Monthly Archives: August 2014

Happy Labor Day


It’s Labor Day weekend which marks the official end of summer for most students and workers.  Vacation season is pretty much over as students return to school and workers begin to re-focus on work routines that have typically been somewhat disrupted by the distractions of warm summer months and the vacations taken both by themselves and co-workers.  For those of us in the upper Midwest, having experienced one of the coldest and snowiest winters in several years just a few months ago, we bid summer farewell with considerable trepidation of what the months ahead hold for us.

Nevertheless, this Labor Day weekend is our opportunity to enjoy one final extended weekend of warm weather, outdoor fun, and of course the celebration of the contributions of labor.  It is in the spirit of Labor Day that I would like to highlight the many types of career opportunities afforded by the risk and insurance industry.  Many people view insurance employment in just one dimension – the insurance salesperson.  That seems patently unfair since virtually every industry includes a sales component, and yet people don’t identify these other industries solely by their sales component.  For example, if someone says that they work in the automotive industry, it could be manufacturing, marketing, finance, design, or any number of careers other than automotive sales. Automotive industry careers do not automatically conjure “salesperson” as the default occupation, but insurance does.  Let’s face it, automotive salespersons (especially used cars) have had some public relations challenges as much as insurance sales, so why is the insurance industry occupational perception so biased towards sales?

Don’t misunderstand – the sales function is necessary in the insurance industry, just as it is necessary in any industry.  Without sales of the product, nothing else matters.  It requires talented people to perform this function.  My point is that there is so much more to the insurance industry than sales, contrary to public perceptions.  So on this Labor Day weekend, if you’re curious about other types of labor that comprise the insurance industry, please take a moment to explore the Gamma Iota Sigma Career Resources page.  There is a treasure trove of career information there, and it may just broaden your perception of all that a laborer can do in the insurance industry.

Have a happy and safe Labor Day!

Collegiate Studies for CPCU


One of the most prestigious and valued credentials in the insurance industry is the Chartered Property and Casualty Underwriter (CPCU) designation.  To be clear, you don’t have to be or aspire to be an underwriter to benefit from this designation.  It is recognized throughout the risk management and insurance industry.  The CPCU designation and the industry networking that goes along with it are both significant career enhancers.

The good news is that students who are part of a participating risk management and insurance collegiate program (such as Ferris State University) can earn a collegiate studies for CPCU certificate.  But wait… there’s more… The qualifying collegiate courses will also waive the exam requirement for up to two of the required CPCU courses.  The bottom line is that a student may earn a certificate that will immediately help them in the job market, and they have a significant jump start on earning the full CPCU designation by waiving two of the eight required exams.

Ferris State Risk Management and Insurance students  may take advantage of this opportunity simply by earning a B or better in qualifying courses and completing an online application upon course completion.  You can’t beat this deal.

Obamacare and the Courts


As I mentioned a couple of weeks ago, moving week has arrived for me.  So I’m going to share just a few thoughts on the latest developments in our nation’s raging debate over health insurance, and then leave it to those of you who wish to post comments to debate the point while I’m busy toting furniture around.

Two different courts recently issued polar-opposite rulings on the question of whether Obamacare’s subsidies are legal for citizens of states who opted not to build their own health insurance exchanges.  The plain language of the statute clearly says that the subsidies may only be paid to citizens purchasing health insurance through a state-run exchange.  The statutory language is not a mistake, though that would be reasonable presumption given the haste and political gyrations through which the bill became law in 2010.  The disputed language actually accurately reflects the political calculation made by the Democrats during the construction of the law.  They thought that this language would create an irresistible carrot to entice states to develop their own exchanges.  It backfired when 36 states decided not to offer their own exchanges, leaving it up to the Feds instead.

This Business Insurance article encapsulates the issue well and provides an enlightening quote from federal government legal beagles.  Here’s the most entertaining paragraph of the article:

Government lawyers wrote in the court filing that the July decision, if left intact, would “impose a severe hardship” on people who currently get the subsidies in the form of tax credits. The appeals court’s ruling led to “harsh and illogical results,” the government lawyers’ court filing said.

The Feds are arguing that the court (through its ruling) is imposing “severe hardship” and “harsh and illogical results” on the citizens who may lose their health insurance subsidies.  That’s rich.  From where I sit, the court is simply interpreting plain English.  It appears to me that the authors of the controversial and politically charged law are the ones responsible for “severe hardship” and “harsh and illogical results” that may now descend from their political shenanigans.  Perhaps the operative wisdom at work here is “you reap what you sow.”


Gas Prices and Insurance Premiums


Over the past few months, I’ve noticed a pattern emerge for gasoline price movements here in West Michigan.  Every few weeks or so, gasoline prices seem to spike dramatically higher for no apparent reason.  At least not the reasons we’ve grown accustomed to – geopolitical events, weather shocks, etc.  Then, the prices seem to gradually subside – until the next spike higher.

I heard a analyst discuss this phenomenon on the radio recently.  He suggested that this pattern is simply the natural competitive dynamics of the retail gasoline industry at work, in the absence of any specific driving forces (i.e., the aforementioned geopolitical shocks) for the price spikes.  The industry’s highly competitive nature causes prices to gradually drop as the gas stations located along the same street battle for market share.  Have you ever noticed how one station can have every pump in use while the gas station across the street with prices just a penny or two higher per gallon looks like a ghost town?  When you’re selling a commodity, price is pretty much all you have to work with.  Anyway, the analyst suggested that every few weeks the industry realizes that they can’t keep selling gasoline at those decreased price levels and still be profitable, so a price spike ensues and the pattern starts anew.

This caused me to ponder the insurance market and its penchant for soft and hard market cycles.  The industry is highly competitive with literally thousands of insurance carriers competing for business, and the insurance product itself is typically perceived by consumers to be a commodity.  That’s not true as I have previously discussed, but it is a perception that feeds the competitive pressures on insurance premiums.  Consequently, insurers battle (predominantly over price) as long as they have capacity that they need to utilize to generate returns, and the result is a soft market cycle of lower premiums, generous underwriting terms, and broad availability of insurance.  Eventually, the underwriting losses mount and the industry finds the discipline to raise premiums (prices), tighten underwriting standards, and restrict the types of risks accepted.  The hard market arrives.  Sometimes the hard market is abrupt and sharp, creating a crisis of availability wherein some insurance buyers suddenly cannot find the insurance they need at any reasonable price.  In gasoline market terms, this is akin to the long gas lines and gas stations running out gas in the 1970s.

Obviously, the gasoline price to insurance premium comparison is not exact, but the similarities are intriguing and characteristic of highly competitive industries.