When Barbara Hayes Crouse died last month at age 73, her obituarysummarized a career typical of a region where giant insurancecompanies have thrived for almost two centuries: 'Hoping to become apublic school music supervisor, she earned a bachelor's degree inmusic . . . took a summer job at Aetna Life & Casualty Co. and stayedfor 40 years. She retired in 1982 as a group underwriter.'
But today, Katharine Lanza, 27, a Cigna Corp. employee whosemother and brother also work in insurance, says, 'There's nosecurity now. You realize you're here for now, you can't think aboutthe future.'
Hartford is in the midst of a difficult and radical realignmentwhose outcome is not at all certain.
It is the product of two distinct downturns in the city'sfortunes. The first is a five-year-old recession that has claimed51,300 jobs, mostly in insurance, banking and defense in ametropolitan area of about 1.1 million. The second is a nationwide,ongoing restructuring within the insurance industry that began atabout the same time.
Comes now a third factor: national health reform and the prospectsthat it will force further insurance company layoffs andreorganization. The triple whammy 'has left some people shell-shocked,' said Elliot Gerson, president of The Travelers Corp.managed care division.
'It's affected the general level of confidence that things will infact turn around and get better,' he said. 'With all the {layoff}announcements by all the companies, it's becoming harder and harderto feel optimistic about the community. Even the Whalers {hockeyteam} can't win.'
Hartford's troubles are similiar to those felt in recent decadesin Detroit and Pittsburgh as their major industries were battered bycompetition from abroad.
Hartford's woes began at least five years ago when the real estatecollapse hit the insurance companies, which had markedly increasedtheir real estate portfolios. At the same time, their life insurancelines, once a highly profitable and relatively simple business,became highly competitive with razor-thin profit margins.
Then along came the major, and ongoing, shake-up in healthinsurance. Unlike steel and autos, which faced threats from aboard,competition in the health insurance business was local, sweepingcommunity after community as businesses that bought health benefitsfor employees demanded curbs on premium rates.
To reduce costs and increase profits, the biggest and mostinnovative of America's 1,200 health insurance companies began andcontinue to shrink their traditional 'indemnity' business - wherepatients file claims for medical care and the company reimbursesthem. In its place, they are creating 'managed care' networks thatown, rent or contract directly with doctors, nurses, hospitals andclinics and over whom the insurers can exercise aggressive costcontrol.
Insurance companies, in short, are hiring fewer actuaries and moredoctors. They are buying fewer claims forms and more beds for theirhospitals. The proportion of employees who work in Hartford isdecreasing.
Aetna Life & Casualty Co., for example, the nation's largestpublicly traded insurance company - with assets of $90 billion - isconsolidating 65 claims centers into 22 regional offices for anestimated saving of $100 million. Aetna's health division nowcontracts with a a network of 105,000 physicians and 1,224 hospitalsin 42 states.
Federal health care reform, as proposed by President Clinton,would put further pressure on insurers to cut costs and to acceleratethe retooling. Even without national health reform, insuranceexecutives and analysts say as many as 600 of today's health insurersand 256,000 related jobs may be eliminated over the next 10 years.
For all Clinton's talk about the 'security' health care reformwould bring to the average American, the administration's plan, forthe moment at least, has aggravated insecurity here, say employees.
Three of the country's largest insurers, The Travelers, Aetna andCigna, all based here, have announced plans to terminate more than4,000 employees in Connecticut, 'The State of Steady Habits,' whichhas lost 200,000 jobs during the recession.
'I don't think the insurance industry has seen the end of thecutbacks and reorganization,' said Linda Ericson, senior researchanalyst at the Connecticut Department of Labor.
Recent announcements bear her out. In October, the New York-basedPrimerica Corp. merged with The Travelers Corp. The ITT HartfordInsurance Group has plans to sell its health insurance business.National health reform, say industry analysts, could force mid-sizedcompanies, such as Hartford-based Phoenix Home Life, to eliminatetheir health insurance business altogether.
