Thursday, September 30, 2010

Who Can Best Administer Insurance?

Getting back to the subject mentioned earlier this week, the subject of government-provided insurance comes to mind.

The case for some forms of government-provided insurance is that the nature of a major catastrophe -- hurricanes, earthquakes and the like -- is far too great for private insurers to bear. Which is true.

Where the problem with government-provided insurance lies is in how it's administered. More specifically, by whom it is administered.

There are very, very few things the government can do more efficiently, either in terms of cost or service, than the private sector. Why? Simple. The private sector in an open market is actively competing for the consumer dollar. Therefore, each organization striving to be the end recipient of that dollar will expend maximum energy to be the best choice.

The government has no such pressure. It is the ultimate monopoly.

A strong case can be made for the government to act as a reinsurer in case a catastrophe strikes. But as a primary provider? It would be well advised to leave such matters to the professionals.

Sadly, it's advice that is seldom taken.

Tuesday, September 28, 2010

Is CLCA A Solution In Search Of A Problem, Or Is It A Solution At All?

Earlier today, Governor Schwarzenegger signed into law an extension to the California Low Cost Auto Insurance plan, or CLCA. The plan provides a very basic level of coverage at rates lower than offered by most carriers.

Sounds great, considering how auto insurance is mandatory in California. However, when the estimated number of uninsured drivers in California is presently floating around one-quarter of all drivers, one has to wonder whether CLCA, with presently less than 57,000 policyholders, is of any genuine effectiveness in its goal.

Thursday, September 23, 2010

A Hint Of What's To Come

In the post earlier this week, mention was made of Carriers Who Shall Not Be Named and their plastering the airwaves with advertisements.

Advertising is good when done well. By saying an ad is done well, a wide spectrum of factors are involved: the attractiveness/effectiveness of the ad itself, how easily it can be measured in terms of direct effect and so on.

Speaking of ads...

Tuesday, September 21, 2010

Caffeine Insanity?

A brief personal note with which to begin this post.

I apologize for not posting anything last week. There was a reason. Last Tuesday morning, I found myself in quite the state -- heart racing, confused, difficulty breathing. Either I had just fallen head over heels in love, or something was seriously awry. It was door number two. A battery of tests later, and the answer became clear: I had suffered an allergic reaction.

To caffeine.

While the thought of getting through the day -- every day, actually -- minus coffee isn't the most pleasant thought, going through another allergic reaction has even less appeal. I liken it to some food allergies I've known about for years, namely corn and tree nuts. I can handle foregoing visits to Starbucks forever and anon. But a life without popcorn and Cap'n Crunch? It's been brutal. Still, given the alternative, namely being sick, it's a sacrifice relatively easily made.

Moving away from personal diet issues to matters of far greater general interest, coffee is deeply embedded in the business culture. We pour ourselves a cup first thing in the morning, then have another one later. What's the first thing we do when someone comes to call? We ask them if they want a cup of coffee. It's how the business world rolls.

No, this isn't going to devolve into a sermon on healthy diet and all that. Rather, it's more of a comment on what coffee symbolizes, rather than coffee itself.

We exist in an industry that is at one static and fluid. The static nature of insurance is rooted in the immovable nature of key elements: determining appropriate premiums, maintaining sufficient reserves, the mechanics of claims handling and the like. Where the fluidity comes into play is in its customers.

We all want the most coverage at the least price. Some gamble by carrying less insurance than they ought to, while others go the opposite route and purchase far more coverage than they could possibly need. For the most part, people choose the middle path, carrying enough insurance and no more. And we'll go to whoever offers the aforementioned most coverage at the least price.

The constant barrage of advertisements for carriers who shall not be named has seen a paradigm shift the past year or so. Whereas before it was price price price and do it all yourself online, the emphasis has gone to selling service along with price. Apparently the carriers who thought their customers could do it all realized you can't expect people to take care of their insurance needs in the same manner as buying a book from Amazon.

A cup of coffee, offered to a guest at your place of business, is a symbol of the welcoming side of service. Helping someone with their insurance needs from a purely technical standpoint is good and necessary. However, it's also lacking.

Service also entails empathy, the gift of genuine concern for the person purchasing goods and services from you. We've all dealt with "those people," the kind who on the surface ooze compassion, but at their core are interested solely in your wallet. Sure, they'll offer you a cup of coffee. But they'll also do their best to charge you for it. Don't be one of "those people." Be genuine in what you do. Be generous with the coffee.

Just make mine decaf, thanks.

Thursday, September 9, 2010

California Processes 15.5% Fewer Surplus Line Premiums

(Courtesy Insurance Journal)

The Surplus Line Association of California has processed $1.9 billion in premium for the first six months of 2010, a decrease of 15.5 percent compared to the same period in 2009. The total number of policies filed with the SLA from January 1 through June 30, 2010, was 209,545, representing a 4 percent decrease compared to the 2009 six month policy count.

