IN VIRGINIA, INSURANCE IS COMPETITIVE

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, January 10, 1992                   TAG: 9201100437
SECTION: EDITORIAL                    PAGE: A-8   EDITION: METRO 
SOURCE: TED L. SMITH
DATELINE:                                 LENGTH: Medium
IN VIRGINIA, INSURANCE IS COMPETITIVE
CONGRATULATIONS! The Nov. 19 editorial on antitrust, "Break up the insurers' cartel," is a well-written piece! Unfortunately, it is profoundly one-dimensional, and as such it will, in my opinion, misdirect and misinform readers.
Certainly editorials are just that - opinions. But after reading this piece, I truly wondered whether the opinion expressed was an educated essay, or merely a judgment formed after hasty research by one who really does not understand the mechanics of the insurance marketplace.
When I read such a piece, I ask why the writer doesn't attempt to seek information on both sides of the issue. If the writer had picked up the telephone and called anyone in the insurance community in Roanoke, I believe the article would have received the balance that it so definitely lacks.
In this case, all the writer needed to do was contact the State Corporation Commission and get its report on affordability and availability of insurance in the commonwealth. Either source would have lent an entirely different viewpoint to this editorial.
The insurance industry in the commonwealth of Virginia is truly competitive. There are a large number of players, and competition is rampant in personal and commercial lines.
However, the editorial makes it sound as though insurance companies are smoking cigars in the back room somewhere and setting prices at an arbitrarily excessive level. If this were true, would the insurance industry in Virginia be in the fifth year of a soft market?
Competition among Virginia insurers is not artificial and can be measured by any industry barometer. When the State Corporation Commission last year asked citizens of the commonwealth to attend hearings on automobile insurance, no one came forth. Virginia enjoys one of the lowest average automobile-insurance premiums of any of the states. Virginia is an excellent market for homeowners and automobile insurance when compared to most other states in the country.
Even the most cursory investigation of the commercial-insurance marketplace reveals that prices have been spiraling downward since 1986. Business consumers in Virginia are experiencing availability of products and reduced prices for business insurance.
That being the case, one must ask what the value of the editorial really was. Insurance consumers must have not only good pricing, but also available products. This requires a balance between free enterprise and market regulation.
In Virginia, we have been fortunate that we have maintained the proper balance and that insurance companies desire to do business here. The article would certainly cause a reader to question how the system is functioning. To the extent that this promotes further unnecessary regulation of our industry, the loser will be the consumer. As regulation increases, availability decreases.

Ted L. Smith is executive vice president of Independent Insurance Agents of Virginia in Richmond.

by Archana Subramaniam by CNB