The Report, Volume 9, Number 1
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Mergers change insurance portfolio
1998 will go down as the year that banks made major inroads into insurance and insurance companies got bigger. Keen competition and the drive to cut costs created some new alignments within the industry and saw reinsurers going to capital markets to get hedges for future losses.
According to the American Banker, banks now recognize the importance of small and midsize-business customers that typically have many high-priced insurance needs. This year, Chase Manhattan Corp. began offering its business customers various employee benefits through a partnership with USI Holdings, a leading brokerage.
Other banks such as Commerce Bancorp and BB&T Corp. have followed suit by courting insurance business with their business customers.
On the other hand, insurance underwriters also ventured into banking. John Hancock Mutual Life announced in September it was establishing a bank sales force. Unum Corp., the nation’s largest disability insurer, formed a business unit to sell through banks.
Insurance companies also grew during 1998.
The merger of Travelers and Citigroup was the year’s biggest consolidation but was far from the only one. St. Paul Cos. Inc. merged with USF&G for $2.8 billion. Berkshire Hathaway, Inc. offered to acquire General Re Corp. in a $22 billion stock deal. Employers Insurance of Wausau agreed to become part of the Liberty Mutual Group.
Legally speaking
In a landmark decision, the Washington Supreme Court has ruled that the personal injury portion of a comprehensive general liability (CGL) policy covers environmental liabilities. Experts believe the ruling could be a tool for policyholders to get around pollution exclusions in their liability policies and allow them to tap insurance policies to cover the cost of government-ordered cleanups.
The case, Kitsap County vs. Allstate Insurance Co., et. al., originated when residents of a mobile home park sued the county alleging damage to their health and property from a nearby waste disposal site.
Kitsap County in turn sued 19 insurance companies that had, over a 30-year period, issued 23 liability policies to the county. The county argued that the claims against it were "personal injury" claims within the meaning of the policies issued by the insurers.. The court ruled in favor of the county on the argument that the insurers were obligated to cover claims of " wrongful entry" or "other invasion of the right of private occupancy."
The decision marks the first time a state court has ruled that the personal injury portion of a CGL policy covers environmental liabilities.
Storms set catastrophic record in Minnesota
1998 ended with a record $1.5 billion in insured damage from storms in Minnesota. That figure was more than the value of all insured catastrophe losses in the state for the previous 49 years combined.
According to records kept by the Property Claims Service that started in 1948, the insured catastrophe losses through 1997 totaled $1.44 billion.
The Insurance Federation of Minnesota blamed much of the increase in damage costs to severe storms last winner and during the summer. An IFM spokesman predicted that many of the repairs will not be completed until next summer because builders and roofers in affected areas are already booked through next spring.
Minnesota’s experience echoed experiences worldwide. Munich Re, the world’s largest reinsurer, estimated that violent weather caused losses of $89 billion worldwide during the first nine months of the year. That is 48 percent higher than the previous record of $60 billion set in 1996
Fascinating facts
1998 was a deadly year for natural disasters. There were 460 weather-related deaths in the U.S. in 1998 compared to 168 in 1997.
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FEMA reports that nearly half of the 65 major disasters in 1998 resulted from ice storms that paralyzed the Northeast in January (4), massive California floods in February, El Niño-spawned tornadoes and floods in the Southeast (10); Atlantic hurricanes and tropical storms (14) and the October floods in Texas.
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Almost 30 percent of candle fires occur in December and January. According to the National Fire Protection Association, 44 percent of candle fire originate in the bedrooms. Another 20 percent start in living rooms, family rooms or dens.
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Those who deal in illegal or illicit businesses and have their property destroyed by a disaster will get no sympathy from the Small Business Administration. A recent addition to the guidelines governing SBA disaster loans prohibits the agency from approving any money for businesses engaged in illegal activities or those that provide "products or services of a prurient sexual nature."
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This fact could keep the insurance industry awake at night: 135 million Americans now live near one of the nation’s coastlines, and 95 percent of the U.S. population live in areas that have potential to be seismically active.
