As the economy trends downward, financial hazards multiply. The mainstream media likes to sensationalize corruption in our financial markets. I’m more concerned about threats that are just as bad, in our insurance system. When the bottom line is bad, perhaps desperation is the motivator. In a crisis, people sometimes forget good business principles. Let’s make sure we protect ourselves, and steer a straight course for ourselves.    
One such example is New York State’s Section 332 assessments, which amount to exorbitant taxes on insurance companies domiciled in New York. Our domestic insurance industry is now threatened by the state’s short-sighted budget expedients. The state levies assessments on these companies (only the ones headquartered in our fair Empire State) to fund the New York State Insurance Department. Of course, our loyal regional carriers are the ones who will suffer this assessment the most.    
According to a guest column written by Utica National in its local paper, The Observer Dispatch, that carrier’s bill has tripled—by an amount that exceeds $2 million—since 2007. How is a small, regional carrier expected to cover that? These companies will have to get their money somewhere. Either premiums will go up drastically, or it would not be surprising if some of them give up the business altogether, to the detriment of New York’s insurance-buying public and their ombudsmen, the agents.    
Compounding that bad practice; the governor’s deficit reduction plan calls for legislation allowing the state to transfer any surplus in the NYSID’s coffers to go toward balancing the state budget. Raiding insurance funds sounds familiar. I recall some 20 years ago, during another economic downturn, when PIA and The New York Times stood in agreement against what the paper called an “annual insurance raid” of the New York State Insurance Fund. Then, in 1987, the result was a 7 percent increase in premium for policyholders. I wonder who will pay the price this time around.    
Speaking of the State Insurance Fund, things are different with them now because the SIF is excluded from certain expensive filings. I don’t mind competition, but the purpose of the State Insurance Fund was to be a place of last resort when a business could not get coverage elsewhere. Now, the state is openly competing against us.    
Fiscal motives lead the state to affect the competitive balance of our industry in other ways, too. I encountered another example a few days ago when I picked up my mail. This one has been around for a few years, but warrants note because it, too, shows the state bending principles in order to meet financial challenges. I was excited to receive my registration renewal in the mail, and really excited because it wasn’t accompanied by a GEICO advertisement— unfortunately, this time State Farm had the privilege. Department of Motor Vehicle mailers should not be for sale to the highest bidder.When an ad is placed in the same envelope as a state registration, it easily can be misunderstood as an endorsement. I wonder, in these economic times, what the winning bid has gone up to now.    
So much for New York State: What about us? My fellow agents also should be reminded that our reputation is the most important asset to our business. Those who endure know to avoid hazards. Falling into these temptations may or may not be legal, but they can end in a business’ demise. So can falling victim to another’s manipulation.    
It seems to me it’s always the same clients who are non-payers. The amount of labor spent by an agency to retain those accounts after no-pay notices go out is very expensive. I wonder if the direct writers call their clients when they go for nonpay. I believe we, as agents, should rethink what accounts we retain because of the expenses in handling them.    
Also, in these economic times, it is vitally important to remember to keep our premium accounts in compliance with the regulations. New York state mandates that we have a separate, labeled premium account and another, separate account that is our operating account.Never should the money be commingled.    
These tough times give rise to other hazards.Many agents monitor their claims on a daily basis, but with the use of service centers, delays can occur in companies notifying their agents of claims submitted directly. One example from my office was a public adjuster who notified a service center directly of a fire and we were never notified until our reserves on that client popped up. There should be some way, in the case when anyone other than the insured or their agent submits a claim to a carrier’s 800-number or claims center, that the agent should be notified immediately because many of these claims could be handled locally by the agent and the insured. Public adjusters serve a good purpose on complex claims, but for simple claims, they aren’t always necessary.    
As I write this article, I don’t mean to sound negative. We have a great business that will continue to prosper. But, there are a lot of pressures on us in this economy; expenses running out of our offices; a zealous regulatory environment and companies that also are under pressure to lower premiums to compete. Sometimes certain companies will be extremely aggressive on new business, but that assertiveness wanes when one tries to get them to change their renewals… Life goes on.