You dont appreciate your parents until you are an adult. My father was a great businessman who made a living in the garment business in New York. When I was growing up, he taught me to respect a profit. Hed see store owners reduce their prices to move inventory under the belief that theyd make it up in volume, and hed say, Thats no way to hold on to a profit. He was very smart.

This concept isnt specific to the retail garment industry. In fact, it applies to insurance too. You just cant short-sell your inventory to increase volume and expect to keep loyal customers, or your profits. So Im wondering, whats wrong with the current management of the insurance companies that they dont know how to hold on to a profit?

A few weeks ago, I lost an account that was with my agency for 35 years. And during that time, they had their share of losses. In normal underwriting situations, a company would ask me to give the loss runs and then theyd underwrite the risk. But when I called the client this month to review some renewal information, he told me, We replaced the insurance five weeks before the expiration with another company because they lowered our premium.

And they did it without loss runs! Where is the smart underwriting criterion in this market? If companies keep using loss leaders to write risks, they are going to fall victim to the old adage my father lived by: If you try to make it up on volume, youll be out of business in no time.

OK, so maybe I shouldnt be crying over a company that is sabotaging itself with self-destructive behavior. But the truth of the matter is,as an industry were one big family, and agents suffer when companies engage in this practice. And Im not talking about reduced commissions that are an overall reflection of lower prices. Our reputations are at stake.

It has been less than two years since the hurricanes in Florida, and Katrina in Louisiana.

That was when all the carriers started sounding like Chicken Little: The sky is falling, and premiums went up to pay for claims; the estimates of the losses during Katrina have been as high as billions of dollars.

Companies raised premiums countrywide to make up for those losses. As agents, we carried the flag, explaining the insurance principles for spreading risk as the reason why our clients saw their premiums rise. We explained that rate increases are a sound principle of insurance.

And now, little more than a year later, after all that education to our clients about the industry, we find our companies dont know how to hold on to a profit, and we are involved in a pricing war that makes us look unprofessional. Now it looks as if the companies made so much money that they can afford to give it away. And we, the agents, are losing credibility with our insureds.

Companies have thrown good underwriting practices out the window. Forget loss runs, some carriers just throw a dart at the wall and thats what they charge. They may as well be throwing darts at our credibility.

When will we learn? After more decades than I want to admit in this industry, Ive seen this before. Every 10 years or so, the same soft-market cycle occurs; always after a catastrophe or litigious year for which the rates had to go up. The soft market always comes after a period of justified rate increases. And the misguided theory that if we write a lot of business at a discount, even though well take losses, we can make it up on volume, becomes a real practice. But it never gets made up. and at the end of the day, we are stuck with more high-risk policies paying lower premiums. Its not brain surgery; its more like gardening: you reap what you sow.

And when the losses start coming in because of this reactionary behavior to the soft market, and when the rates start going up, we are going to look even more dubious as agents. How are we going to look when the economy is tanking and we have to raise rates to cover these risks?

Another thing my father taught me was you have to be honest with family. As with some previous columns Ive written, I know Im going to get heat from companies about this one. I am not singling out a company, but as I write, I am reminded that we are all in this industry together like a big, sometimes dysfunctional, family. When certain family members repeat the same, self-destructive behavior over and over again, who, but your family, will tell you the painful truth? Think of this as an intervention. Im saying this for your own good and to protect our industrys reputation.

Besides, a good company wants to hear its agents thoughts. So, true to the title of the column, my dear companies, this is how we, your agents, feel. If Im an island unto myself, send a letter and let me know. Certainly company input is always welcome. As long as we keep the dialog open and business profitable, well get through this together.

N. Stephen Ruchman is president of Ruchman Associates Inc. in Rockville Centre, N.Y. and a past president of the Professional Insurance Agents of New York State Inc. As an active supporter of PIANY, Ruchman also served as first vice president and vice president of the association. He also chaired PIANYs Convention and Membership committees. He is a member of PIANYs Government Affairs, Nominations and Membership Programs Committees. Ruchman also is chair of the Long Island Advisory Council. He is a member of PIANYs Political Action Committee where he serves on their Executive Committee.