Maine Agents Told Markets, InsurBanc, IIABA Enjoying Spring Growth

Speakers at this year’s annual meeting of the Maine Insurance Agents Association didn’t let a sneaky spring snowfall get them down as they issued positive reports on markets, products, association business and even the agents’ own venture into banking.

“It’s easy to think there are always problems in the insurance industry but that isn’t so,” proclaimed Superintendent of Insurance Al Iuppa, setting the positive tone that was followed throughout the day.

Iuppa’s own bureau’s recent report on property insurance found only 3 percent of homeowners had any problem with insurance. (Yet this report still became the basis for legislative intervention in the form of a bill to authorize a market assistance plan. See story, page 8.)

There was good news in the form of no news. Iuppa did not even raise the often troublesome subject of workers’ compensation until prompted by an audience question. Governor John Baldacci’s plan—which he has signed into law—to reconfigure the workers’ comp board will “bring some accountability” to the system, according to the superintendent. But there really was not a lot bad to say about the workers’ comp marketplace.

“The workers’ compensation market is changing. Some losses are coming in and there are fewer companies but it’s not a market I’m losing sleep over,” he said.

Iuppa was followed to the podium by Louise “Bebe” Canter, president of the Independent Insurance Agents & Brokers of America, and an agent from falls Church, Va.

Canter stressed the big in the Big “I,” noting that the association owns its own building and has a budget of more than $20 million. “We’re a big enterprise,” she admitted.

As big as the Big I is, it may soon get bigger. There is talk of IIABA forming a captive for an agents’ errors and omissions program, she reported.

Canter discussed why IIABA, long a staunch ally of state regulation, has supported efforts along with the National Association of Insurance Commissioners (NAIC) to establish federal regulatory standards for insurance, as long as enforcement remains at the state level.

“We don’t want this to be like when we fought banks for years and years. We kept saying ‘no, no, no’ only to find that the train in the form of Gramm Leach Bliley left the station without us,” she commented.

“So we’ve learned. There are serious talks in Washington right now,” she added.

The agents’ bank, InsurBanc, owned in part by IIABA, is in its third year and expects to break even in the second quarter, reported Michael Herlihy, president. The financial institution with $60 million in assets and $32 million in loans to agents is looking to raise an additional $10 million to fund its national growth.

As part of its plan to become a national enterprise, InsurBanc has signed agreements with Fleet, Wachovia and Wells Fargo to allow its customers to use their branches across the country for deposits and transactions. When Bank of America and Fleet merge, InsurBanc will pick up even more outlets—for a total nationwide network of 11,400 branches.

“We hope to continue to show that there are options for agents other than selling out to a bank,” Herlihy stated.

In their analysis of the current marketplace, insurance company executives agreed that the property and casualty market has stabilized but has not necessarily softened. They just hope it stays that way.

“Things are moving in the right direction now with rates and deductibles. I would hate to see us backslide,” commented Walter Smythe of Patrons-Oxford.

OneBeacon’s Pat Lavoie acknowledged things have improved a lot but he’d still “like to see a few more good years.”

Larry Shaw of Maine Mutual Group said reinsurance markets appear to be stable but he worries that may only be on the surface. “As a buyer of reinsurance, we are concerned about market security,” he cautioned.

After Iuppa was asked about credit scoring —”It’s a red hot iron in the fire and I don’t think it’s going away,” he said—discussion turned to how companies are using credit scores to craft new policies.

Pat LaVoie referred to OneBeacon’s own new multi-tiered auto product in Maine, to which he said the response has “exceeded all our expectations.”

Myers of Peerless advised agents to expect a lot more credit-based and tiered policies from companies in personal lines.

Smythe of Patrons-Oxford noted how it is becoming increasingly difficult to compare products and prices with so many tiers and classes.

“It’s tough to know where you stand competitively,” Smythe acknowledged.

MMG’s Shaw agreed, suggesting that the proliferation of multi-tiered policies could also mean “a disjointed approach” and more work for agents at first, until their technology catches up with all the new options.