Analyst: Spitzer Good For Insurance Industry

By Jim Connolly

February 16, 2005 at 07:00 PM

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Regulatory scrutiny will strengthen carriers and brokers.[@@]

Steven Schwartz, a senior vice president in the Chicago office of Raymond James & Associates, made that prediction during an insurance conference organized by the New York Society of Security Analysts.

One topic Schwartz discussed was the investigation of insurers and brokers sparked by New York Attorney General Eliot Spitzer.

"Spitzer will be very good for the life insurance industry in the long run," Schwartz told his fellow securities analysts.

The investigation will help insurers by loosening the power that the distribution system now has over both life and property-casualty insurers, Schwartz said.

Today, because of consolidation of brokerage firms, managing general agents and large agents, "the power is with the buyer," Schwartz said.

Diffusing the power will be good for life insurers and other insurers, Schwartz said.

Schwartz also is predicting that another issue roiling the life insurance industry, reserves for universal life products with guarantees, will be good for the industry.

The controversy should encourage a shift away from traditional, simplistic reserving formulas, toward more efficient "stochastic" statistical models, Schwartz said.

The changes should spur life insurers to return to their roots and retain more mortality risk, Schwartz said.

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