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​ Another Look Back at 2018 — Underwriting & More

Posted By staff reporter, Tuesday, January 22, 2019

 

 

The American Property Casualty Insurance Association (APCI) and Verisk — a unit of ISO — released a report about the first nine-months of 2018. The biggest positive? The $4.7 billion net underwriting gain.

It is a huge improvement over 2017’s $21 billion loss.

The profits are driven by a decline in overall losses, loss adjustment expenses (LLAE) and a jump in premium growth. The LLAE stats show a 0.5% drop to $310.2 billion. It was pushed by a $13.1 billion drop in the LLAE net from catastrophes.

More from the report:

  Net written premiums leaped 11.4% to $468 billion

  Organic premium growth and changes to reinsurance arrangements are why

  Net investment income rose to $40.9 billion

  That’s up from $35.4 billion

  Dividends from subsidiaries not connected to P&C insurance is why

  Net income after taxes doubled from $22.4 billion in 2017 to $49.5 billion

 

ISO’s president Neil Spector said continued growth continued growth in premiums and investment income led the way.

“As we look forward, catastrophes remain a major consideration, and the full-year industry results for 2018 will likely be affected by the losses from the California wildfires. In the coming years, insurers' underwriting results will critically depend on their ability to acquire and deploy the analytical and technological tools to help automate processes, improve decision making, and reduce costs,” Specter said.

APCI senior vice president Robert Gordon agrees and noted the combined ratio improved to 97.3%. He said the report has lots of positives but also portends challenges for this year and into next.

“However, insurers faced record-setting wildfires and severe hurricanes for the second straight year. Annualized investment return continues to under perform the industry average over the last ten years, and the stock market's precipitous decline in December may be a harbinger of increasing volatility,” Gordon noted. “Insurers are well positioned to provide stability and expanded protection opportunities to consumers in the new year.”

 

Source link: Intelligent Insurer

 

Tags:  2018  American Property Casualty Insurance Association  insurance 2018  The American Property Casualty Insurance Associati  underwriting 

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PIA National — IRS Affirms Pass Through Rate for Agents

Posted By staff reporter, Tuesday, January 22, 2019


Late last week the Internal Revenue Service (IRS) and the U.S. Treasury issued final regulations for the so-called Trump Tax Cuts. Insurance agencies are not considered to be a financial service and can take the 20% pass-through tax deduction.

At least the insurance sales part of the business applies. Other services like wealth management, etc. will not likely fit the definition.

PIA National Executive Vice President and CEO Mike Becker calls it a major win for small business. In this case, it is small business as it relates to member insurance agencies and brokerages.

“PIA aggressively advocated for this tax relief for pass-through entities since passage of the tax reform law (P.L. 115-141) in December 2017. We advocated for the language that was passed by Congress, then ultimately adopted by Treasury and the IRS in their regulations,” he said.

Becker said many PIA members own independent insurance agencies organized as sole proprietorships, partnerships, or Subchapter S corporations. They do not pay corporate income tax. Instead, their income “passes through” the firm and appears directly on the owners’ individual tax returns. There it is taxed as normal income.

The 20% deduction, subject to other limitations imposed by law or regulation, will lower these individuals’ tax bills.

Lauren Pachman, Esq. is the PIA counsel and director of regulatory affairs. she said, “PIA was gratified to see that Treasury and the IRS recognize that the typical insurance agent is not engaged in ‘financial services’ in the way Congress described them, allowing agents the opportunity to take the 20% pass-through deduction,” she said. “Also, we’re glad this rule was issued in time for the start of the 2018 tax season.”

That said, PIA National warned — as noted earlier — the Treasury and the IRS declined to issue a categorical exclusion of all services provided by insurance agents from the definition of “financial services.” The rules recognize that some agents do engage in activities like managing wealth, advising clients with respect to finances, etc.

They are considered “financial services” for the purpose of this law.

Source link: PIA National

 

 

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Tags:  PIA National — IRS Affirms Pass Through Rate for A 

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Allianz Survey — Business Worries 2019

Posted By staff reporter, Tuesday, January 22, 2019


 

The survey is called the 2019 Allianz Risk Barometer. It’s an annual look at the worries of business. They range from business interruption to cyber attacks to too many regulations.

This year’s survey went to businesses in the U.S. and Canada, Germany, Spain, Italy and China. The top two worries for the biggest majority of businesses — an equal 37% — are business interruption and cyber incidents.

Allianz spokesperson Marek Stanislawski said this is the seventh year in a row that business interruption topped the list. Cyber attack worries — however — have gained ground in the last couple of years.

