But there is an issue of trust in the minds of consumers, he said. “There is more danger in how [companies] deal with consumer concerns” than their finances,” he asserted.

During this hard market period, the insurance industry has managed to keep its negative opinion numbers among consumers surveyed at between 16 and 20 percent, while approval comes in at the 50-to-60 percent range, he said. He compared this to the hard market of the 1980s when the approval ratings were running in the low 30-percentile range.

However, he noted, unless insurers begin to understand the issues that really concern consumers, the standing of the insurance industry could deteriorate in the eyes of consumers.

“There are two million people who work in the insurance industry and 263 million who do not,” said Mr. Stewart. “It is easy for us to think that the ideas that occupy us would be dinner table topics for them. Its not” the case.

“Our problem is we need to understand what is on their minds, what concerns them on insurance, and what topics rise to dinner table talk,” he said.

Companies are faced with underwriting challenges in order to remain profitable, he noted. But when companies drop customers, drop lines of business and raise prices, customers fail to understand the reasons why. That failure in understanding undermines the relationship, creating “anxiety about a product that is suppose to provide security”

“That deteriorating relationship could have a political outcome,” Mr. Stewart warned. “The industry needs to watch out and deal with these issues and take care of the consumer.”

Taking care of the client, for independent agents, means being keenly aware when companies appear to be in trouble and recognizing the need to place their clients risk somewhere else, said Bob Rusbuldt, chief executive officer of the Independent Insurance Agents & Brokers of America.

“Agents usually know what is going on before regulators and raters,” Mr. Rusbuldt said. “They are on the front lines.”

He said company executives he has spoken to say they are having concerns with their underwriting and the forces impacting their business.

“Asbestos is a huge issue,” he said. “Some executives say there are only three issues that concern them: Asbestos, asbestos and asbestos.”

However, when it comes to client understanding about insurance and the risk of insolvency, he observed that the “client doesnt always know about all the safe and sound issues, but they understand [how much it costs] when they write that check.”

He noted that the Alexandria, Va.-based associations new marketing campaign, Trusted Choice, is an effort to reach out to those consumer concerns with “a pledge,” by both member agents and companies, to give them what they are looking for in insurance.

“It is unique and cutting edge,” he added.

Gerard Altonji, senior financial analyst with the property-casualty division of Oldwick, N.J.- based insurance company rater A.M. Best, observed that despite the need for continued premium improvement within the industry, he expected to see softening begin again after 2004. “We see some softening coming back now,” he said. “The industry has a long history of shooting itself in the foot.”

For raters, Mr. Altonji said, the biggest problem is when to “pull the trigger” and lower a rating. A lot has to do with the companys business plan, he said. If the company is in some financial trouble, but presents a plan that appears would be successful, then the rater is “obligated to hold off” but would also be obliged to give the company a negative rating.

He did not feel that the insurance industry has any Enron cases out there, but added that “when a company goes bad it goes quick.”

Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.