The intense regulatory scrutiny and plummeting consumer confidence that has dogged the property and casualty insurance industry since the onset of the most recent hard market were brought on by the collective actions of insurers, says Ellen Moore, president of Chubb Insurance Co. of Canada. “Companies focused on getting business on the books and underwriting took a backseat [in the years prior to the hard market of 2002-2004],” notes Moore who was a guest speaker at the Insurance Institute of Ontario’s (IIO) recently held “Spring Luncheon”. Moore observes that rate inadequacy had become evident in most classes of business before the tragic events of 9/11, which many commentators mistakenly identified as being the prime motivation behind the hard market turn in the pricing cycle. The trauma brought about by the sudden and steep shift in pricing was rather due to lax underwriting discipline in a market environment that had become dependent on investment earnings. The only effective way for insurers to repair the damage to the industry’s public image and ensure long-term stability is if pricing discipline is maintained, she says. Moore notes, however, that “auto insurance drives our [the industry] public image”. The auto product is highly regulated, she observes, and such influences can have detrimental impacts on the underlying profitability of the marketplace. In this respect, Moore believes insurers and brokers need to better communicate with regulators regarding what actually goes into the process of “rate making”. And, “we can help the industry image by speaking as one voice”, she adds. On a positive note, Moore says the Canadian insurance industry handled the public controversy surrounding intermediary remuneration disclosure which was sparked by investigations in the U.S. conducted by New York’s attorney general Eliot Spitzer extremely well. The Canadian industry, at least in Ontario, introduced voluntary, self-regulated broker remuneration disclosure requirements which were the result of close cooperation between insurers and brokers. This prompt action prevented the possibility of draconian regulations being enforced on insurers and brokers operating in Ontario, Moore says. The voluntary disclosure requirements established by insurers and brokers is also being looked at by international insurance industry bodies as a model to be applied in other countries, she adds. Justin MacGregor, president of the Toronto Insurance Conference (TIC), notes that the public attention caused by the Spitzer investigations has resulted in the insurance industry having been under a microscope for the last six months. “Hoping it’s all just going to go away is not a viable option,” he adds. MacGregor says that transparency in client dealings has become the key issue for regulators. As such, the financial services environment has changed over the years with greater expectations placed on the professions whether they be investment advisers or insurance brokers. In this respect, the insurance industry “buried its head in the sand”, he says, in not reacting sooner regarding disclosure measures for broker remuneration when it was evident that regulators were taking action in the other financial services fields. “We let circumstances catch up with us rather than acting ourselves.” The way forward for brokers and insurers in repairing the industry’s damaged credibility lies in open and coordinated communication, MacGregor says. “We have to work harder and smarter to make sure that we don’t present confusing messages. I think that, today, the industry does work better in coordinating that message. We have to act [henceforth] with total transparency we [the industry] have to embrace change, whether we want it or not,” he notes.