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Changing Structure of the Property-Liability Insurance Industry

This article explores the major structural shifts in the property-liability insurance industry, from the 1940s to the 1990s. It discusses key events, such as the SEUA and McCarran-Ferguson Act, post-war boom, regulations, financial services conglomerates, mergers and acquisitions, e-commerce, and deregulation. The effects of these changes on leading insurance companies and the industry as a whole are also examined.

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Changing Structure of the Property-Liability Insurance Industry

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  1. Changing Structure of theProperty-Liability Insurance Industry Major Structural Shifts in the Industry 1940s SEUA and McCarran-Ferguson Act Post War Boom and Multiple Lines Regulations 1970s and 1980s Financial Services Conglomerates 1990s Mergers and Acquisitions E-Commerce Financial Services Deregulation

  2. The Industry in 1940 Monoline Insurers Independent Agency Insurers

  3. Fire Insurers INA Hartford Fire Continental Home Fidelity-Phoenix Phoenix National Fire Great American Aetna St. Paul Casualty Insurers Travelers Aetna Life and Casualty Hartford Accident Aetna Casualty Globe Indemnity USF&F Travelers Indemnity Fidelity and Casualty Connecticut General Royal Indemnity Leading Writers in 1940

  4. Catalysts for Change in the 1940s Southeast Underwriters Association Case –1944 Power of rating bureaus reduced McCarran Ferguson Act – 1945 States regulation would preempt Federal antitrust laws Boycott, coercion or intimidation covered by Federal law Removed anticompetitive restrictions Post-WWII Boom More drivers New homes Diemand Committee Report to the NAIC - 1944 Supported multiple-line operations

  5. Effect of the Changes in 1940s Growth of Direct Writers Lower commissions Expense ratio advantage Multiple Line Policies Homeowners policy Comprehensive General Liability policies Multiple Line Insurers

  6. 1989 State Farm Allstate American International Aetna Life & Casualty Liberty Mutual Farmers Insurance Nationwide CNA Hartford Travelers 1998 State Farm Allstate American International Farmers Insurance CNA Nationwide Travelers Berkshire Hathaway Liberty Mutual Hartford Leading Writers

  7. Catalysts for Change in the 1970s and 1980s Perceived Benefits of One-Stop Financial Shopping Combine Insurance, Investing, Real Estate in one Institution

  8. Effects of Change in the 1970s and 1980s Combinations of Life Insurance and Property-Liability Insurance Combinations of Insurance and Stock Brokers Full Service Financial Conglomerates Sears owned Allstate Dean Witter Coldwell Banker Real Estate

  9. Catalysts for Change in the 1990s Mergers and Acquisitions Corporate Restructuring E-Commerce Financial Services Deregulation

  10. Effects of Change in the 1990s - 1 Mega-mergers Berkshire Hathaway owns GEICO and General Re St. Paul buys USF&G Safeco buys American States CNA buys Continental Restructuring Sears sells Allstate Allstate sells Allstate Re CNA sells personal lines business Aetna sells casualty business

  11. Effects of Change in the 1990s - 2 E-Commerce Provides potential for lowering cost of sales Lowers the cost of entry into business Applications for: Marketing Transferring information Examples of Companies Using E-Commerce Quotesmith (www.quotesmith.com/) Provides life insurance quotations Progressive (www1.progressive.com/) Sells over the internet American States Improve communications with agents

  12. Effects of Change in the 1990s - 3 Financial Services Deregulation Banks selling insurance Insurance companies offering banking services Next lecture

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