Industry Value

Often our industry doesn’t get the credit it deserves. Some of us have been put on the defensive over Obamacare. At times Minnesota’s Insurance Exchange has treated us as an after-thought.  Then there’s usage-based auto, which seems to be an effort to make us redundant. It’s scary that they think a smartphone application might be next for gathering underwriting data. Then along came the recent McKinsey report stating that agents have no future, which is simply wrong, in that it’s what they seemingly think is inevitable is totally avoidable.

Our industry does serve a purpose and independent agents are a vital part of it.

In the early 1990’s, Bob Comeau, an independent insurance agent in Coon Rapids, Minnesota made me aware of the problems involved in distracted driving.

His son and my second son were just getting their licenses and we were both keenly interested in teen driver safety. They both went on to graduate from St. Olaf’s and can give you a rough translation of “um-ya-ya”.

At that time, several companies, including Chubb, worked to produce and distribute a video to back the graduated licensing program in the United States. It was aptly named, “Young Drivers: The High Risk Years” and was produced by the Insurance Institute for Highway Safety.

My wife and I watched the video. Our oldest son had already had two car crashes in which his vehicles were totaled. No one was injured in either crash, but we were badly shaken. The InterAgency decided to purchase several hundred tapes and give them to independent agents throughout North Dakota and Minnesota.

An updated version is at

I recently checked. Every state in the union except one has some form of graduated licensing. I’m pleased to have had some small part in making that happen. Insurance agents in our two states stepped to the plate and spread the word of what needed to be done.

I’m even more pleased to think how this is just one example of the insurance industry having a positive impact on our society.

For years our industry has served as a policing mechanism for reducing the number of speeders and other traffic violators by our methods of increasing premiums to reflect improper driving. We are quicker and more effective than the courts.

Constant fire inspections have reduced the number of industrial fires. (Mea Culpa for having made some fifteen MPH “drive-by” inspections as a special agent for The Continental Insurance Company. I tried to keep my company car’s rearview mirror out of the pictures. The vast majority of the time I took the time to do a thorough inspection and make proper recommendations.) Without the follow through by agents with their clients on recommendations fire inspections are an exercise in futility.

How many of us were given a plastic Hartford helmet as a school-aged child? The “Junior Fire Marshal” program had to have been a significant influence in home safety. That program succeeded because local agents volunteered their time.

Where would product safety be without the influence of our industry? Who fills out the applications with their clients to make sure all the info and labels are attached.

How clogged would our court system be without our adjusters working tirelessly to keep claims and lawsuits out of court? Agents have a positive  influence on these proceedings.

How many insurance agencies haven’t sponsored several youth sports teams, often coached by the agent?

How would commerce happen without performance bonds? Any agent involved in bond accounts understands how hard everyone works to safeguard the construction industry. (Wouldn’t it be great if the bonding industry extended to computer programmers. I wonder how many of those cowboys could convince an underwriter to give them a bond?)

Along those lines, our industry does a great job of policing professional standards through E&O and Malpractice insurance underwriting. Insurance agents spend a huge percentage of their time learning to better serve their clients to avoid E&O claims against them.

Without homeowner’s insurance how many individuals could stand the risk of owning such a huge asset that’s so susceptible to tornados and fires? The basic H.O. policy is the backbone of our financial industry.

In the early eighties I cancelled the insurance on four bars in Grand Forks when they refused to cancel an “Irishmen’s Run”. The event featured several hundred people running a ten-kilometer race with stops in each of ten bars for a 12 oz. glass of beer. The bar owners were livid because the TV show called “That’s Incredible” was coming to town to film the event; and I was being a killjoy. A.) Underwriters are killjoys, and B.) When you qualify to be on a show called “That’s Incredible” you should really rethink what you’re doing.

I wouldn’t have known about that event had the agent not been honest.

Our industry, through our profit motive makes decisions that are usually beneficial for all.

The only way we, agents and companies, can make a profit is to sell a policy. You can’t sell a lot of policies if you make decisions, or work with companies who make decisions, simply to be overbearing.

Some underwriters would be champion nitpickers, but most are Solomon-like in their decision-making. In a world where 25% of the applications for insurance rise to the level of material misrepresentation, keeping a positive attitude isn’t easy.

Back when I was an underwriter I would find myself doing some belt and suspenders thing, like hiding my parking ticket so a would-be thieve wouldn’t see the time printed on it, and make a judgment as to when he could best steal my car, and say to myself, “I’ve GOT to get out of underwriting.”

Underwriters and agents tend to be pretty nice people. The industry has a way of shaking out those who aren’t.

Our industry’s desire to reduce risk is good. Profit greases the wheels of the entire industry.

Insurance is capitalism at its best.

Government computers and smartphone data-gathering won’t easily replace us.

We really aren’t that bad.

James Holm


One thought on “Industry Value

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