The insurance industry in a nutshell

From the CEO of St. Paul/Travelers:

"Not only can this company not grow the top line [revenue], but margins are also under pressure," said Chris Winans, an insurance analyst at Lehman Brothers of New York, who has an "underweight" rating on the St. Paul's stock. "It's not a message that investors are likely to take well."

The weak pricing comes at a time when the insurance industry is still tallying losses from the costliest hurricane season on record. Four hurricanes have hit Florida over the past six weeks, costing insurers more than $25 billion. The St. Paul's losses from the storms top $900 million and could wipe away 90 percent of its third-quarter profit, according to Winans of Lehman Brothers.

Fishman said Monday that the storm-related losses now rival those that the insurance industry incurred from the 9/11 terrorist attacks and could cause some insurers to raise rates. "These are big numbers that are starting to add up," he said.

To make matters worse for many insurers, yields on bonds have declined since the Federal Reserve started raising short-term interest rates. That hurts the St. Paul because it allocates about 80 percent of its investment portfolio to bonds. As yields decline, so does the interest income that the company earns on those securities.

"There are times when because of growth opportunities, you can put capital to work thoughtfully and there are times when you can't," Fishman said. "Perhaps [capital is] better sitting with your shareholders than sitting earning 4 percent in your own bond portfolio."

Lloyd's Chairman calls on Texan businesses to guard against "21st century risks"

...a recent industry survey that revealed that only 46 percent of US companies are buying terrorism coverage.

Lord Levene said cyber-security – against computer viruses and hacking attacks by “cyber terrorists” – is reportedly immature and, according to a recent survey, 40 percent of Western companies do not have adequate plans in place.

Tort reform update: House of Representatives passed H.R. 4571 by a vote of 229 to 174, sending it on to the Senate

Specific provisions include:

Making monetary sanctions against attorneys who file frivolous lawsuits mandatory rather than discretionary, and removing an earlier "safe harbor" provision that allows attorneys who file frivolous lawsuits to avoid sanctions by withdrawing their suit after a motion for sanctions has been filed
Allowing sanctions for frivolous or harassing conduct during discovery
Allowing a plaintiff to sue only where he or she lives or was injured, or where the defendant's principal place of business is located

Motorcycle Injury Data- One Year After Repealing State Helmet Requirement

Pa. Looks at Motorcycle Crash and Injury Data One Year After Repealing State's Helmet Requirement

I used to own a motorcycle. Sold it because I didn't feel safe riding w/a helmet.
But people should be able to ride without a helmet if they want. Just as long as whatever injuries they suffer come exclusively from their own pocket. Caught without a helmet...sorry can't insure you any more. You're free to do whatever you want so long as it isn't soiling the loss experience of my pool.

Marginal Revolution: The economics of Mexican kidnapping

Tyler Cowen takes time out from his travels to ponder the mysterious ways in which the finuding provided by insurance can produce behaviors quite contrary to its intent.

5. Can we not think of the insurance company as an institution that helps the kidnappers make credible commitments? The company certifies which kidnappers will in fact return a live body in return for the money. The company is a kind of Better Business Bureau for the kidnappers.

Insurance Snub Rules Out Barrel Race

The popular event has in past years seen youngsters roll empty nine-gallon beer barrels from the quay to one of the town’s pubs, as part of Topsham’s annual fair.

You gotta love it when it's the insurance company questioning the wisdom of teaching kids to roll kegs from one pub to another.

Middle Man Mess

Arnold Kling offers an insightful look at the impact health insurance has had on our economic recovery (link via instapundit):

"A relentless rise in the cost of employee health insurance has become a significant factor in the employment slump, as the labor market adds only a trickle of new jobs each month despite nearly three years of uninterrupted economic growth.

Right now, employers do not provide insurance to employees, they sell it to them. In the future, we'll see "disintermediation" of health insurance purchasing process (employees buying direct rather than through their employer).

The consequences of health insurance disintermediation are generally favorable. It gives workers opportunities for jobs and take-home pay that otherwise would not be available. I would like to see complete disintermediation, so that health insurance is always bought directly by individuals, rather than through employers.

Scream exposes art insurance gaps

The theft has highlighted gaps in the insurance of major works around the world, with a large number not covered against being stolen, according to some of the UK's leading art insurers.

