P E R S P E C T I V E S

Outside Influences

Strategic plans are wonderful things. Business plans make the world go ‘round. We plan carefully with financial goals, growth projections and market forecasts. The way is clear, all we have to do is execute the plan!

Then it happens. Four hurricanes hit one state in four months. Force Five tornados flatten the Midwest. Earthquakes shake the West Coast. A freak freeze explodes pipes in Texas. And that’s just Mother Nature.

The stock market seems to fluctuate with every puff of wind, every rumor, every scandal or every shift in perception. The world shakes. The dollar plummets in value. Gas prices soar. Interest rates can’t quite decide which way to go. And that’s just finance.

Entire populations change direction as farmland is gobbled by developers and urban living encroaches on the country. And, although coastal counties occupy only about 17 percent of the territory of the contiguous United States, they contain about 53 percent of the nation’s population. Huge corporate farms are overrunning small family farms, changing families and towns forever. The cost of keeping up with the competition skyrockets as technology changes, literally, daily. And that’s just progress.

Ingenious criminals devise fraud schemes costing insurance companies and their customers $30 billion annually. Insurance investigators and law enforcement run a never-ending race to keep ahead of the perpetrators. NAMIC’s just-released issue brief, “Insurance Fraud: Most States Act to Curb the Abuses, But Adequate Statutory Remedies Still Lacking in a Few States,” describes the measures being taken to ramp up the attack on fraud. The paper lists details of model law elements listed by the Coalition Against Insurance Fraud (CAIF) as important for states to adopt to effectively deter insurance fraud. Some 40 states have moved to adopt most or all of CAIF’s key legal provisions. With the urging of our industry and the legal system, more states will get on board. And that’s just fighting fraud.

Then come legislative and regulatory challenges. The Terrorism Risk Insurance Extension Act (TRIA) and Sarbanes-Oxley (SOX), each in its own way affecting the structure and operation of NAMIC’s member companies and the industry itself, are the products of powerful influences. The grassroots power of NAMIC members is felt in the halls of Congress and at the NAIC as we deal with issues such as the future of insurance regulation, asbestos and class action reform, among others. NAMIC member advocacy efforts have prevailed time and again to champion the industry and the customers who depend on it. And that’s just public policy.

But NAMIC member companies are resilient. As NAMIC’s recent SOX cost-benefit analysis shows, our members made up 33 percent of the property/casualty industry premium in the past decade, but mutual insurance companies were only five percent of the industry insolvencies. Our members work together to combat the forces challenging them. We have little control over many outside influences, but we have total control over the way we deal with them. Sharing ideas, experiences and solutions as we do in venues such as the Management Conference, Leadership Forum, CEO Roundtables and Annual Convention, brings the strength and resources of the whole to each of its parts. Together, we rise to the challenge!

Posted: Friday, August 19, 2005 12:00:00 AM. Modified: Friday, August 19, 2005 4:08:50 PM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.