Risk & Business

With the Hartford announcing that it wants to go back to its P&C roots and relieve itself from the life,  health, and financial service business, one has to think, what do they know that we don't?  This headline started when one of the Hartford's big stock holders made the suggestion. It has to be thought that the Hartford may see a changing landscape and realize they need to make some adjustments. Let me speculate, is the new health and financial services federal laws that are starting to be implemented, putting some "chills" down the spine of insurers like the Hartford?  I have been thinking that these Federal programs are going to push more professionals out of the financial & health and into the P&C side of the business. There is no real room for brokers with the new health law. Well there is,  but no commission based sales. So maybe with the Hartford testing the waters of "majoring" in the P&C business again, the rest of the industry is

Vincent Stanford's 7 billion ponzi scheme may cause class actions against third party vendors who did business with Stanford. Victims may pursue class actions and one of the possible targets is Willis. Apparently, the victims contest that Willis gave them a false sense of security by issuing insurance and risk services for Stanford. If these cases go forward it could change case law that defines a brokers relationship to third parties that a policyholder deals with. I will have to keep an eye on this one and report to you later. Until next time be careful out there and know your risks. K

Today a jury found Va. Tech liable for not acting and communicating quick enough during the tragic shooting rampage. This verdict will change risk management approaches on campus and in businesses across this country. The jury made it clear that entities will have to have a quick response and communication risk strategy to save others and prevent further loss and to avoid liability. There is no way to prevent  random acts of violence but this verdict will make it clear that risk managers will have to mitigate further loss by having a mechinism to alarm, protect, and secure others. Until next time be careful out there and know your risks. K

Each day I read another state has changed it's insurance regulations to make it friendly for captive formation. Larger businesses are using captives as part of their risk transfer program. The reason? Control !  Business owners want to control their destiny's and reducing the cost of risk is one what to gain some of that control. Commerical insurers pass on the costs of their administration and profit in the rates and premiums they charge. Business owners want to get a piece of that for themselves at the same time reduce their risk management costs. Direct access to reinsurers is also making it easier for businesses to bypass the traditional commercial insurance market and do it themselves. Captive insurance companies do demand expertise, committment, and discipline to avoid a insurance meltdown of not having enough reserves to pay claims. If structured right, a captive insurance company can significantly reduce the cost of risk for a business. If I am a traditional insurance c

2011 closed with the majority of commercial insurers with combined ratios in the red and the story continues this year. Already weather disasters have insurers reeling. Loss ratios continue to climb and  we are not even through the first quarter. Talk of hardening rates also continues as insurers are starting to realize they are falling behind the curve. The economy is still however weak and getting a quick turnaround to appropriate rates may be harder than imagined. The scenario that is playing out could be unprecedented for insurance companies. Through out the history of the market,  insurance companies have pretty much gotten their way  however 2012 and going into 2013 may prove one for the record books. Stay tuned !  Until next time be careful out there and know your risks. K

A big PIP fraud case got busted today. The scheme involved doctors and lawyers and many other professional types. The investigators put in the indictment that the scheme milked insurers out of 250 million dollars. The depth of the fraud is amazing. I do not want to go into all the details in this blog, but I am always amazed at how these things get started. Until next time be careful out there and know your risks   K