The recent hurricanes that hit Texas and Florida may cause a 5% to 10% bump in premiums during the next 18 months, predicted Tom Corbett, chief executive of Alliant Insurance Services Inc., the biggest insurance broker in Orange County.
The industry won’t run out of money to make those payments because it’s closely regulated in order to ensure it survives such events, he said.
“The amount of the losses will be substantial, maybe $100 billion, which is a lot, but the insurance industry’s reserve is substantially higher,” he said. “It’s difficult for an insurance company to go under in an event like that. We think things are under control.”
Newport Beach-based Alliant has a large office in Houston with expertise in energy and marine insurance products. Some employees’ homes were flooded.
“The good news is everyone is safe,” Corbett said. “We began an employee relief fund to help them find temporary housing. They’re digging out. They’re a strong group. Their attitude and morale are good.”
Corbett also discussed other trends in the industry:
Obamacare’s Future
“Obamacare is a very confusing law,” he said.
The confusion helps Alliant as businesses seek advice on how to comply with it.
Even so, the Affordable Care Act affects individuals more than the group plans that Alliant sells to companies. About 25% of the company’s revenue comes from employee benefits, such as group health, life and long-term disability.
While the Obamacare exchanges haven’t been successful nationwide, Corbett doesn’t see Congress overturning the law.
“I think they’re still trying to push water uphill,” he said. “Repealing is pretty easy. Replacing it looks difficult. I don’t see any big shift away from Obamacare. You might see fine-tuning.”
Single Payer?
Some Democrats are promoting a “single-payer healthcare” financed by taxes to cover the cost of healthcare for all individuals. Corbett said he doesn’t believe it will happen, pointing out that even California Gov. Jerry Brown rejected the proposal for California this year.
“The financial burden to the taxpayer will be overwhelming,” Corbett said. “At this point, we don’t believe it’s a serious option.”
Internet Insurance
While internet-based companies have upended big industries like the media, Corbett doesn’t see the same in insurance because there are too many variables in a policy.
“It’s hard to get a complex risk analysis and solution to your business operations on the internet. You’re not going to fill out a form on the internet and the computer tells you what you should be doing.
“It’s pretty boring, and no one wants to deal with the complexities, which is good for us. Our people know a lot more about insurance and risk transfer.
“Ours is a very people-heavy industry. Great people are the key.”
