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 Chapter 1 “I” Is For Industry and Ideals

The Insurance world is indeed an Industry. It has rules, and many, many regulations and lots and lots of supervisorial personnel. The layers of hierarchy and peasantry make for rules to follow. When I entered the insurance industry, I had no idea of what it was about even though I was a college graduate. I had never taken an Insurance course, or bought any commercial insurance. Most people I knew had some type of personal policy and, usually, paid for the policy by the month.

            The Insurance Industry is broken down first into two basic categories: 1) Life, Accident & Health and 2) Property & Casualty. These categories are then broken down into sub categories such as Life Insurance has a plethora of products to protect one’s heirs in case of death; Accident involves all types of non-life threatening injuries & Health, of course, a major topic of today such as Universal Health Care, HMO’s private doctors, Major Medical & Hospitalization.

            Property & Casualty literally covers anything else. Coverages such as property, real & personal, and home insurance. Lastly, Casualty covers, liability, professional, personal & general.  And the big one: auto insurance and workers compensation.

            The Industry has always resisted regulation from the outside. Each state maintains an Insurance Commissioner who overseas the insurance industry, its rates, regulations and maintains the licensing of certain individuals. The States where I have worked if you handle quotes, $ and issue binders and certificates of insurance, you must be licensed, either as a solicitor, agent or broker. Most require uninterrupted employment to maintain license. In California a license can be held without steady employment and be renewed at a certain date. In Nevada, one’s license only lasts for noninterrupted employment. Once this license terminates, you must retake class hours and the exam for license. In Texas, I worked for the Dept. of Insurance so no license, for me, was needed. 

            The work hierarchy begins with the ever-on high and so mighty insurance company such as Aetna, Liberty Mutual, Allstate, Chubb and The Hartford to name a small few. You do not have to be licensed. Then there are the Agencies, captive like Allstate & State Farm and Agencies that have more than one company they write for. Like the one I began at, Alexander & Alexander, Inc. others are Marsh & McLennan, &Brown & Co.  Most of the workers were like myself, classified as Customer Service Reps who assist the client (buyer of the policies) with amount of coverage, rates, collect premium, set up files, enter data and invoice (bill for the coverage) which later was done by very complicated insurance computer programs.

Most Customer Service Representatives, (CSR’s), are very overworked and underpaid, however a lot of gold bricking is done & one of the big battles the bosses have is keeping the workers working. I was always working but I was really never without work. When my desk was almost clean, the mail would come in or a client would need 15 certificates.

The Industry has a problem keeping rates low. Most people do not realize that if a company does not make a profit, it cannot pay its’ claims. The sharing of risk by all promotes equitable fairness. Most captive agencies prefer to train their own employees but the independent agents want experienced Customer Service Representatives, because the larger Brokers, use many companies and the small agents don’t have time to train people except for their procedure. And, each agent is different. They all have their own philosophies and ‘way of doing business’. When an agents bottom line becomes unprofitable for the company, the agent (the one with the adverse loss ration is usually dropped and it’s perfectly legal. Why? Too much unprofitablility means a company cannot meet its obligations and claims. All companies are scrutinized for their practices and usually must file new rates with the State Dept. of Ins. Some people ask why do companies need agents? Agents are better able to deal with clients on a daily basis. I.e. answer questions give a quick rate, decide if coverage is applicable or if needed at all, or does the client meet all the insurance requirements for coverage.  There was an acronym for basic underwriting of coverage written: “COPE” Construction, Occupancy, and Protection & Exposure.

