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Yesterday, today, tomorrow.

Our industry is changing rapidly and yet in some areas we continue to replay the past. I would like to comment on some of the issues in the news lately.

Young insurance professionals are in the news everywhere and for good reason--they are the future of this industry. With the exit of the baby boomers from the workplace, finding dedicated young professionals to replace them is a critical issue for our industry.

Many of the folks who were involved in young agents when I was an agent member and active in that group are now leaders in our industry. Names like Steve Zogby, Dave Bauer, Eddie Carpezzi, Scot McCartney, Steve and David Spiro, the folks from LoVullo, Chris Petrocelli, Rich De LaSota, Mike LaValle, Steve Katz, Doug Cypes, Steve Rosenberg and Bob Pilla just to name a few. Along the way we have lost some great young agents as well, Roger Gurney, Steve Dooley and Joel Pollack for whom the Young Agent of the Year Award is named.

The old guard has been replaced by the new young agent fraternity of Meghan McGarry, Mike Zwas, Chris Alderson, Ann Marie Wagner, Mickey Romeo, Derek Oberman, Amy Davis, Jessie (Belleville) Cole, Aaron Epstein, Brian Bergman and Mike Shay just to name a few.

There are many more names in both categories and I apologize to those who may not be listed. The point I want to make is that the current young agents are tomorrow's leaders and need all the support and mentoring we can offer. If you have read any of their recent comments, this group is very optimistic about the future of our business and extremely interested in growing professionally and heading the agencies of the future. Our industry needs to provide them with the opportunity to achieve these goals. That is especially true of the old guard above who remember the support and mentoring they received when they were starting out. It's payback time.

One product these young agents probably find bewildering and frustrating is Workers' Compensation. Some time ago I mentioned my concern that we might not achieve the goals established by last year's reform bill. I'm still of the opinion that we may not. In addition to potentially failing to achieve these goals, this line of business is in serious trouble in several other areas.

The State Insurance Fund is out of control. Someone needs to rein them in and force them to conform to all the same rules as those required of the private carriers. Since they aren't the market of last resort and instead want to compete in the marketplace for business they should not receive special treatment. It's time they are regulated by the Insurance Department like everyone else and that they conform to all the rules established by the Workers Compensation Board. They need to eliminate the 30 day notification of replacement, the indiscriminate use of debits and credits as well as the use of loss assessments other than those approved in the rates. In addition, if they want to compete in the marketplace for all business they need to pay commissions just like everyone else. How much longer will they be allowed to continue to operate outside of the rules?

The other problem area in Workers' Compensation is self-insured trusts. Not all trusts, just those not properly managed and administered that find themselves significantly under funded. Just last week 5 trusts handled by one administrator were terminated and the 6th trust they handle is listed as under funded. Approximately 50% of the trusts are listed as under funded and even SWCB Chairman Zachary Weiss and Director of Licensing Mary Beth Woods warns the board may close a few more. They have even requested a bond for a little over $59 million to handle claims for the terminated trusts while the Attorney General attempts to collect assessments. With the issues related to the State Insurance Fund as well as the Self-Insured Trusts it's easy to see why this line of business is such a mess. It may get worse before it can get better. One thing's for sure, it is going to require change by the State Insurance Fund and Self-Insured Trusts to improve the marketplace for Workers' Compensation.

Many agencies are suffering from the effects of the soft market. Agent members are struggling with depressed premiums on existing business. Even agencies with good growth and excellent retention are being affected. Many agencies can't grow fast enough to offset the loss of premium due to the soft market. When the last hard market ended carriers vowed to hold the line and not reduce their underwriting standards. They promised no cash flow underwriting. They said they wouldn't under price high risk exposures or place risks in programs they weren't really eligible for. Unfortunately, Alzheimer's patients have better memories than the companies. Is this the kind of cyclical business that creates a negative image with consumers that we want to leave the agents of the future?
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Title Annotation:ON THE LEVEL
Author:Deapo, Jamie
Publication:Insurance Advocate
Date:Apr 21, 2008
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