Embracing Change ...and the Future
CPCUs Forecast the Industry's Future and Readiness

Six months ago, the CPCU Society's Member Opinion Panel examined the causes and implications of the global financial crisis for the property-casualty insurance industry and their careers. Now, detecting some glimmers of a recovery, CPCUs on the Panel were asked in May 2009 whether prospects for the insurance industry would improve or deteriorate further over the next six months (to December 2009). Panelists were also invited to look even further into the future, and identify the most serious business threats that will face the industry in the next two to three years.

Some Background
CPCUs who have volunteered to participate in the Member Opinion Panel received an e-mail invitation to contribute their expert insights via a web-based survey on Tuesday, May 12, 2009. Details include:

Methodology: Web Survey

Survey Period: May 12 through 29, 2009

Number of Panelists Participating: 143

A Financial Hangover
The consequences of the recent financial crisis will linger with the property-casualty insurance industry for some time, according to the CPCU experts on the Opinion Panel. Similar to other recent surveys of the global insurance industry, issues of poor investment returns, macro-economic stagnation, and resurgent inflationary pressures resulting from the financial meltdown are seen as serious threats to the industry's health over the next two to three years.  The business also faces a new political reality, a result, at least in part, of the decade's earlier financial excesses. More U.S. and state regulations, and new business taxes are both near-certainties, according to the Panel.  Escalating fraud and rising claims volume are also projected to cost the industry dearly.

Home-Grown Remedies
Not all future business threats can be dismissed as being outside of the property-casualty insurance industry's control, however. The risk of failing to attract and/or retain talent, and also of damage to the industry's reputation resulting from the financial crisis, are both within the industry's sphere of influence. And not all risks are created equal. CPCUs foresee a return to a more rigorous business discipline as the "silver lining" to this recession. Tighter underwriting standards, more stringent capital and liquidity requirements, further industry consolidation, and an aversion to complex financial instruments are seen as likely and potentially positive outcomes of the financial mess. The best news of all may be that the majority of CPCU employers are seen as being somewhat prepared to deal with the Panel's vision of the future. Even so, the professionals on this Panel believe more can and should be done before the industry can fully "embrace change ... and the future."

Embracing the Future

• State of the Industry: The current recession ranks as the most severe and extensive downturn in the Panel's collective memory. (And that is saying quite a lot, given that seven out of ten respondents are 50 or older, and have experienced most of the economic downturns since the Great Depression!) The impact of the recession has been variable across the industry, with most employers taking measures to respond, typically by reducing non-essential costs. All responses have not been to cut back, however. Almost 60 percent of Panel members say their companies are stepping up spending on marketing and advertising!

• The Start of a Hard Market?: Interestingly, two-thirds of respondents in May report their employer has or is considering increasing premiums, up from only one-quarter of the Panel six months earlier in November 2008. CPCUs are somewhat skeptical about the industry's ability to manage the pricing cycle, however, rating its likely success as low to moderate.

• State of CPCU Careers: As has been widely reported, attendance at business events has been severely curtailed in the industry. Six out of ten CPCUs report limits on travel, and another one-third say their employers have reduced support for attendance at professional events. Unfortunately, more than one-half of CPCU employers have or will implement staff reductions, and salary freezes or cuts. Workloads spread over smaller staffs will also keep more professionals at their desks. On the other hand, almost one-half of Panel members report that their employers are putting more emphasis on training and development. And only twelve percent or fewer report that their employers have reduced financial support for obtaining the CPCU and CPCU Society membership.

• Crystal Ball Gazing: The worst of the recession may be over, according to CPCUs. Over the next six months, the consensus opinion is that the health of the U.S. economy and the U.S. financial sector will improve slightly.

• When the Going Gets Tough: According to the Panel, "Insuring Your Success" for CPCU members and their employers in the future will involve aggressively promoting the CPCU designation both within the industry and with insurance consumers (commercial and personal). And, while the CPCU designation already has a reputation for being tough, members of the Panel would like to see even more advanced courses, dealing with emerging issues, management skills for experienced professionals, and a post-CPCU certificate or designation program. CPCU Society members, their employers, and industry observers are encouraged to keep an eye on this site for news about the Society's new advertising campaign and courses designed to address senior management development needs!

Get on the Bandwagon!
To find out more about this survey and its findings, read the detailed report. Or e-mail Suzanne Kinsler, marketing and sales director for the CPCU Society.