Insurance Regulation – Should they regulate themselves?  In 1942 the industry was acquiring its highest # of customers & premiums written by the legal reserve insurance companies. $130,000,000,000 covering 67,000,000 policyholders. The highest in history. Education in Insurance. In a movement to improve the efficiency and educational standards of those engaged in fire and casualty insurance the American Institute for Property and Liability Underwriters was launched in 1942, sponsored by stock and mutual company and producer organizations. This Institute offers courses of study based on college standards, and those whosuccessfully meet all requirements will receive the designation CPCU, which stands for Chartered Property & Casualty Underwriter. Some refer to the designation as Can’t Produce, Can’t Underwrite. A similar higher educational program has been in successful operation in life insurance for many years. The Chartered Life Underwriter (CLU). This educational course is in addition to the more elementary and fundamental program offered by the Insurance Institute of America through its various societies and study groups in the United States and Canada.

Microsoft ® Encarta ® Encyclopedia 2005 © 1993-2004 Microsoft Corporation. All rights


Chapter 2 “N” is for NepotismNepotism is defined as favoritism especially government patronage extended towards relatives. However, in insurance it reaches a new high! It’s probably best exemplified by Cronyism: favoritism shown to friends and associates (as by appointing them to positions without regard for their qualifications) Cronyism is similar to nepotism, but it applies to friends and prior associates rather than exclusively to family. Governments are particularly susceptible to accusations of cronyism as they spend public money. This is why democratic governments are encouraged to have transparency in their accounting and contracting processes.A large number of Presidents of the United

States have been accused of cronyism,

including Democrat Franklin D. Roosevelt and Republican George W. Bush.The cases I have found include a stolen kiss with a secretary; obvious familiarity among employees, marriages, dating, & schooling. Any one of these occurrences would apply. In the nepotismic world, most of the larger companies I worked for at first discouraged marriage between employees but softened as time went by. Since Insurance is such a close proximity profession, bosses & reps, etc are thrown together in very small spaces. There was no sexual harassment or rules and regulations governing employee conduct. Mostly, get the job done; do not ask do not tell. My first boss was possessive; he wanted me as his Executive Assistant, but I was ready to move on! Nepotism in reverse? Other departments later told me they asked my boss if I were interested in becoming a CSR, but were told that I was not interested; I never knew about this, and wonder why they never asked me directly. CSR paid more money but you had to be licensed.  Most workers I must admit were shy about going on about their love lives & who was influential in the field & who was not. One had to read the lines and catch a bit here & a bit there. Then, there’s the type that demand niceness from the csr no matter what their performance was. In many cases, they penalized you, told the boss you were pushy, or just ignored your work requests. Favorite or employee of the month/year/century. I guess the most telling was working for an agent who had just broken up with his partners & was moving from a huge office to a small one in Beverly Hills. His bookkeeper that was moving from secretary to bookkeeper was getting some sugar on the side and it wasn’t only in her coffee. This guy was a 1st class, intelligent jerk He was either giving a deposition or threatening some one with being sued. In the office he was a serious dictator with a smile, hug!  Kickbacks, etc. In 2004, dirty secrets of one of the largest brokers operating came to light: Marsh & McLennan  (MMC) had certainly gone to extraordinary lengths to ensure loyalty. A former Putnam executive recalls being grilled by a company psychiatrist in a hotel room for hours during a job interview. Says the former exec: "Everyone has a Dr. (James) Terry story. He would ask questions like: 'What's the worst thing that ever happened to you?' 'What are your views on religion?' 'Whom do you vote for?' Cronyism - as defined by Wikipedia, the free, on line encyclopedia is similar to Nepotism, but it applies to friends and prior associates rather than exclusively to family. Governments are particularly susceptible to accusations of Cronyism as they spend public money. This is why democratic governments are encouraged to have transparency in their accounting and contracting processes. “MMC, when interviewing, tell you they're looking for any signs of malfeasance or criminality. But they're also looking for people who will fit in, lockstep, at the company." An MMC spokeswoman claims that using a psychiatrist for screening purposes is "industry practice." Business Week Online. The Secret World Of Marsh Mac. Friday October 22, By Marcia Vickers Favoritism shown to friends and associates (as by appointing them to positions without regard for their qualifications). According to an Article in The Atlantic Jul/Aug 03:"Americans censure nepotism on the one hand and practice it as much as they can on the other. There's much to be said for 'good' nepotism, which is fortunate because we're living in a nepotistic Golden Age......” Adam Bellow. Author's example: Gore vs. Bush. Bush, Jr. (a comment originally aimed at the dad) "He is a man who was born on 3rd base & thinks he hit a triple."  2 Marriage & Love While some employees work for their significant other, working in same contexts others found the rule abhorrent. I’m somewhere in the middle; I see relationships on a mature basis that work quite well. Usually in positions that complement each other rather than compete say, 2 underwriters versus 1 underwriter/actuary or loss control agent. The clandestine kind is somewhat variable as many gay couples as straights (more than we imagined) face these consequences all the time. A beautiful couple very intelligent & capable; one had a young daughter the other a widower; she an underwriter & he a loss control engineer. Perfect harmony; no outward shows of affection and they were a joy to behold. It can work given the abilities of those concerned. They worked in the major accounts division of A&A. They were perfect examples of office decorum. Alexander & Alexander, has strict policies and I never saw their policies abused. They were the largest Insurance Agency in Los Angeles at that date 1974; they of course had major competition but their clients were venerable no nonsense businessmen from the community; some more colorful than others.  A&A’s office at that time was on the 18th floor on Wilshire Blvd. In Los Angeles. 3. Children of Employees This seems to become a problem at smaller agencies where owners have direct control over their employees. Some are mindful some are not. Usually, the child is a brat, does as little work as possible, is always pouting about the amount of work, etc,. etc. Or kissing up to one of our coworkers for special favors such as a crocheted baby blanket for the oh so pregnant employee’s child Children

