Risk & Business

Tuesday's mid term election will give the insurance industry something to think about on Wednesday Nov 3rd. No matter the outcome the industry will have to deal with an increasing Federal push into regulation of insurance. The thought is that the Republicans will still push for some Federal regulation but will still keep most of the State regulation infrastructure in tact. If the Dems keep control then the State system could be in jeopordy as some people think. My thought is that either way the insurance industry is changing to more Fed regulation and less State oversight. I see this trend continuing under the Republican or Democratic controlled Congress. Until next time be careful out there and know your risks. K

Even in the recession insurance companies have made money. Mostly from interest income out of investments and lack of significant claim catastrophes over the last few years. However to continue their earnings insurance companies may be faced with tough times. The Fed is looking to keep interest rates depressed even through the slow recovery. As the economy picks up and people and small business grows, claims will increase. The insurance companies will then have to walk a tight rope on when to start raising rates to keep their earnings. If they raise rates to fast the industry could hinder the already slow economic recovery. If they don't raise premiums then their earnings could be negatively impacted. So it is a fine line they will have to navigate over the next few years. Lets hope for small businesses around the country that the industry will slowly raise rates to cover the forthcoming claim increases so that the economy can grow. However if the insurance companies get greedy and

  I have to applaud the NFL in their accelerated quest to reduce concussions. Currently the league is looking into helmet design and rule changes on hitting and tackling. This is risk management at its best. The NFL is doing great and revenue even in this recession is up, but the league is looking ahead to make the game safer without changing the inherent toughness that makes the game great. The helmet desing issue is a great example. The NFL is looking into helmet design per position. Studies show that each position on the field have different forces on the helmet. The lineman take more hits to the front of the face and chin. Receivers take hits to the side of the head and neck. Running backs get hit more on the top of the head. As the league continues to risk manage the helmet design I can only see the game getting safer and better. Again this is risk management at its best. Until next time be careful out there and know your risks. K

For the first time businesses are reporting losing more money to electronic theft than to theft of hard physical assets. The Insurance Journal reports that the amount of loss due to electronic piracy and fraud is now outpacing the theft of business assets by millions. Studies are showing that most of this theft is coming from middle tier employees and outside thieves. The risk management practices to control the electroninc theft is not as well formed as hard asset theft and also lags in keeping up with the technology changes that occur so rapidly. How this will affect businesses going forward will remain to be seen. With the electroninc risk so high, businesses that cannot control it will most likely not expand or grow as quickly as they may be able to. In other words electronic theft may be contributing to a stalling economy. In time I think we will see sound risk managment techniques develop that can control some of the problems with electronic theft. Until next time know your risks

I can't help but think that 90% of this recession is lack of confidence. I hear it and see it when I visit my clients every day. No business owner that I deal with has any real confidence in the direction of the country. Time and time again we discuss how the policies of Washington DC over the last decade or so have pushed the economy to the brink and now everyone is kinda just holding on. As a country someone or something has to break the deadlock. Will it be the Nov election results ?  Will it be the banking sector? Will it be green energy initiatives?  No one really knows but America has always pulled itself out with innovation and creativitity. It is time for all of us to help ourselves by using our minds and energies to create confidence. Once we get that back then the economy will flourish again. Until next time be careful out there and know your risks. K

Risk is everywhere and never ending. Top businesses are starting to learn that risk management is a science and a needed discipline for survival and success. The complexities of it take special skills and training and cannot be accomplished successfully unless individuals are skilled in the field. As the profession of risk science evolves it is becoming clear that individuals in their daily lives could benefit from what the big corporations are finding out about risk management, it makes life easier. Unfortunately it can be overwhelming for individuals to accomplish on their own. As a matter of fact it is impossible for individuals to practice risk managment scientifically without specialized training and education. Like medicine, people need doctors to heal them when they are sick. In the future I predict that people will have a risk professional to help them live along with their docs, accountants, and lawyers. Until that time people will live risky lives because they don't know

With the insurance companies making more money than ever and the increasing commodization of the business, independent agents find themselves at a crossroad. Historically, agents have been more than sellers of insurance they have been advisors and counselors of insurance and risk. Clients have always had the advantage of getting great service from agents and not having to pay for it other than the premiums since insurance companies pay the agents a commission. As companies have pushed agents for more and more growth while lowering commissions, agents are trying to continue to give the same amount of service under more and more pressure. Agents are faced with trying to serve two masters, growth for the insurance companies & quality service to their clients all the while getting paid less. Something has to give. If agents continue on this path, they will not be able to sustain their businesses. The answer may be in fee for service or the answer may be in consolidation of agencies as

A new law just passed in Ca. mandates a communication strategy for consumers that outlines the nuts and bolts of homeowners insurance policies. On the heels of the wildfires, many homeowners found themselves underinsured and the State felt that warnings and education will help consumers understand what they are paying premiums for. My question is where are the agents? This is the job of the agents that sell these policies to consumers. Maybe the agents have been doing a good job and the consumers are not listening, or maybe the agents hae been lax in communicating to customers what is and what is not covered. I think it is a little of both. Either way the State getting involed to such a degree that they are doing part of an agents job is not a good thing. It is the tip of the iceberg of more regulation and oversight of the business. My warning to all agents and brokers out there if you are not communicating on a regular basis the coverages and non coverages to your clients the regulato