While the past has graphically illustrated that market predictions are no more than educated guesses -- it's still a soft market, right -- there is some interesting commentary this week on some anticipated trends. (See stories, page 3.)
First, a Conning & Co. study reports that personal lines auto insurers are refining strategies and consumers stand to benefit from evolving cost, distribution and other market strategies.
Probably the most disturbing aspect of the report for independent broker/agents is that relating to alternative distribution -- with banks and the Internet gaining in popularity, according to the Conning findings.
"The increased use of banks is noteworthy, with over two-thirds of the companies planning to use this distribution method over the next five years," Conning states. "The use of the Internet shows the most dramatic increase, with more than 70 percent of the companies planing to use this channel in the future. Growing use of different distribution methods means that consumers have new and more ways to buy auto insurance."
The tension on the bank/insurance issue, as you may have noted, is far from resolved at the moment as the Senate attempt to adopt its version of HR 10 fell victim to a couple of Senators shilling for banking interests. (See story and Voice column, page 10.)
Ironically, another study out this week by a Berkeley-based consultant group, finds that the banks have not done a very effective job of selling insurance products.
"Banks spend millions of dollars in advertising and marketing to sell their products, from insurance to mutual funds to CDs. But, ironically, the selling stops as soon as there is a prospective customer. Bank and insurance company mergers are no guarantee of success," the report states. (See story, page 5.)
Note how the experts conspire to keep us all confused.
Another market prediction this week, from a Sedgwick executive, is that of continued strong growth of the alternative market, as more and more companies move away from traditional insurance carriers that are unwilling to become creative and are too slow to respond to changing client needs. (See story, page 3.)
That won't come as surprising news to broker/agents who for years have implored their carriers to get with it and provide creative coverage protection to meet client needs. Companies have difficulty with that term "client needs."
"Standard insurance carriers are unwilling to deviate, slow to listen and slow to develop products and services," is how Charles Fiske, Sedgwick senior vice president, puts it.
He also cites some growth figures: the traditional market grew 121 per cent from 1994 to 1997. That growth was overshadowed by 170 percent in risk retention groups; 125 per cent in qualified self insurance; 132 percent in private retention; and 181 percent in captives and rent-a-captives.
It's all grist for the mill. Take your pick.
Issue of October 22, 1998
Copyright © 1998 by Underwriters' Report, Inc.