"Quite a lot of the world's art, believe it or not, is not insured, or is insured only for that which a budget constraint will allow," he said.

I'll believe it when I see it

FT.com reports that the Zurich CEO doubts a return to price cuts.

James Schiro, chief executive of Zurich Financial Services, said insurers had learned the lessons of the 1990s and would maintain pricing discipline, even if business conditions weakened. But Mr Schiro recognised investors' scepticism - reflected in current low share prices.

It's easy for the chief to say, but at the ground level, there is price competition every day. I think it would be a major change from some of the behavior we've seen over the past few years. Underwriters and program managers are still under pressure to produce results. If your renewal is at the end of the month, be sure to ask how they're doing on their budget. That said, there are companies who have discipline, but that's been a part of their culture for awhile. I don't think you change that overnight.

Healthcare reform from the private sector: Pfizer launches prescription program for uninsured

via St. Louis Business Journal: "Under the program, families earning less than $31,000 qualify for free medications through two Pfizer programs; families earning less than $45,000 a year can save an average of 37 percent on retail prices of Pfizer medications; and families earning more than $45,000 would be eligible to save an average of 15 percent. "

The Simpsons test for marketing collateral

via instapundit, Brainwash highlights a most unfortunate logo.

Do you really save on insurance by cutting out the middleman?

Policies have different exclusions and special conditions. When it comes to exclusions and conditions, the devil is in the fine print, but this can make a huge difference to you when you claim.

Personal Finance looks answers the question of whether buying insurance direct can save you money. The answer...it depends.

Brokers retain approximately 85 percent of the short-term market despite years of direct competition.

If there is parity between brokers and direct writers, I think the next question to ask would be whether broker-managed specialized programs offer any better results. If you're relying on a broker for advice, you may want that advice to come from someone who's sold more policies than you have.

Fulbright & Jaworski release study of top corporate counsel litigation concerns

The Number One concern was labor and employment, with 62% identifying it as the chief cause of action. Retailers especially fear employment suits -- 76% said it was their top concern. The Number Two concern was contract disputes (58%), followed by intellectual property, product liability and class action lawsuits.

Nearly half of companies reported some financial benefits from domestic arbitration, with 47% of respondents seeing a cost savings, 44% saying there was no difference, and 9% stating that it actually increased their costs over litigation. The risks of huge jury awards seemed to be the predominant concern in deciding whether domestic arbitration was worthwhile.

Counsel were also inclined toward nonbinding mediation: 60% favored this litigation alternative, while only 15% stood opposed. Larger companies in particular were pro-mediation, and mediation was perceived as much more cost- effective -- 70% of counsel found that it produced some level of savings. "Cheap -- faster than with trial or arbitration," was a typical pro-mediation comment. Another counsel noted that "non-binding mediation is always a welcome approach for parties to articulate their positions and positively work towards a resolution." --

When hiring outside counsel, money takes a back seat to relevant skill sets and historical success. Counsel were asked to name the top factors for selecting litigation counsel: cost-effectiveness actually registered fifth in importance. The Number One selection factor was specific case experience, followed by general knowledge, reputation, and past experience with the company. Cost may have drawn the most mentions overall, but companies appear to choose their litigators on the basis of expertise over economics.

28% of companies below $100 million in revenues filed a contract litigation since 2001

Coffee of the future?

BBC NEWS:

"Normal monkeys and people procrastinate - tend not to work very well when they have a lot of time to get the job done, and work better when the reward is nearer in time," Dr Richmond says. "The monkeys under the influence of the treatment don't procrastinate."

Forget caffeine, they do it by blocking dopamine. Which is also the title of a very interesting recent DVD release. The future Starbucks selections: regular, decaf, de-dopa? Makes you wonder if this wouldn't also be a suitable method of treating bad habits (smoking) that provide short term enjoyment, but disastrous results over the long term.

link via drudge

Update: more at Wired News, and much more over at FuturePundit:

He fashioned an agent (DNA antisense expression construct) that, when injected directly into the rhinal cortex of four trained monkeys, spawned a kind of decoy molecule which tricked cells there into turning-off D2 expression for several weeks. This depleted the area of D2 receptors, impairing the monkeys' reward learning. For a few months, the monkeys were unable to associate the visual cues with the workload – to learn how many trials needed to be completed to get the reward.

