Brokers cautious, but still optimistic - Denver Business Journal:

evittiebodum1296.blogspot.com
Commercial insurance carriers and agents in andtheir clients, are feeling the effects of the recession. “Th major drivers of insurance premiumsare revenue, property value, vehicles and All of those have gotten hit,” said Todd senior vice president in the Denver officed of LLC, a commercial insurance and risk management Colorado’s construction industry, which has had a sizeablew drop in payrolls during the downturn, is a particulad area of concern for Rich Rogers, Southwest regional president for property and casualty carrier in Denver, said workers’ compensation and generao liability coverages make up a significany portion of his company’s premiums.
So declining construction payrolls can hurthis business. “W e are still writing new accounts in but opportunities have been slowed down bythe economy,” he Despite the bad economy, carriere and agents in Denver see reasons for One is the stabilizing rate environmenrt for property and casualty (P&C) insurance. According to the Councipl of Insurance Agents andBrokers (CIAB), rates for all typess of P&C insurance have declinedd steeply since 2001, putting pressure on premiumws and commissions. Now that trend is beginning to moderate: Rates declinedr by 5.1 percent in the first quarter of versus a declineof 13.5 percent for the same periosd in 2008.
“If we have hit the bottok of this cycle, all of the insurance agentg communitywill rejoice,” said Ed Harrington, CFO of Denvefr broker and risk management consultancy . But the downturnb also has created new opportunitieas for localinsurance companies, as corporate clientd of all types revisit their looking to control costs. On one hand, this wave of cost-cuttinb poses a challenge to the As one broker noted inthe CIAB’s first-quarter marketr survey on the commercial P&C sector, “The crisiws … has diminished consumer funds available to spend on From another perspective, though, the trenx toward cost control means some insurance firms are seeinh opportunities to capture business that may not have existef previously, since companies looking to maximize valu e from their insurance spending may switch carriersz or agents.
The widely publicized problems at AIG and ratings downgradews of other major providers also have played a as more customers have grown cautious aboutheir carriers’ financial stability. According to Travelers’ “Our new application flows are definitely up, which meane there is some activity being driven by clientse needing to get their coste down and ensurethat they’re with a financiallyg stable company.” The drive to reduce expenses also has generated activitgy on the employee-benefits side.
Colorado insurers have seen increased demandrfor less-expensive options, such as high-deductible health care plans, whichg enable employers to reduce premium costs and potentially decrease employees’ monthly payroll Higher out-of-pocket costs for employees can be partially managecd through tax-shielded health savings “There’s more demand for innovativw approaches that enable organizations to offer comprehensivse benefits programs to employees at a reasonablee price,” said Michael senior vice president with Consulting, an employee benefits and HR programs specialist in Denver.
There’sx also more interest in wellness programs, which aim to reduce long-terjm health costs to employers and theif work forces by identifying and managing employerehealth risks. Voluntary life and disabilityy coverage products have grownas well. Employer cost-cuttingv has helped results for these lines since companie s are looking for ways to offeer enhanced benefits without incurringbadditional costs, according to Gary Keating, regional manageer of the Denver Group benefits office for , a largse seller of group disability insurance.
Voluntary coverages options can be offered to consumers at discounterd rates throughtheir employers, with the employe e paying the cost of the Also helping sales has been the uncertainty surroundinf the potential evolution of the health care-insuranced industry in the next several years. “More insuranced brokers and consultants are payinvg attention to voluntary group life and disability insurancde becausethey don’t know what’sx going to happen on the health insurance side,” Keatiny said.
In the current carriers and agents alike noted that diversification among client industries and products has been Some customers have asked Aon to help determinde appropriate staffing levels during the partially offsetting declinesin premium-based commissionsw from headcount reductions in some Travelers also has benefited from multiplee product offerings. “If payrolls are down, it may impacr premiums to some extent, but a lot of client offset that by buying additional coverage in othe r areas as needed to ensure they areproperlu covered,” Rogers said.
While Denver’s insurance companie absorb the recession’s effects, they’re guardedl optimistic about industry Several local firms have noted plana to hireadditional staff. And according to Bill Paul, principal at benefits-and-insurancd company in Denver, clients will continue to see value in the services he and his colleagueds provide as coverage options growmore “The more complicated the industry the more the insurance brokers are needeed to clarify everything,” Paul said.