Insurance Accounting

As a former insurance company executive, now retired, and having served as national president of one of the industry’s largest service organizations, I am prompted to write in support of the auto premium rollback election (Proposition 103). Now, if only the industry will hear, and heed, the voice of its customers and accept their expression in a positive way--not only for California but elsewhere, as well.

For too long the industry has continued to promote the mystique of “insurance accounting”--using unique terminology to explain profit and loss, rate making, reserve techniques, investment income and a host of other items.

My concern is not whether the 20% is too much, or too little, but rather that the matter could be greatly minimized and largely resolved by adopting changes within the industry in its accounting procedures. The industry must come off its old outdated, mystery-shrouded methods and traditions used in developing its operating statements, balance sheets and rate increases--all of which are generally supported by nothing more than “our business is different.”

Has the industry “dazzled” the public for too long? Do they feel the insurance industry is so complicated that the average citizen cannot comprehend its complexity? I think so--and, the public won’t buy this any longer. Neither do the people accept the threat of “play by my rules” or else I’ll take my ball and bat and go elsewhere.

A final word about blaming attorneys. Who developed the product upon which this profession “lives” in ever-increasing amounts and numbers? Who, just a few short years ago, with vigor, promoted larger and larger limits of liability which quickly attracted the attention of these esquires?

The changes I propose will not, in the main, require any revision in laws. They will require the cooperation of the regulatory agencies, the industry and representatives of the public. It’s long overdue.

WENDELL HOLST

McMinnville, Ore.