Declarations – Midwest

Amateur Hour

“A lot of firms … have been dabbling in employee benefits and have put no money in the infrastructure, and have no real advisory expertise. … Amateur hour is about over now, and that’s why we’re seeing a mass exodus of a lot of P/C shops who were just that.”

—Richard Lonneman, managing director for the Cincinnati, Ohio, office of Kentucky-based insurance agency Neace Lukens. Larger property/casualty agencies like Neace Lukens have been increasing their involvement in employee benefits as a way to strengthen relationships with key commercial customers and diversify their businesses.

No Enron or WorldCom

“We’ve not had anything even approaching an Enron or a WorldCom or any of the other accounting scandals that we witnessed 11 years or so ago.”

—Michael Oxley, former chairman of the House of Representatives Financial Services Committee and co-author of the Sarbanes-Oxley financial reform legislation that turns 10 this year. Oxley, a Republican, said the law has has stood the test of time and that blaming the law for some recent scandals is based on a misconception about what it was supposed to do. “It really had nothing to do with Lehman Brothers, AIG and the other meltdowns in 2008. It didn’t really have anything to do with Bernie Madoff,” he said.

A Darwinian Evolution

“None of us anticipated 10, even five years, ago that the government would get so deep into our pockets.”

—Hank Watkins, president of Lloyd’s America Inc., told attendees at the Western States Surplus Lines Conference in July that one of the big issues for Lloyd’s is the Solvency II directive that codifies European Union insurance regulation. Eighty-eight Lloyd’s syndicates must meet the new standards, which Watkins said will make the market’s operating environment more difficult. Regulation, along with changes in technology, is prompting a Darwinian evolution of the industry, including Lloyd’s, he said.