Skyrocketing Insurance Costs

Regarding Kathleen Day’s excellent report on skyrocketing insurance costs (Sept. 14), there was one area that she did not touch upon and that is the motivation, dedication and experience of the top string-pullers in the management of many American insurance companies.

If you take a look at the many companies that have recently failed or are about to, you will find in the majority of cases that they are owned and operated by every type of industry people except professional insurance men. Conducting the fortunes of many troubled insurance companies are savings and loans, banks, credit-card issuers, lawyers, accountants, real estate tycoons and just plain old folk swooning at all the loose cash sitting around and itching to make as much money as they can in the shortest possible time and to hell with any sort of responsibility toward what the industry is actually in business for. The fact that they have lost a record amount of capital over the last few years can be put down to a combination of greed and total ignorance of the industry that they have hopped into.

Much of this ownership has surrounded itself with a cadre of top management mediocrity that is hanging onto its job by a suspender belt and whose motto seems to be, “let’s see what everyone else does first before we copy them.” They are terrified to make any sort of decision that might require the blessing of an ownership that knows nothing about the insurance business except how to invest its money.

Because of this mediocrity, the working underwriter in the trenches, upon whose judgment the underwriting results rests (and who in any other industry would be the key person in the company), is unmotivated and tired of being the scapegoat for poor results. He/she has no communication with the ivory-towered, cash-flow bunch but must go through a chain of command of increasingly unknowledgeable senior management whose first thought is not to make waves. Few companies train their underwriters any more and in fact will advertise for a “senior man with three to five years experience,” which is a period of time that 25 years ago barely took you out of the ranks of apprenticeship.

Until the industry reins are handed back to professional insurance people again, the consumer may as well continue to expect a poor performance from the risk takers, because the only risk too many of them want to take is the speed with which they run to the bank. The actual responsibility for the product they should be offering or toward the people who work for them obviously is the last thing on too many of their minds.

TIM MORTON

Burbank