If the trend continues, SLA expects it will process $3.8 billion in premium for the year, according to Joy Erven, stamping office director.

Year-to-date, U.S. domiciled insurers wrote 76.4 percent of the California surplus line premiums, while Lloyd's wrote 17.1 percent and all other alien insurers wrote 5.4 percent.

The top 10 surplus line brokers in California are:

Rank   BrokerPremiums Processed (in Millions)   % of Total

Risk Specialists Companies Insurance Agency Inc.   $131.86.92%

Swett & Crawford$114.25.99%

Aon Risk Insurance Services West Inc.$112.65.91%

AMWINS Insurance Brokerage of California LLC$105.75.55%

Marsh USA Inc.$105.35.52%

Hart, Anthony Joseph$90.54.75%

CRC Insurance Services Inc.$58.83.08%

Crump Insurance Services Inc.$51.72.71%

Worldwide Facilities$48.82.56%

Lockton Companies LLC$47.82.51%

Tuesday, September 7, 2010

Auto Insurance and Our Nation's Infrastructure

An illustration, if you don't mind.

When an experienced carpenter is building a house, and turns to their apprentice to say, “I need a hammer,” it is safe to assume the carpenter needs a hammer. Not a saw. Not a wrench. A hammer.

And why is it safe to assume the carpenter needs a hammer?

They have the experience needed to know what tool is required at any given point during the construction of a house. Therefore, you trust their judgment. After all, they know better than you what goes into the construction of a house. They’ve done it, and they’ve done so successfully. If this was not the case, they wouldn’t be able to find work in their chosen field.

Now, when the experienced carpenter turns to their apprentice and says, “I need a hammer,” does the apprentice get them a hammer? Or do they argue with the carpenter about what tool is required, doing so based on the belief they know better?

Logic says no. They cannot know more than, or better than, the carpenter.

Yet in reality, far too often this is precisely what happens. Whether the root cause is the apprentice believing they know far more than is actually the case, or believing that while the carpenter may have experience on their side they are so much smarter than the carpenter it more than negates the experience factor, tremendous amounts of time and energy are wasted debating what ought not to be so much as a point of discussion.

Meanwhile, the house sits uncompleted.

Breaking this down into specifics, few can argue the wisdom of investing in the nation’s infrastructure. Any one whose daily commute includes a crumbling highway, or who insures the vehicles receiving an unnecessary pounding from chewed-up roads, knows full well the vital nature of this work. There's no argument there.

But you still have to pay for it.

Believing that, as it was outlined yesterday by President Obama, the fifty billion dollars required for this effort can be conjured without adding to an already ruinous national debt is quite the leap of faith. If the President and Congress can pull it off, more power to them. Now, reveal any indication this can be done. The track record isn't encouraging.

Were we to see a better breakdown of price and effect when it comes to public projects such as what has been proposed, it would be far easier to sell. Here are the roads, here is the number of cars that drive over them daily, here is the shape they are in, here is what it costs to repair and/or improve them. There will always be complaints about any amount of taxes taken, but when there is a clear definition of what is needed, it becomes far easier to gain public support.

Which, reportedly, is something politicians prefer having, especially around election time.

That said, you still have to pay for it all. It is critical this project be done both efficiently and with fiscal responsibility at the fore.

Our roads and highways are one house that must not be allowed to sit uncompleted.

Friday, September 3, 2010

A Journey Through Time... Well, The All-Employee Meeting

Here at the Walnut Creek office, we've just concluded our monthly all-employee meeting. It's the first one we've held since reunification of our San Francisco and Walnut Creek offices, so not only did we have a bigger crowd, but more energy.

And what would an all-employee meeting be without pictures? Once the business discussions were concluded, the fun began. First, we bid a reluctant farewell to the three interns who've been here this summer:

Alex Seys;

Damien LeClerc;

and Amanda Mournier.

Next, a warm CSE welcome to our two newest members of the family:

Eda Gotterup, our Director of Accounting;

and Sarah Ferrucci, our new Marketing Manager.
(Also this author's new supervisor.)

Following the introductions, it was time for service awards marking special anniversaries with the company. First up, celebrating ten years was our resident mail room master Rizal Udan. Rizal is with our President and CEO Pierre Bize (L) and Rizal's supervisor Mario Ubaldi (R).

Also celebrating ten years with the company, ol' what's-his-name, standing in-between VP of Market Strategy & Business Development Matt Hull (L) and Pierre (R).

"I would like to thank the members of the Academy..."

Another member of the ten year team was Senior Data Entry Operator Maria Machek, with Pierre on her left and Maria's boss Operations Manager Romey Dalisay on the right.

Commemorating fifteen years, Product Development Supervisor Bob Pick receives his well-deserved recognition from Pierre and Bob's boss Vice President of External Relations Greg Parini.

Finally, marking twenty years of service was Senior Business Analyst Kevin Johnson, standing in-between Pierre and Kevin's boss Manager of Computer Operations Vicki George.

Finally, we wish Elpidio Cruz a happy retirement!