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Do they know something we don’t? A recent news item in The New York Times reports that executives from Allstate Floridian Insurance, one of the state’s largest homeowner’s insurance companies, told a special Florida state Senate committee that they had been forced to raise rates to cover losses “and prepare for the possibility of more frequent hurricanes in the future.” To be fair, Allstate Floridian wasn’t alone. Executives from Nationwide Insurance Co. of Florida also appeared before the committee and two other insurance company representatives were scheduled to add their statements. Now, say what you will about insurance companies and you’ll not get an argument here, but one thing you do have to admit is that they usually know a good bet when they see one. That’s what insurance is all about—hedging bets against a possible future event. Joseph Richardson Jr., chairman and chief executive, Allstate Floridian Insurance, reportedly told the committee that the company was bracing for an increase in destructive hurricane activity because of rising ocean temperatures, a possibility that the state’s hurricane loss projection models do not take into account. “Prudent business judgment dictates that this increased risk of hurricane formation should be taken into consideration in determining the appropriate rate for the risk being insured,” he said, as quoted in the Times article. Prudent business judgment would seem to dictate a lot of things. Among them would be hurricane protection dealers and manufacturers being prepared for seasons of increased hurricane activity, too. Despite the relatively calm seasons of late, expert forecasters tell us we’re in a period of increased storm activity—a naturally recurring cycle. Sooner or later the scales will tip to balance out, and it’s likely to take a few years of increased activity to do that. If you’re a believer in the global warming phenomenon (another naturally recurring cycle, it seems), then that may be even more reason to be prepared. The only thing that’s changed in, say, the last thousand years or so is that now so many more people live in harm’s way. They, too, need to take the same long view as the insurance companies and hedge their bets. Money spent now, in a time of relative calm, will more than be repaid. If they understand that, dealers need to be there ready. In this month’s Sales & Marketing Front column, John Dearden makes an appropriate observation: Businesses stop selling long before customers stop buying. Howard Shingle
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