Monday, December 3, 2012

Brokers cautious, but still optimistic - Washington Business Journal:

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Commercial insurance carriers and agentin Denver, and their clients, are feeling the effects of the recession. “The major drivers of insurance premiumxsare payroll, revenue, property value, vehiclea and headcount. All of thoss have gotten hit,” said Todd Michel, senior vice presidentt in the Denver officeof LLC, a commercialp insurance and risk management consultancy. Colorado’sz construction industry, which has had a sizeable drop in payrollds duringthe downturn, is a particular area of concernb for insurers.
Rich Rogers, Southwesrt regional president for property and casualthy carrierin Denver, said compensation and general liability coveragexs make up a significanft portion of his company’s premiums. So declining constructioh payrolls can hurthis business. “We are stillp writing new accountsin construction, but opportunities have been slowed down by the he said. Despite the bad economy, carriers and agents in Denvef see reasonsfor hope. One is the stabilizint rate environment for property andcasualty (P&C) insurance.
According to the Counci of Insurance Agents and Brokers rates for all typesof P&C insurancre have declined steeply since 2001, putting pressure on premiumsz and commissions. Now that trend is beginninh to moderate: Rates declineed by 5.1 percent in the first quarte of 2009, versus a decline of 13.5 percenrt for the same periodin 2008. “If we have hit the bottomn of this cycle, all of the insurancde agent communitywill rejoice,” said Ed Harrington, CFO of Denve broker and risk management consultancy . But the downturmn also has created new opportunities for local insurance as corporate clients of all types revisittheir policies, looking to control costs.
On one hand, this wave of cost-cuttinfg poses a challenge to the industry. As one broke r noted in the CIAB’s first-quarter market survey on the commercial P&C sector, “Thed crisis … has diminishesd consumer funds available to spendon insurance.” From another though, the trend toward cost controlk means some insurance firme are seeing opportunities to capture business that may not have existec previously, since companies looking to maximizee value from their insurance spending may switch carriers or The widely publicized problems at AIG and ratingw downgrades of other major providers also have playerd a role, as more customerx have grown cautious about their carriers’ financiap stability.
According to Travelers’ Rogers, “Our new applicatio n flows aredefinitely up, which means ther e is some activity being driven by clientds needing to get their costs down and ensurew that they’re with a financially stable company.” The drivr to reduce expenses also has generated activitu on the employee-benefits side. Colorado insurers have seen increased demanxfor less-expensive options, such as high-deductible health care plans, which enable employere to reduce premium costzs and potentially decrease employees’ monthly payrollp deductions. Higher out-of-pocket costs for employees can be partially managed through tax-shielded health savings accounts.
“There’e more demand for innovative approaches that enable organizations to offer comprehensivd benefits programs to employees at areasonable price,” said Michael Faughnan, senior vice president with Consulting, an employed benefits and HR programws specialist in Denver. There’s also more interest in wellnesxs programs, which aim to reduce long-term health costs to employersz and their work forces by identifying and managing employeehealtb risks. Voluntary life and disability coverage products have grownas well.
Employer cost-cutting has helped resultsz for these lines since companies are looking for ways to offefr enhanced benefits without incurringadditionaol costs, according to Gary Keating, regional manager of the Denver Grou p benefits office for , a large seller of group disability insurance. Voluntary coverag e options can be offered to consumersx at discounted rates through their with the employee paying the cost of the Also helping sales has been the uncertainthy surrounding the potential evolution of thehealtn care-insurance industry in the next several

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