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I Am Going To Agree With Insurance Companies On This Matter


I Am Going To Agree With Insurance Companies

Rarely do I completely agree with casualty insurance companies on a broad subject. This is one time that I have to make an exception. I do agree that insurance carriers do not pose a systemic risk to the US financial systems.

Systemic Risk – Two Definitions

Picture of insurance companies paper

1. In finance, the risk of collapse of an entire financial system or entire market, as opposed to risk associated with any one individual entity, group, or component of a system.

2. Financial system instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries“. It refers to the risks imposed by interlinkages and interdependencies in a system or market, where the failure of a single entity or cluster of entities can cause a cascading failure, which could potentially bankrupt or bring down the entire system or market.

Systemic Risk is also sometimes erroneously referred to as “systematic risk” It is not possible to avoid systemic risk through diversification.

Why did I decide to go into definitions on systemic risk? The Federalization of Insurance – specifically Workers Compensation from a different angle is now in Congress. The Federal Government wants to rein in insurance companies by regulating them with the same laws as banks.

A letter signed by various large insurers’ executives was delivered to Sen. Christopher Dodd, D-Conn., the banking committee chairman, as a precursor to bipartisan financial services reform legislation that could be introduced in the Senate this week.

Graphic of Two hands Insurance Companies letter

I will not go into the letter except for the passage “Property and casualty insurers have been an oasis of relative stability, weathering the crisis well without presenting any risk to the broader financial system.” One of the main concerns of the recently formed Property & Casualty Leaders Coalition was having to pay some sort of tax that was centered on bank failures. Also in the letter was “The property and casualty industry should not be charged any assessments to cover shortfalls that arise from a resolution of a non-insurance financial company.”

The gravity of the situation can be shown by who signed the letter. The letter was signed by Evan Greenberg, chairman and CEO of the ACE Group; Thomas Wilson, chairman, CEO, and president of Allstate Corp., John Degnen, vice chairman and chief operating officer of Chubb Corp.; Thomas Motamed, president and CEO of CNA Corp.; Edmund Kelly, chairman, president and CEO of Liberty Mutual Group; Stephen Rasmussen, CEO of Nationwide Mutual Insurance Co.; Edward Rust, chairman, president and CEO of State Farm Mutual Automobile Insurance Co.; Jay Fishman, chairman and CEO of the Travelers Cos. Inc.; Stuart Parker, president and CEO of USAA Property and Casualty Insurance Group; William Berkley, chairman and CEO of W.R. Berkley Corp.; and Paul Hopkins, CEO-Americas of Zurich Financial Services Group.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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