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The top five advertisers last year spent more than half a billion dollars on advertising. In 1997, Sears spent the most ($664.6 million) followed by Chevrolet ($656.3 million), McDonald’s ($580.5 million) Ford ($569.9 million) and Dodge (551.8 million).
Take charge of your career
Except for a substantial gap in salary, what is the difference between the top salespeople and average performers? The most successful salespeople are generally more focused on goals and consequently more motivated. Consultant Marc Corsini works with salespersons in a variety of industries and offers these suggestions for going from "spectator to spectacular."
Get committed. To be the best, you must really want to be the best, Corsini believes. Becoming to top salesperson requires commitment. Top salespeople consistently do the things poor performers refuse to do.
Get a mentor. Enlist help from professionals you respect who can help you with your selling techniques. A good mentor should listen to your ideas and remind you what you want and need to do to get ahead.
Develop a plan. Write down one-year, three-year and lifetime goals. Once you’ve developed you plan, track your progress weekly and monthly, and stick with it. If you lose sight of your goals, you’ll lose focus.
Surround yourself with the best. Top salespeople, managers and others will force you to think bigger and better. They see more opportunities and have higher expectations of themselves. They think in terms of "can" instead of "can’t".
Don’t be afraid to fumble. Those who take more risks make more mistakes but they also advance farther. To be twice as successful, you have to be willing to make twice as many mistakes.
Visualize your success. Fear and reward are powerful motivators. Visualize the reward you are attempting to achieve. Or, if you’re in a slump, think how it would feel to be at the bottom of the list of salespeople, or to see someone else receiving your award.
www.insweb.com keeps growing
American International Group (AIG) has joined State Farm as the second major company to offer property insurance on the web. The site allows consumers to get quotes and select coverage for their home.
Insweb’s site also has quizzes and other interactive features that allows consumers to test their knowledge about their current policy and whether they are doing all they can to save money on their insurance
Y2K Bug - Pest or Disaster?
Though millions are being spent to correct a potentially devastating shortcut that used to be common in computers, no one knows precisely how much impact the Y2K problem will have when this calendar year ends. Some believe Y2K could create minor annoyances, while others forecast catastrophic outcomes.
There is not enough time left to repair every system worldwide before January 1, 2000, and those systems that have been repaired could be re-contaminated by exchanging data with unfixed systems. Systems at risk range from common electronic appliances to telephone exchanges, hospitals, banks and satellites.
Many devices have computer chips embedded in them that are known only to the manufacturer and are located in places difficult to access. Anything that is electronically powered is suspect. Vulnerable systems range from door locks to electric utilities and medical equipment.
Some observers believe litigation relating to Y2K problems will cost double the estimated $700 billion repair costs and will go on for a decade.
Rich Huggins wrote in the Natural Hazards Observer that Y2K presents an unprecedented opportunity for the hazards field and urges research institutions to set priorities and focus their energies on the most productive ways to mitigate the hazards before the ball drops on Times Square next New Year’s Eve.
Short Takes
Make lunch productive
If you develop the habit of going to lunch later - around 1:30 instead of 12 noon -
you’ll find the crowds are smaller and service is faster.
What’s more, you’ll be able to get more done at the office when others are
out and phones are generally quieter.
Practice recalling names
Nothing is more important to a salesperson that remembering a customer’s name. If this is a problem for you, there’s a technique that can improve your ability to remember names. When you go to a restaurant, find out the name of your server, bartender, host and busboy. When you leave, thank each of them by name. This exercise will help your brain get used to remembering names.
Phone aerobics
Your voice is your chief selling tool when you telephone customers. Telemarketing expert Art Sobczak advises those who sell by phone to warm up their voices before they talk with clients by repeating this phrase several times. "The tip of the teeth, the lips and the gums."
Envelopes make a difference
If you are trying to contact a client who is difficult to reach, try mailing your letter in a 9 x 12 envelope instead of the standard business one. Letter-sized envelopes get lost in the shuffle more easily than a larger envelop with the single letter inside it. Avoid paper clips, articles, brochures or other items that might detract from your letter.
