December 2, 2005
By DIANE LEVICK, Courant Staff Writer
No magic fixes surfaced, but executives and legislators tried to build momentum Thursday to reverse the shrinking of Connecticut's insurance and financial services industries and improve the business climate.
At a forum hosted by legislative leaders and Hartford Mayor Eddie A. Perez, officials from many of the state's largest insurance companies and banks called for more collaboration between business and government.
Although few specifics were discussed Thursday, participants expect solutions will involve tax changes and improvements in transit, including Hartford-New York travel, commuting bottlenecks and education and training of employees for the insurance and financial services industries.
"There are states for whom the business climate is a top priority," said Art House, vice president of public affairs for Webster Financial Corp. "The perception out there is it has not been at the top of ourpriority list, and we need to move it up."
Some states, such as Iowa, have aggressively recruited operations from companies in Connecticut and elsewhere, while employment in the industry here has waned.
"We are under direct attack," said Robert F. Flynn, executive director of the Insurance and Financial Services Cluster, a state-corporate partnership to foster the industries.
During the 1990s, Iowa created 7,800 insurance jobs while Connecticut lost more than 16,000, Flynn noted.
Flynn recounted how an Iowa economic development officer told him, "Willy Sutton robbed banks because that's where the money was, and that's why we target Connecticut - that's where the expertise is."
Only some of the job loss here can be blamed on other states. Mergers and acquisitions, for instance, continue to take their toll on the Hartford area. Technology advances, globalization, companies' own missteps and financial problems also have led to job cuts.
The annual average number of financial employees in Connecticut, including insurance, banking, securities, real estate and other activities, fell from 153,400 in 1990 to an estimated 140,700 last year, according to the state Department of Labor.
In insurance alone, Connecticut jobs dropped by more than 17,000, from an average 82,900 in 1990 to 65,700 in 2004. Insurance jobs numbered about 64,500 in September of this year.
Insurance and financial services contribute about 30 percent to Connecticut's gross state product - the goods and services produced here. The economy of the state "is based squarely on the success or failure of this industry," Flynn said.
Insurers, meanwhile, are still laying off workers in the Hartford area, and Perez is worried about the coming merger of Lincoln Financial Corp. and Jefferson-Pilot Corp. Hartford could see job eliminations, but Lincoln has said it's too early to say what the impact will be.
"I fear that there are another 800-plus jobs at risk and nobody's doing anything to try and deal with those situations," Perez said.
Legislators should think twice before introducing certain bills if they care about the perception of Connecticut's business environment, said Maura Melley, a senior vice president at The Phoenix Cos., and James Abromaitis, commissioner of the Department of Economic and Community Development.
The two didn't cite specific bills, but proposals that could raise companies' expenses, eat into profits, restrict outsourcing or other staffing changes, or slow commerce are typically seen as anti-business.
"Even raising the bills that aren't necessarily going to make it through the system have a chilling effect on what companies may or may not do" when deciding on where to locate operations, Abromaitis said.
One of the legislative issues that companies want to see addressed is taxes, including Connecticut's sales and use tax, Flynn said. Connecticut's 6 percent tax, he said, compares with a 4.8 percent national average.
Senate President Pro Tem Donald E. Williams Jr., D-Brooklyn, said after Thursday's session that state officials have already started a serious look at Connecticut's tax structure. But becoming more business-friendly doesn't just involve taxes. Transportation and workforce development also need to be addressed, he said.
"We can't afford to ignore the needs of businesses and corporations until we see our cities emptied and our unemployment rates rise," Williams said. "It's late right now, but it's not too late. We have to redouble our efforts."
But Sen. John Fonfara, D-Hartford, sounded a note of caution during the forum. Connecticut is a high-cost state and many elements of that won't change, he said.
"I hope we don't try to rebuild yesterday's world in the insurance and financial services industry," Fonfara said. "I heard a little bit too much of that this morning. ... I hope we can try to recognize tomorrow's world of insurance and financial services and what that looks like and begin to plan for it."
Reprinted with permission of the Hartford Courant.
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