“Cyber risk has been a major risk for a number of years, but as with any new risk it has struggled with awareness,” Stanislawski said. “We have now reached a point where cyber is as equally concerning for companies as their major traditional exposures.”

It’s no wonder. Cyber crimes now cost business $600 billion a year. That’s up from $445 billion in 2014. Cyber crimes — Stanislawski noted — are quite costly and often lead to securities and consumer class action lawsuits. There are also third-party liabilities.

Business interruption is still huge because they often lead to product recalls, quality issues, terrorism, political riots and environmental issues.

 

The Most Important Business Risks in 2019

1. Business Interruption

2019 — 37%

2018 — 42% — ranked 1 last year

 

2. Cyber incidents, cyber crime, data breaches, etc.

2019 — 37%

2018 — 40% — ranked 2 last year

 

3. Natural catastrophe like storms, floods, earthquake

2019 — 28%

2018 — 30% — ranked 3 last year

 

4. Changes in legislation, regulations, tariffs, etc.

2019 — 27%

2018 — 21% — ranked 5 last year

 

5. Market developments, intensified competition, M&A, etc.

2019 — 23%

2018 — 22% — ranked 4 last year

 

6. Fire, explosion

2019 — 19%

2018 — 20% — ranked 6 last year

 

7. New technologies

2019 — 19%

2018 — 15% — ranked 7 last year

 

8. Climate change, weather volatility

2019 — 13%

2018 — 10% — ranked 10 last year

 

9. Loss of reputation or brand value

2019 — 13%

2018 — 13% — ranked 8 last year

 

10. Shortage of skilled workforce

2019 — 9%

2018 — 6% — ranked 15 last year

 

Source link: Carrier Management

 

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Tags:  Allianz Survey — Business Worries 2019  Marek Stanislawski 

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Washington Commissioner Kreidler Bans NRA Insurance

Posted By staff reporter, Tuesday, January 22, 2019

 

Washington Insurance Commissioner Mike Kreidler has banned the sale of illegal insurance policies that carry a National Rifle Association (NRA) brand. He has also issued a fine to two companies selling those policies.

A news release from the commissioner’s office said, “The policies were sold through the NRA’s Carry Guard program and give upfront money to policyholders for covered costs and expenses related to criminal defense for gun owners, even if the insured subsequently pleads guilty to or is convicted of a crime. Washington state law prohibits insurance that covers criminal activity.”

The two companies selling the policies are Illinois Union Insurance — a subsidiary of Chubb — and Lockton Affinity. Illinois Union was fined $102,000 for selling 811 policies and Lockton was tagged for $75,000.

“When it comes to insurance products associated with the NRA, it’s buyer beware,” Kreidler said. “The attempt to insure a criminal act is a rip-off for consumers. The policies sold are deceptive and dishonest. I would be remiss as the state’s insurance regulator if I didn’t shut them down.”

Kreidler said the 811 policies had premiums totaling $260,000. Of those, 255 were cancelled and no claims have been made in Washington State. He also noted Illinois Union has paid less than 1% in claims for every premium dollar in 2017 and 2018.

In April of last year, Kreidler told the NRA to stop selling four Carry Guard liability policies through its website. Those policies were sold by through NRA and the NRA did not have an insurance license.

Both companies have until February 14th to accept the fines or demand a hearing.

 

Source link: Washington Department of Insurance

 

Tags:  Washington Commissioner Kreidler Bans NRA Insuranc 

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New Legislatures, a New Congress, the Trump administration & ObamaCare

Posted By staff reporter, Tuesday, January 22, 2019


 

Democrats in a number of states are now working on proposals to pump up and save a collapsing ObamaCare. In the PIA Western Alliance states of California and Washington, Governors Gavin Newsom and Jay Inslee are making plans.

Newsom wants to expand Medicaid to people illegally in the U.S. up to the age of 26. He’s also looking at getting a law passed that requires everyone in the state buy health insurance or face a fine. That’s similar to the now done away with Individual Mandate of the Affordable Care Act.

The governor also wants to consolidate the state’s purchase of drugs to — hopefully — lower prescription prices for consumers.

In Washington State, Inslee has proposed a public health insurance option to insure those not covered by Medicaid or private employers, and who cannot afford to purchase a policy. A public health insurance option — for those not knowing — is a government run health insurance company.

Other states — including the PIA Western Alliance state of New Mexico — are looking at public options as well.

In Washington State, House Rep. Eileen Cody — a Democrat — is leading the charge. “Once you give something to somebody, it’s pretty hard to take it away, and I think we see that with how the support for the (Affordable Care Act) has grown over the last two years,” she said.

