Risk managers sent two very loud and clear messages to insurance brokers and carriers during the annual Risk and Insurance Management Society conference in Dallas last month. To sum up both messages in a phrase borrowed from the movie "Network" -- "We're mad as hell and we're not gonna take it anymore!"

The first message hit insurers right between the eyes. Releasing preliminary results of its second "Quality Scorecard," RIMS noted that in the eyes of risk managers, the insurance industry still rates a "D" when it comes to service.

For the second year in a row, the insurance industry overall rated a 70 and 67, respectively, on performance and satisfaction on a scale of 1 to 100. That's incredibly poor for a so-called "financial services" industry.

Insurers actually dragged down the industry's overall standing, seeing their performance rating fall from 68 to 67, while their satisfaction rating remained dismal at 66, according to a preliminary report on the scorecard, which is sponsored by New York-based RIMS and the Quality Insurance Congress in Nashville.

If the numbers themselves didn't do enough damage to the industry's already poor image on service, insurers had to endure harsh but well-deserved criticism from the incoming president of RIMS, who said the industry suffers from a chronic "inattention to detail."

In an interview with NU's David M. Katz, Roger L. Andrews, first vice president of RIMS and therefore the one in line to welcome its top dog next year, complained about the long delays risk managers face in getting their policies. He also lamented the fact that after often having to wait several months to get an actual policy in their hands, buyers are still likely to find several errors in basic information.

Mr. Andrews went on to damningly assert that if the firm he serves as general counsel and director of risk management-E.D. Bullard Company of Cythian, Ky.-made as many mistakes in the hard hats and fire helmets it produces as insurers commonly make in their policies, "we wouldn't be in business long."

These complaints are all too familiar. To say that the industry has been slow to respond is like saying the dinosaurs were slow to adapt to their changing climate. Those that don't start evolving, and fast, into high-quality service providers will suffer the same fate as their dull-witted ancestors--extinction.

Is it any wonder that with such poor reviews, insurers have been unable to win back the business they've lost to the alternative markets despite the softest commercial insurance pricing environment in memory?

Indeed, probably one reason risk managers are sticking with captives, self-insured funds, large-deductible plans and the like is that they simply don't trust the insurance industry to deliver a reliable, affordable and effective product in good times and bad.

And if the insurance market ever does harden, look out! Alternative market growth will explode, particularly in the far more technologically efficient capital markets. Cheap insurance prices might be all that is keeping many buyers--especially in the middle market--from trying something different.

Meanwhile, the second message risk managers sent to the industry at the RIMS conference was more subtle but equally powerful. RIMS tapped Insurance Management Company-a relatively small insurance brokerage in Erie, Pa., with 22 people and just $2.5 million in annual fee and commission income--as the winner of the 1999 Arthur Quern Quality Award.

After reading NU's profile of IMC by Lee Ann Gjertsen in our April 26 edition, I have no doubt IMC was worthy of being honored. But my speculation is that RIMS also snuck in a potent political statement here.

By picking a middle-market brokerage for one of its highest awards, RIMS is telling its members that they don't need a huge, multinational broker to handle their risks. They're also telling the mega-brokers that buyers do have viable alternatives despite massive consolidation, and that brokerages must provide high-quality service to earn their business.

And, most importantly, they're telling small- and middle-market brokerages not to give up hope--that they can compete with the big boys for major accounts if their service is top-notch. In the quality scorecard, brokers did manage a slight improvement in their satisfaction and performance ratings--from 69 to 70 and 73 to 74, respectively. Perhaps this is because brokers have at least begun to address customer concerns about undisclosed contingency fees paid by insurers to steer business their way.

However, this is no cause for celebration. In fact, the ratings for brokers remain appallingly low for a service-oriented business.

Risk managers have been more vocal in their complaints about the insurance industry lately. But the question is, is anyone out there listening? Will insurers and brokers be awakened from their long slumber and finally start doing their jobs efficiently and effectively? Or will they remain incredibly lame as service providers and allow more market share to slip through their fingers into the alternative markets?

Normally, the word of warning in a free market is "caveat emptor"--let the buyer beware. But since buyers are clearly fed up with insurers and brokers and with plenty of alternatives available to them, the more common phrase of the new millennium in insurance might be "caveat venditor"-- Let the seller beware! -NU