come to the jobs as a favor to their parents. Some are great! Some are brats, and others downright awful. Usually they had no interest in working in Insurance, or they were overzealous to a fault. Feast or famine

4 Affairs I include this subchapter because I’ve seen it in action and it really stinks; There are many habits that are frowned upon, but an affair, involving the boss, and the entire office knows, then, it is really is disgusting. 5 Hire From WithinOne of the more hollow and abused sayings in all private industry! This is the mandate that is  the most frustrating & hard to swallow of all? So many have said it; so few enable it? Where do we start? Most small agencies hire as they wish & fire with the same abandon; there are no union reps to redress grievances; no collective bargaining to improve hourly wages, and certainly no promotion programs that truly hire from within.



CT's Essays are copyrights of Claudia T Thomas, Las Vegas, Nevada 2005

Chapter 3 “S” is for  StatisticsStatistics is the study of numbers, figures, rates, and Risk Tolerance. Reams and reams of statistical data are collected. This information is the lifeline of the Insurance industry. Data are the arteries that support the industry and govern how the industry holds its loss ratio in check.  Some people call them bean counters and there actually is an actuarial department at large companies & agencies. These people spin the data to back up premiums charged. This is for all types of life, health & accident, Property & Casualty. Statistics are not only collected on who the insured’s will be what they will do & when & where will they do it! Having these factors together with the responsibilities (regulations) of the industry determine the rate that will be charged and the value on which it will be figures such as $1.20 per $100 of value whatever the value is!Statistics comes to life and has credibility the more samples are collected. The more samples studies, the more valid your statistics become. This information is sent to a place, like the Insurance Services Office, that issues state guidelines for rates.  These tomes that were used primarily before computers, was the backbone of the industry. The insurance company to fit their writing capabilities and their risk tolerance or risk aversion then modifies these industry guidelines. Whatever the amount of examples show. Surety is a major important part of Insurance. Are you bonded? I need a Completion bond. A Notary bond. Almost anyone in business, at some time or another, will need some type of bond. Or a document of faith. Bonds are fully funded by the insured; a bonding company merely certifies that a bondholder will fulfill their obligation. All contractors need bonds and sometimes right away - to bid on a job, etc. Working with contractors, you hear & see a lot of braggadocio, and many of them have potty mouths. Usually you have a surety company that writes bonds as needed provided they have financial info, and very thoroughly completed applications, and financial statements. Bond clerks type the bond and are Notaries to execute the bond. Usually these jobs can be done in the agent’s office. Larger agencies have a bond department. At A&A the bond guy used an old standard typewriter with a two finger (index) typing style. He was accurate and thorough. He’d been doing this all his life & literally knew nothing else but was happy with it. His best advice! Dummy up; know nothing and see nothing. Good advice. Wished I’d have taken it; however. I’d finally finished college and was still smarting that in 1974, I couldn’t find a job in music production.  
