asked to what they attributed their success and overwhelmingly, regardless of agency size, they noted “the quality of our people.† According to IIABA, this quality is defined as a strong work ethic, expert knowledge in agency products and services, as well as high ethical standards and dedication. These factors along with advanced proficiencies with agency technologies allowed the 2007 Best Practices Agencies to push productivity levels higher than ever. The 2007 study names 195 new agencies in six agency revenue categories ranging from under $1.25 million to over $25 million. It includes a new statistic, known as the “Rule of 20†, which provides a quick means of calculating whether or not an agency creates value for its shareholders. The leading agencies must be nominated for participation in the study. Check out further I.I.I. info on distribution.