This is my fourth year writing this column for the Insurance Advocate. I’ve enjoyed writing every single word, but if you’ve read my previous columns you’ll remember that September is the edition I prefer. Autumn is my favorite time of the year. It gives me cause to reflect on change, symbolic of what our industry is experiencing, and sometimes a little irony.

There’s a cyclical nature to our industry that lends itself to this tradition. For starters, this is the time of year the Professional Insurance Agents of New York State elects its new officers. D. Scott Liebert, CIC will pass the baton to Kevin Ryan, CIC of the Valley Group in Kingston as the new president of PIANY in September. By the time this publication goes to print, congratulations will be in order, as well as recognition of the stalwart job Scott and his officers have done leading our association and our industry through a very difficult year in 2008 and 2009.

In September last year, I noted that the same week PIA changed officers, Lehman Brother’s bankruptcy was announced and the finance industry’s crisis was hitting our own industry with AIG’s shocking and dreadful news. The President was urging a bailout; I declared we had been in a recession for months, and that we were in for a long, cold winter. I wish I had been wrong. I also applauded then-Superintendent Eric Dinallo for his testimony in favor of state governance of our industry, and for his praise of state regulators who moved quickly and more nimbly than the federal government could in reaction to the financial crisis and to reassure the public. Little did I know that one short year later, rumor and his own actions would have Dinallo vying for the position of state attorney general. According to the New York Times, the former state insurance superintendent filed with the state Board of Elections to open the campaign account, Dinallo for Attorney General. How could anyone have foreseen Dinallo’s departure from public service or our current governor’s ratings drop to the point where his seat is in question? I wonder what our regulatory landscape will look like next year at this time, when we are preparing to go to the polls for the 2010 elections.

Speaking of retrospect and attorneys general and irony, readers will remember five years ago, when our attorney general prosecuted certain mega-brokers for bid rigging and steering business. Those megabrokers were caught manipulating the marketplace and some agreed to settlements that restricted their payment structures. But just last month, Arthur J. Gallagher, one of four brokers that settled with AGs in the 2004 bid-rigging, schemes announced a new, nationwide agreement with the Illinois Attorney General and Illinois Insurance Department, which permits Gallagher accept contingent commissions beginning Oct.1 this year. Marsh, Aon and Willis also had similar settlements, but they have not obtained permission to change their agreements. We’ll see who gets the next pass. Gallagher president and CEO, J. Patrick Gallagher Jr., said the newly permitted contingents are expected on add an estimated $10 million to the firm’s earnings in 2011. “We vehemently disagreed that contingent commissions were in any way illegal or immoral,” he told analysts: sentiments that echoed that of Liberty Mutual Group which won its fight in the Appellate Division and affirmed the legality of contingent commission agreements last year.

These reactions are in stark and ironic contrast to comments made by Willis, which added salt to the wounds it inflicted to all honest agents and brokers, by testifying in 2005 that it would not participate in contingencies because of a “concern for the perception of conflict” after the company settled to avoid prosecution for cheating its clients. I wonder how long Willis CEO Joe Plumeri will continue to hold this opinion. field,” surely will try to either prevent his competitors from doing business at an advantage, or he will redefine the playing field again to suit his company.

What goes around comes around.
I close this column with more hope than I’ve expressed during this season in any other year. Quietly and slowly I am noticing long-awaited changes in the market.

Though we never want to have policies cancelled, rates are rising. Companies are tightening their underwriting. On Long Island, we are hearing carriers cancel tenants for “anything south of Sunrise Highway.” Other companies are discretely issuing rate hikes for more premium. It seems carriers may have learned the lesson that profits have to be made on good underwriting, not investments. The days of having a risk priced at $10,000 or $9,000 loss, with a new carrier undercutting for $4,000 may be coming to an end. I’ve said for quite some time that these horror shows have to stop: Poor underwriting gives nothing but a black eye to our industry and its agents. Only professional agents and carriers that truly underwrite and price risks properly will have survived in the end. It’s been a long season of reckoning; but I can see the upside coming soon. [