Stay connected

via FastCompany: The Visual Thesaurus, a Dictionary of the English Language isn't your average Shift F7. Floating constellations show the way to words less travelled.

What, Exactly, is " Partnering" ?

Rebecca Morgan at Inc.com examines:

"Eli Goldratt and the Theory of Constraints reminds us that we are only as strong as our weakest supplier and weakest customer and that it is in our best interest for them to be healthy and vibrant. Additionally, lean manufacturing has taught us the value of working with a limited number of suppliers who can help make us better. And buyers are often now measured on 'lowest total cost of ownership' instead of lowest purchase price. As a result of all this new thinking, we now understand there is a lot more to purchasing than just price and that suppliers are not the enemy. The lesson has been that we need good, strong, and profitable partners so they can help us become good, strong, and profitable companies. We've learned that we're in this thing together."

An especially tough discussion to have with potential clients when your major competitors or related services launch major add campaigns saying "just get a quote, we'll beat anyone." Or "15 minutes could save you $500." One of the approaches I've used is to ask, "are you tied to the process, or are you tied to the results." On the other hand, if you're trying to build your business, how do you not get sucked into the quoting process.

Go Meme 4.0

via geek ramblings:GoMeme 4.0

There are by some estimates more than a million weblogs. But most of them get no visibility in search engines. Only a few "A-List" blogs get into the top search engine results for a given topic, while the majority of blogs just don't get noticed. The reason is that the smaller blogs don't have enough links pointing to them. But this posting could solve that. Let's help the smaller blogs get more visibility!

This posting is GoMeme 4.0. It is part of an experiment to see if we can create a blog posting that helps 1000's of blogs get higher rankings in Google. So far we have tried 3 earlier variations. Our first test, GoMeme 1.0, spread to nearly 740 blogs in 2.5 days. This new version 4.0 is shorter, simpler, and fits more easily into your blog.

Why are we doing this? We want to help thousands of blogs get more visibility in Google and other search engines. How does it work? Just follow the instructions below to re-post this meme in your blog and add your URL to the end of the Path List below. As the meme spreads onwards from your blog, so will your URL. Later, when your blog is indexed by search engines, they will see the links pointing to your blog from all the downstream blogs that got this via you, which will cause them to rank your blog higher in search results. Everyone in the Path List below benefits in a similar way as this meme spreads. Try it!

Instructions: Just copy this entire post and paste it into your blog. Then add your URL to the end of the path list below, and pass it on! (Make sure you add your URLs as live links or HTML code to the Path List below.)

Path List
1. Minding the Planet
2. Luke Hutteman's public virtual MemoryStream
3. geek ramblings
4. The Watercooler
5. (your URL goes here! But first, please copy this line and move it down to the next line for the next person)

(NOTE: Be sure you paste live links for the Path List or use HTML code.)

August 2009: How Google beat Amazon and Ebay to the Semantic Web

geek ramblings links to Ftrain.com: Paul Ford looks into the crystal ball to imagine a future where Google has harnessed an evolved web to become the economy.

It's between you and the seller, anonymously, perhaps even tax-free if you have the right account number, no one takes a cut. Not using it to buy items began to be considered backwards. Just as the regular Google search negotiated the logical propositions of the Semweb, the Personal Agent did the same - it just did it every few minutes, and on its own, according to pre-set rules.

Tough to imagine a world without salesmen. I only shop online for books, electronics, plane tickets, hotels, phone service, insurane, car rentals...

Sadly, these developments will be too late for Mark Guthrie.

Insurance Industry Should Embrace Data Warehousing

CRM Daily: NewsFactor Network Report:

"What the insurance industry fails to realize, argues Agosta, is the gold mine on which it sits. He recommends a series of other uses to which insurance companies could put their already detailed and well-organized data to use nearly immediately. "

As a former database programmer, it pains me to see the vast amounts of useful data we have stored up in incompatible systems. Hopefully we'll continue to see pressure to pursue the direction that Agosta promotes and deliver better services for our clients.

Iraq's insurance industry getting back on track

KRT Wire::

...the company offers...auto insurance..."It's supposed to cover all Iraqi drivers for injuries under a blanket program paid for by a fuel surcharge. Officials admit that many people are unaware of that coverage, and therefore fail to submit claims after accidents."

