The Depopulation Dream
The N.Y. Insurance Department is still on its "depopulation of the AIP" kick. Its original idea was to give credits to the companies that voluntarily took AIP business as their own on expiration. I knew this plan was doomed to failure and said so many times. Only one company. N.Y. Central Mutual, made an effort to comply with the department's revolutionary concept. I heard rumors that there were a few other companies that did the same thing but I was never offered proof. The concept died but was never buried.
Enter Robert Wallach, who knows the AIP business tetter than anyone else except this father Billy. He came up with a new twist that may have a limited success. Bobby plans a consortium of several companies under the banner of one of his companies that will, hopefully, accomplish what the department envisioned. Rates will be 10 percent lower than the plan for liability and 5 percent lower for physical damage. Accidents and violations are OK, up to a point. So far seven companies have shown an interest in Bobby's concept.
I am sure this plan will achieve some of the department's goals because it addresses several important concerns. Brokers will own the expirations and the policy will be more liberal than what is currently offered.
The only reason I feel this program has a chance is that it will be run by the Robert Plan that has a proven track record and that this program comes at the right time. We need something now.
Most TOP (take out programs) are nothing more than day dreams. There are many problems that have to be addressed before we think about depopulation. Whey should most "clean" drivers want to leave the plan if the rates are lower in the AIP than in many voluntary companies'? Why should the direct writers and companies with captive agents admit new producers to their ranks? Why should companies like Empire care about depopulation credits for writing in certain areas when it does it anyway on a regular basis? Finally, why should producers chance losing an account by moving it around?
I am also very concerned that the "something new" we need may take a very unfortunate turn. At the most recent session of the N.Y. Stale legislature. Senator Guy Velella introduced a bill that would have put the store front broker out of business. Under his proposal, any clean risk in the plan was put up for grabs by any carrier that would take it. The producer would have lost the ownership of the account. Fortunately, the...