Chapter 4 “U” is for UnderwritingUnderwriting became my favorite discipline endeavor. Underwriting resulted in my getting my Associate In Underwriting designation. It was a new program, at that time, being offered by the Insurance Institute of America. Just take four classes, pass a three-hour written exam at the end of each course and, Voile! The designation AIU will follow. Seems simple enough, right? Almost. Take the classes, take notes, and study the material. Also, don’t forget the test taking suggestions they are pretty useful and helpful. Then you will succeed. Ins. Principles is the same the world over. In fact, I met several insurance personnel in my travels. In Texas, at the Department of Insurance we had to take some Insurance review. One class was taught by an insurance professional that traveled back & forth to Spain, spoke the language. Our next-door neighbor, in Valencia, Spain, was in the insurance field. However, he was too much of a ladies man to have a conversation with for any length of time. Many present days CSR’s do most of the agency work. They offer quotes, underwrite and present coverages to whomever needs it. Insurance Principles cover most basic terms, coverages, procedures and hierarchy that is insurance. Personal Insurance and General Liability Insurance follow this course. Real insurance people teach these classes. Many different designations are available. Often students are taking the classes for different objectives. General Liability was the most difficult for me and I had to take the test twice before getting the AIU. Most producers start with a picture of the location to insure, and the facts, along with desired coverages and need a quote
Chapter 4 continued Caption 2 & 3  Daily Schedule & Monthly Renewal ListOnce you get into a small agency setting and are considered a jack of all trades, your schedule is never, ever quiet; As you can see a planned day means getting all of the coverages renewed or analyzed. But this often does not happen.  This time schedule came about because after this company asked one of the producers to clean up the office, so to speak. He put in a time clock; mainly for several employee’s who claimed hardship due to lack of automobile but after clock was put in, they came late anyway! He was tough, unfair & stern with some employees and not with others (especially, his main CSR. This boss/overseer told the big boss that I was not getting back to clients on time, etc.  Not renewing coverages soon enough & a whole bunch of have to do’s” So I made up this time schedule. Not much room for failure, taking up too much time on one client; but always with an eye on the clock. It was tough. I brought work home, tried to cut some corners in letter to clients but was told this was unacceptable. Underwriters, CSR’s or Account Managers whatever the title, are responsible for a book of business belonging to one or more producers. If you analyze the above list, you find 26 accounts (not policies) that may have from 1-5 coverages: Property, Liability Automobiles, Workers Compensation. Depending on type of business, Floaters, Transit, etc. # of clients 26* per mo:        = 312 clientsMinimum per client:           =   $     300   in  premiumTotal Annual billed:           =   $93,000  This makes for a very busy day. We were expected to bill, diary, service, and offer new coverages and handle producers new business finds.  All calculated to balance out; even though it seldom work or works some of the time. * This figure varies but the formula does not change. Either the number of clients goes down or the policy premium increase. Underwriting is like detective work. You have to have insured complete an application that warrants his statements as fact; if his statements are found to be incorrect, the insurance contract may be terminated. So you become a detective to find out what is correct, what is not and if company’s will accept this client/risk. Underwriters have to keep in mind what they will and won’t write; and what are the requirements. They are usually pretty rigid. One either falls in or falls out

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