Insurer settles with plaintiff to keep from paying insured's defense

via FindLaw:

"presents a novel but potentially quite important issue of insurance law:
whether a liability insurer, asked to defend (or pay the defense costs in) a
suit against its insured that contains some claims that are covered by the
insurance policy and others that are not, can limit its responsibility to defend
by paying the plaintiff in the liability suit to replead the covered claims as
uncovered claims."

Sounds messy at first, but there's no telling whether the net effect would be negative for the insured. Would the plaintiff still sue if there was no coverage?

The Hole Truth- Choosing a Broker

"Garbage in, garbage out…quality in, quality out." The better the information provided by your broker to the underwriter, the more comprehensive the program will be upon quotation. An insurance company must be convinced that financially assuming your exposures to risk is a smart business decision.

You may find yourselves repeatedly asking participating brokers, "Why do they need that?" (Referring to why the insurance company wants to see your financial statement or your membership application.) The broker who bombards you with the most questions may well be the most qualified to negotiate effectively on your club’s behalf. For it is he or she who is proactively working to get the carrier to improve upon your existing coverage.

Beware of those who ask for very little data throughout the proposal process. With limited information they can deliver only a "generic quote." In today’s competitive marketplace you have access to far more than that. If willing to put the effort in, you can secure highly customized coverage.

Amen.

Wired News: The Empire Blogs Back: "While Microsoft may be the biggest corporation to attempt to harness the power of blogs and social software in order to be a better company, it certainly isn't the only one. Lots of small and large companies, including eBay and PayPal, are turning to blogs and other shared tools for both internal and external projects, according to Six Apart's Dash. "

blogs as brand barometer

Guardian Unlimited:

"After a doctor, the person we would most trust is the average person who's 'just like us' - a company CEO is eighth on that list. It's the same for news sources about companies. After specialist business magazines, we trust family and friends and colleagues; journalists are sixth.

"So it's a pretty shocking piece of research that shows we trust people who we feel are like ourselves and are not out to promote something. That is why blogs have such power. We trust them, and if we disagree with an opinion, we normally have the option of adding our say."

link via instapundit

A data steward's job is never done

"poor data quality cost U.S. businesses more than $600 billion in 2001, and it said business data decays at a rate of 1.5% to 3% every month. "

Online insurance- business model a dud?

The Motley Fool observes:

"Insurance...is something that begs to be sold in person...whether the perception is flawed or not, when folks are buying policies under the notion that the insurers will assess the damage and cut you a check when things go wrong, it seems instinctive to secure it locally rather than ferret out a deal online."

InsWeb (Nasdaq: INSW) was trading for less than the $5.26 per share in cash that it was sporting on its balance sheet. Last night, CEO Mark Guthrie stepped down after seven years of service.

I don't think you can simplify the issue down to one dimension. My success suggests that the right blend can achieve superior results to strict adherance to just online or just personal strategies.

Dot-com gives gripers place to go to complain about insurers

via The Business Review (Albany):

"Insurancegripe.com was created by Rich Pagano, an Albany-based Web-site designer, and Rick Weidman, an insurance industry veteran from Bethlehem, Pa. The site simplifies the process of complaining to a state insurance department and then gives the customers the option of switching carriers or agents."

Overture- Search Term Suggestion Tool

Ever wonder how many folks are searching for the same thing as you. Having a tough time with a search, and need related search ideas. Check out the Overture- Search Term Suggestion Tool

Speaking of inside information

...But not all CEO actions may be covered by insurance.

In their article, CEO Insurance Hits New Highs, Wired has an eerily prophet look at the rising cost of D&O insurance. Their example: Martha Stewart and her huge policies.

Thanks to the skateboard directory and Marylaine Block for the link.

Forget the popular vote:

via Houston's Clear Thinkers- a sneak peak at how the futures market would predict the election if it happened todayPejmanesque: THE EMERGING SHAPE OF THE ELECTORAL COLLEGE

Don't let insurance bill hike become a liability

Belfast Telegraph:

"Employers Liability insurance premiums have increased by between 50% and 200%."