Inslee agrees. “This is not just a moral right. It is an economic wisdom, and this is very possible.”

Republicans — as you expect — think the idea is expensive and ridiculous. In Washington State Republican Rep. Joe Schmick said, “This is about having the government competing in the private market. Medicare-for-all will be priced out.”

Not to be left out of the let’s make ObamaCare changes, the Trump administration wants to increase premiums by 1% next year. This is part of a 300-page update of regulations by the Centers for Medicare and Medicaid Services (CMS). While Democrats will no doubt complain, the administration says this is merely a more accurate premium subsidy calculation.

It is required by the Affordable Care Act.

Oregon Sen. Ron Wyden — a Democrat — immediately pounced on the decision. “Today’s proposed rule deliberately and needlessly increases premiums and will result in too many Americans losing access to health coverage,” he said. “The Trump administration continues to fan the flames of uncertainty while families pick up the check.”

But the administration adamantly says this will save the taxpayer money. It’s about $900 million a year and 100,000 consumers will then — it is estimated — drop their coverage. That’s coverage no longer required by law.

Source links: Insurance Business America — link 1, link 2

 


Tags:  a New Congress  New Legislatures  the Trump administration & ObamaCare 

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Who’s Moving Where — The Annual U-Haul Report

Posted By staff reporter, Tuesday, January 22, 2019

 

 

Every year U-Haul issues a report on who is moving where. What the company can’t say is why. That’s information for other sources. This report has two sides. The first is the states people are moving to and the second is the top destination cities.

The survey conclusions are based on more than two-million, one-way truck trips.

For the third consecutive year Texas is the top destination state followed by Florida, South Carolina, Utah and the PIA Western Alliance state of Idaho. At the bottom of the list is Illinois followed by Michigan and the PIA Western Alliance state of California.

As for cities, the Sacramento/Roseville, California market is the top destination followed by Spring, Texas, Manhattan, New York, Harrisburg, Pennsylvania and Grand Rapids Wyoming.

Here is the top-10 state list. The PIA Western Alliance states are in bold:

1. Texas — last year # 1

2. Florida — last year #2

3. South Carolina — last year #4

4. Utah — last year #21

5. Idaho — last year #14

6. Maryland — last year #42

7. Vermont — last year #10

8. Tennessee — last year #5

9. New Hampshire — last year #31

10. Maine — last year #26

 

The other PIA Western Alliance states:

14. Oregon — last year #32

19. New Mexico — last year #19

23. Arizona — last year #43

25. Nevada — last year #33

29. Washington — last year #6

31. Alaska — last year #36

34. Montana — last year #25

48. California — last year #50

 

These are the top-10 U.S. city destinations. The PIA Western Alliance state cities in bold:

 

1. Sacramento/Roseville, CA — last year #6

2. Spring, TX — no data from last year

3. Manhattan, NY — last year #21

4. Harrisburg, PA — no data from last year

5. Grand Rapids/Wyoming, MI — no data from last year

6. San Francisco, CA — last year #17

7. Greenville, SC — no data from last year

8. Fort Lauderdale, FL — no data from last year

9. Madison, WI — no data from last year

10. Kissimmee, FL — last year #15

 

The other PIA Western Alliance cities:

14. Palm Springs/Cathedral City, CA

16. Davis, CA

19. Temecula, CA

23. Boise, ID — last year #2

24. Concord, CA

 

Source links: U-Haul — link 1, link 2

 

 

Tags:  Uhaul report  Who’s Moving Where — The Annual U-Haul Report 

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PIA Praises Final Regulations Affirming Lower Pass-Through Tax Rate for Insurance Agents

Posted By staff reporter, Monday, January 21, 2019

 

In a major win for small-business insurance agencies and brokerages, final regulations issued January 18 by the U.S. Treasury and the Internal Revenue Service (IRS) specifically state that “insurance cannot be considered a financial service” for the purpose of taking the 20% pass-through tax deduction that was passed as part of the tax reform legislation signed into law in late 2017.

 

“This is a big win for agents,” said PIA National Executive Vice President & CEO Mike Becker. “PIA aggressively advocated for this tax relief for pass-through entities since passage of the tax reform law (P.L. 115-141) in December 2017. We advocated for the language that was passed by Congress, then ultimately adopted by Treasury and the IRS in their regulations.”

 

Many members of the National Association of Professional Insurance Agents (PIA) own independent insurance agencies that are organized as sole proprietorships, partnerships, or Subchapter S corporations. Such small businesses do not pay corporate income tax. Instead, their income “passes through” the firm and appears directly on their owners’ individual tax returns, where it is taxed as normal income. The 20% deduction, subject to other limitations imposed by law or regulation, will lower these individuals’ tax bills.