'Everyone is concerned as to how this will evolve,' said JohnGummere, chairman and chief executive of Phoenix Home Life. 'It'sbeen a difficult decade.'
It would have been hard to imagine such a destabilizing change 10years ago. Most of the insurance companies here date to the early1800s when local merchants and a few entrepreneurial financiers gottogether to insure merchant ships on the busy Connecticut River. Theylater moved on to insure warehouses and firehouses and, eventually,buildings and lives.
They dominated the local cultural and economic landscape, a tasksimplified by Hartford's small size. (The city's population is about140,000.) For decades, The Travelers Tower, at 527 feet, peered downon the State House and all other buildings. Aetna's headquarters, thelargest colonial building in America, mightily overshadowed itsneighbor, St. Joseph's Cathedral, seat of the archdiocese.
When the church burned down in 1956, daily Mass was celebrated forfour years in the auditorium of 'Mother Aetna' - as the company isknown locally. When the Civic Center's roof collapsed two decadeslater in a 2 a.m. implosion that blew pink insulation a mile away, alegendary clique of Hartford patriarchs, many of them insuranceexecutives, made sure the sports arena was rebuilt.
Generations of families followed one another into the business.While that has diminished somewhat today, there are at least 40married couples who work at Aetna's downtown headquarters.
Judy Pendell's father worked for an insurance company, and whenshe got divorced she decided to come home because it was 'a family-centered community and the insurance companies were respectful offamilies.' Now her second husband and her daughter, Stephanie, worktogether in the same legal and regulatory affairs department atAetna.
'People joke about needing to show up at the staff meeting tobreak the family block,' laughed Pendell.
Over the years, the companies poured millions of dollars intolocal charities, schools and the arts. So confident - some would sayoverconfident - were they of their sway over city life that in 1972,during their financial heyday, a group of bankers and insurance chiefexecutives bought up 1,600 acres of land 15 miles east of Hartfordand planned to build a new city for Hartford's poor.
'The idea was a terrible one that fizzled dramatically,' saidDavid Ivry, professor emeritus at the University of Hartford'sinsurance school. 'There was a naivete' that was a littlefrightening.'
It was an important misstep that further frayed relations betweenthe city's poor African American, Hispanic and elderly residents andthe traditional white, affluent business leaders living in thesuburbs.
So strained did relations become that last year the Democratic-controlled City Council considered a resolution effectively callingfor a government-run health system that would wipe out privateinsurance. The measure had the backing of some prominent local socialgroups.
Today, deep concern over the industry's future and what itsmisfortune could mean to the Hartford region have produced atentative reemergence of cooperation between city officials andcorporate leaders.
The insurance companies 'are more important than they ever werebecause right now we're in a recession and they are still the biggestproperty tax payers,' said Rep. Barbara B. Kennelly (D-Conn.), amember of the House Ways and Means Committee and a deputy House whip.'We want them to survive and continue to thrive. We want them to stayin their buildings.'
In November's city election, the incumbent Democratic mayor andher Democratic majority were overwhelmingly defeated. The new mayoris a 45-year-old Republican fireman, Michael P. Peters, who droppedout of college after a week. He spent last week learning the art ofgoverning at Harvard University's Kennedy School of Government.
The election was preceded by an unusual public appeal by Aetnachief executive Ron Compton. 'The political situation here borders onthe ridiculous. It can't be permitted to go on,' he told a Septemberbreakfast forum. The city and the business community, he said, mustwork together.
Reaction was widespread and enthusiastic. The Hartford Courantcalled the speech 'a call to arms for Hartford.'
One of the mayor-elect's first acts was to meet with Compton.
For all its problems, some see Hartford pulling itself out of itsslump.
'It's an American and Connecticut trait to constantly reinventourselves,' said Hal Keiner, Cigna's historian and archivist. 'In NewEngland we don't have broad fields or oil wells to resuscitate. Whatwe have are ideas and capital.'