D&O insurance- a necessary tool for attracting good Ds and Os

Bizjournals takes a look at how executives are becoming more discriminating in serving on company boards, and how the right directors and officers risk management program can help your company attract the best:

Also, the Sarbanes-Oxley Act, which went into effect a year ago, now holds directors more accountable for the accuracy of a company's financial reports and quarterly reports, which could open the door to more shareholder lawsuits.

The majority of board members still know very little about directors and officers insurance or even understand the policies held by the company, according to Chuck ReCorr, the managing director of the Research Triangle chapter of the National Association of Corporate Directors.

"A company can indemnify the directors, but they are being protected at the shareholders' expense, so it is limited," ReCorr says. "Some directors are buying individual insurance policies to add another layer of protection for their assets."

Benefits an issue for everyone, including Microsoft

From Wired: Microsoft plans to cut $1B in costs from changing employee benefits and consolidating outside vendors.

Houston's Clear Thinkers- terrorism insurance on the cheap

Houston's Clear Thinkers links to an interesting economic discussion. Would you be willing to pay $7 for additional peace of mind that your flight doesn't have any terrorists on board?

Digital Deliverance: From More Than 7,000 Sources, Just a Dozen Account for Most Google News Stories?

via John Dowdell's Macromedia blog

Digital Deliverance: From More Than 7,000 Sources, Just a Dozen Account for Most Google News Stories?

Sales is tough

Sometimes I think its the toughest job there is. And sometimes I think the challenges I face in sales are a karmic result of my own shrewd consumer behavior. I've been known to go to a half dozen electronics store to check out prices on digital cameras.

I just got off the phone with a salesman who was trying to sell me his service (lead generation). I'm a probable buyer. It's a product I'm interested in. I originally contacted him. Nevertheless, I don't particularly enjoy getting a phone call from him to discuss it. I know what I want. I know it's not possible to get a guarantee before purchasing his service. But, I do tell him exactly what information I need to make a decision. I tell him when and how to follow up.

I can think of a dozen different sales techniques he could try to pull to get me to pull the trigger. But the path is going to be much easier for both of us if he could just be quiet, understand my concerns, and respond in the manner that I prefer. There's a personal lesson in there, I'm sure.

Economics of light rail

Via Houston's Clear Thinkers: (scroll down)

...it would have been much more economically prudent to buy a new Toyota
Prius for all the light rail riders than to build and maintain the light rail
system.

It's an interesting study in how the benefits to a few (construction related cos) can overpower the costs of the many (taxpayers) and create an environment where these projects are difficult to oppose.

I live in Houston. I've yet to ride the rail. I would like for a system like this to be viable in our city and achieve the noble goals that it aspires to. It makes me think of New York. I think New York has a certain charm because of its population density. Makes me wonder if our votes for mass transit are an attempt to associate ourselves with a city that has that charm.

By the way, if you're looking for a blogosphere perspective on Houston, I'd recommed Houston's Clear Thinkers by Tom Kirkendall. I've been reading him for a few months now, and he always has an interesting perspective- not to mention he's rekindled my interest in Astros baseball. No small feat when you consider how the season is going.

With productivity comes liability?

via lawyersweekly.com: Companies can now worry about getting Sued Over an Employee's Phone Call. Cell phone that is. While driving. Precedents are being set that employers can be held liable if their employee is talking and driving. Regardless of the hour of the incident, it is easy to find out the person on the other end of the line and make a case that there was a business purpose to the discussion.

Expanding your sales force? You may want to set some guidelines in this area.

The custom craze- when will it end?

Never, I hope:
via bizjournals.com: "Indeed, the $20 billion-plus motorcycle market is going through a major growth spurt -- one that has lasted more than a decade. According to Mike Mount, spokesman for the Irvine, Calif.-based Motorcycle Industry Council, the number of on-highway bikes sold annually increased by 211 percent between 1993 and 2003. Last year, sales topped out at nearly 1 million motorcycles. "

I prefer American Chopper to Monster Garage, but maybe that's just b/c I love my dad so much. I'm waiting for custom chopper fantasy camp, where you get to take a week and go build your own bike. Seriously, where does an armchair fan go to really learn how to do this stuff?

