Then we got down to meatier subjects about the state of the industry here.

Mostly, I spoke about the effect of the economic meltdown on the market. For instance, I noted that some say we have an “invisible hard market” looming, because the impact of price hikes by insurers looking to make up for the blood bath onthe investment side is being undermined by business lost whenaccountscut their insurable exposures (via layoffs or plant closings) or that go out of business entirely, all preventing top-line growth.

However, in response to a question from one of the agents, the group was impressed by the fact that property-casualty insurers remain relatively sound financially in these difficult times–especially when compared tobanks. I explained that p-c insurers–including thoseowned by AIG–weretightly regulated by the states, and that their reserves were thus adequate, at least for the time being.

AIG, of course, was the hottest topic. Many ofour guests seemedamused at best and puzzled at worst about the company'stransparent attempts to rebrand under the AIU label. “Willagents and clients not really knowwho they are by changing one letter in their name?”ventured one Japanese broker, via the translator.

I explained that while the rebranding effort was certainly a work in progress,there issubstance involved, not just style changes–including the ability to raise capital independent from the parent, and to set up a separate board of directors, so as to further insulate AIG'sinsurance subsidiaries from the sins of theircorporate parent.

Whether this does the trick remains to be seen, I conceded, noting that risk managers and their brokers are certainly shopping their AIG policies, if only to satisfy the CFO that proper due diligence is being practiced.

Meanwhile, I reported, the word on the street is that AIU remains extremely flexible on price and coverage to keep accounts on the books. Indeed, I noted, a number of attendees atRIMS last week suggested to methatAIUissingle-handedly keeping the market softer than it should be, given the lousy financial results posted by commercial carriers.

The environment for mergers and acquisitions among agencies and brokerages also was a focal point of interest for our guests, who wondered whether such deals were worth the trouble and expense. Outside of becoming bigger overnight with an M&A, a few asked, why bother if it meantlosing some of your independence in the process?

Mr. Ruquet deftly explained that a good M&A helps agencies expand into new territories and lines of business. It also allows agencies to prevent accounts from outgrowing them, he added. I chimed in that M&A deals provide agencies with economies of scale, while generating a critical mass of business to give them greater leverage with carriers on pricing and contingent commissions.

“Ah, bigger bonuses!” responded Mr. Kitano, in English. I quicklypointed outthatthe word “bonus” was not politically correct here these days, given the AIG brouhaha, noting it was more prudent tocastcontingency dollars simply as additional “compensation.”

Our Japanese guests were also very curious about the fate of health care reform in this country under President “Obamason.” I told them the big difference withPresident Clinton'sinitiativeunder his wife's direction was that the current administration is not looking to eliminate private carriers and agents from the mix. Whether that's how this reform effort ultimately plays out is another story.

I asked how health care is financed in Japan. They indicated that everyone had to have basic coverage, which could be provided through the government, but also through your employer, and that additional services and care could be insured privately, sold through agents.

I told them one problem with Americans was that we tended to suffer from tunnel vision, struggling to reinvent the wheel rather than study how other nations might be approaching the same problem, as if no one had a better system than ours. I suggested that perhaps we could learn a thing or two by studying the Japanese approach.

After our 90-minute dialogue, our guests boarded their bus to visit other insurance agencies, on their way to the IIABA conference in Washington, D.C. It was a delightful experience to sharethe morning with them, and we are very honored that they chose to include a visit to National Underwriter on their busy itinerary. Safe travels to them–to Washington and then home to Japan!

Special thanks as well to Peter van Aartrijk, a former member of the NU family and president for 10 years now of the communications and brand management firm that bears his name, for arranging the visit of our friends from Japan.