The end of the year cannot come quickly enough for the insurance industry. Declining profit margins, layoffs and eroding stock prices have affected all sectors of the economy in 2001, including insurers. What's more, although the economy is expected to bounce back next year, it could take the insurance industry years to recover from the financial losses suffered from the September 11 terrorist attack.Prior to Sept. 11, the insurance industry was experiencing its worst economic performance in years. For example, even though Indianapolis-based Conseco Inc. has sold off assets and cut or moved 5,000 employees oversees, the company's stock is trading at a 10-year low. Even more troubling for CEO George Wendt is determining how to come up with the cash to pay off the company's massive debt.

But Conseco isn't alone. In July, Seattle-based Safeco Corp. announced a 10% workforce reduction-1,200 positions-by the end of 2003. One month later, San Antonio-based USAA cut 1,370 jobs, about 6% of its workforce, the deepest cuts in the company's 79-year history. More recently, MetLife announced it was cutting 1,830 employees and 253 officers and directors.

Despite the doom-and-gloom that pervades our economy, carriers should be able to bounce back rather quickly, thanks to the steady rise in net written premiums for this year and in 2002. Rates for commercial lines, reinsurance and personal auto all rebounded well this year, leading to a projected 7.4% rise in net written premium, the steepest since 1987, according to the Insurance Information Institute, New York. And, indications are that homeowner, auto and commercial rates will rise rapidly in 2002, due in part to the terrorist attacks.

The industry will face many challenges in 2002, from increased competition to declining profit margins. But look on the bright side: The knowledge that you've gained by leading your companies through a difficult year will help you make better decisions in 2002. If anything, the Sept. 11 attack has strengthened our spirit of cooperation and compassion, traits that until recently have not been valued.

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