Voice recognition: the next wave of productivity

bizjournals.com: "Elizabeth Harrell, an analyst for Forrester Research in Cambridge, Mass., said speech recognition applications and services for businesses could grow from a less than $700 million market to a multibillion-dollar one by 2008. "

I certainly hope this happens. It appears that they are talking about technology that can expect a certain range of response. I've tried Dragon's Naturally Speaking, but wasn't to impressed. It seemed to run at about 50%. I'm looking for the holy grail of true speech recognition where I can finally capture thoughts as they happen. How 'bout it science?

Services like Audible provide a great alternate use of time when I'm in the car. The MIT Media Lab is also doing some interesting work on human-computer interfaces. The Affective Computing Department is bypassing speech and going directly to emotion recognition.

Nonprofits look on-line for fundraising

bizjournals.com:

"Internet donations to 13 area nonprofits that supplied numbers for the survey
rose 76.5 percent -- up from a little more than $1 million in 2002 to almost
$1.8 million in 2003. "

The question in my mind is what part of the sales cycle is most influenced by the on-line presence. Are the nonprofits finding their niche better, are they remaining in front of their donors more frequently, or are they simply creating an environment where folks are more comfortable donating? Perhaps its the technophile in me, but I really believe that online technologies are going to eliminate sales, rather prospecting, as we know it. The article didn't specifically contrast their recent and previous marketing effrots, but how do you feel answering an unsolicited phone call? How much time do you spend online daily (work/non-work)? How information can you process audibly? Visually? Different people respond to different messages, how can you afford to waste your important message on a medium with such a low probability of communicating valuable information?

Counterpoint: don't count on e-mail to build relationships

bizjournals.com

"You have to remind people that face-to-face is the best communication, that you
have to sometimes walk the 9 feet to the person. My rule of thumb is that if you
start messaging single sentences, then pick up the phone."

The balance to the argument for cybersales is that it you can't count on it to maintain relationships. Although here, they're talking more about internal relationships. The interesting thing is that it seems more and more you really do have to develop relationships within your own organization in order to get results that should already be written into everyone's job responsibilities. I have an acquaintance who recently left a good job in the financial services industry because she was sick of kissing up to everyone in order for them to do their job.

15 billion ATM transactions handle more than $1 trillion a year

via bizjournals.com:

"Authorities also are seeing skimming devices that allow thieves to capture PINs -- personal identification numbers -- and magnetic stripe information using external 'parasites' on ATMs. "

Gannon said the hackers use skimming devices to read the data on a card's magnetic stripe while a camera records the personal identification numbers as they are punched in. The information can be beamed for several miles, he said.

"Bad guys can now sit in a parking lot with an antenna and intercept signals from ATMs, then transfer them anywhere," he said.

About Us

Mission
Our goal is to run the most respected insurance program for professional and technology driven companies. Even though that's a tough variable to measure, it remains the guiding principle behind everything our team does.

Background- Phil Roberts, Techno-Broker
Phil was born in Salina, KS- a town famous for maintaining the fourth alternate landing site for the space shuttle. He got to Texas as fast as he could, settling down in Katy and eventually graduating from James E. Taylor High School. He attended Cornell University where he received a BS in Operations Research and Industrial Engineering. He was also a Distinguished Graduate from Air Force ROTC Field Training.

After commissioning, he was stationed at Los Angeles Air Force Base, a post with more surfboards than airplanes. There he helped secure the future of our country by working on the "Son of Star Wars" satellite missile defense system. Following his stint in the service, he moved to Silicon Valley with big dreams of riding the burgeoning technology bubble. He donned a marketing cap on his analytical head and joined a promising start-up. They pledged to revolutionize the computer industry yet again- this time with an elaborate $1M blow torch. The technology was impressive, and he helped deliver some of the first sales.

In 2002, he left technology's bleeding edge and returned home to Houston to join friends who were also planning to take a company public. That's where you'll find him today, at USI, an integrated insurance, risk management, employee benefits, and financial services firm. His military and technical background found a natural niche in professional and technology related insurance solutions.

When he's not building loyal clients, Phil volunteers his time with his local alumni club and the West Houston Leadership Institute.

Contact
You can reach Phil at:
1250 Woodbranch Park Drive, Suite 300
Houston, TX 77019
ph: 281.754.8037
fx: 281.899.5338
em: papa hotel india lima lima india papa dot romeo oscar bravo echo romeo tango sierra at uniform sierra india dot bravo india zulu.