Treasury’s final regulations state that, in general, “financial services” do not include insurance, and therefore that insurance agents are permitted to take the deduction.

 

“PIA was gratified to see that Treasury and the IRS recognize that the typical insurance agent is not engaged in ‘financial services’ in the way Congress described them, allowing agents the opportunity to take the 20% pass-through deduction. Also, we’re glad this rule was issued in time for the start of the 2018 tax season,” said Lauren G. Pachman, Esq., PIA counsel and director of regulatory affairs. “It’s a great day for small-business insurance agencies, whose businesses will be taxed the way pass-through entities were intended to be by Congress.”

 

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America SM. PIA’s web address is www.pianet.com.


This press release is online at:
https://pianet.com/news/press-releases/2019/pia-praises-final-regulations-affirming-lower-pass-through-tax-rate-for-insurance-agents

Tags:  PIA Praises Final Regulations Affirming Lower Pass 

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Inslee proposes 9% Capital Gains Tax — PIA will rally in Olympia to protest - affects Independent Agencies

Posted By staff reporter, Tuesday, January 15, 2019

See our preview video of this article: 

Share this article with an insurance colleague:  

https://www.piawest.com/blogpost/1199781/316255/Inslee-proposes-9-Capital-Gains-Tax--Washington-Businesses-Worry

Why should a Washington State capital gains tax bother PIA Western Alliance members in general? It’s just one state’s push to fill dwindling coffers. Other states have legislatures that are considering equally onerous measures.

As they pop up we will follow those as well.

In this case, any time a governor or a state Legislature begins the process of taxing the sale of a business at a level this high — and in this case the life’s work of a PIA member — it is a concern to all of us.

Washington Governor Jay Inslee has submitted a budget with two items that will heavily impact small businesses and with a Democratic Party super majority in both houses of the Washington Legislature, it will be a long, hard fight to defeat them.

The first piece is a 9% capital gains tax on the sale of a business. It has some exemptions but it applies to individual filers on a sale of over $25,000 or those filing jointly with a sale of over $50,000.

The second piece affecting businesses is a 66% jump in the B&O tax for the service sector. PIA Washington has been successful in defeating proposals to include its membership in the B&O tax. So this increase does not yet apply to licensed insurance professionals but will affect doctors, lawyers, architects and design professionals.

Members of PIA Washington/Alaska and the PIA Western Alliance will testify at a hearing on the 9% capital gains tax proposal on Wednesday, January 16th in Senate Hearing Room 4 in the Cherberg Senate Office Building.

The association is encouraging PIA members in Washington to attend that hearing.

PIA Washington lobbyist Mel Sorensen told Weekly Industry News that last year the governor wanted a 7% capital gains tax but couldn’t get it through. This year he wants 9% and has an excellent chance of getting the Legislature to approve the tax.

This is why this meeting is so important to PIA member agents and agencies.

“The capital gains tax would adversely impact many business owners — including PIA members who own their own businesses — because prospective capital gains from the sale of a business would be subject to the new 9% tax,” Sorensen said.

Sorensen said many member agents have spent their entire business careers building their business and this tax is very, very unfair and — in a way — punitive. The increased value of their agency is their life’s work and a life’s work ought not be attacked in this way.

And it is an attack.

“For many, they have spent their entire professional careers building their businesses.  The value in their business is frequently what they plan to rely on for their retirements.  It’s simply damaging to expose them to a new 9% capital gains tax. For these reasons, we oppose the Governor's proposal to enact a new 9% tax on Capital Gains in Washington State,” he added.

Here’s another problem with the proposal. It is based on an income tax system. Washington State’s constitution does not allow one.

“Federal law defines the measure of tax on NET capital gain income. Although the Governor's capital gains tax plan may call it an ‘excise tax and ‘for the privilege of selling or exchanging long-term capital assets, or receiving Washington capital gains,’ the departments of revenue for every state with a capital gains tax classify it as an income tax,” Sorensen noted.

And again, if possible — and if you are a PIA member in Washington State — please attend the meeting. It is Wednesday, January 16th in Senate Hearing Room 4 in the Cherberg Senate Office Building. 

Tags:  Inslee proposes 9% Capital Gains Tax; Inslee propo 

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PIA Oregon Forms Young Insurance Professionals Group

Posted By staff reporter, Tuesday, January 15, 2019

 OYIP First Event

 

The PIA Western Alliance is starting Oregon’s first young insurance professionals organization. It’s called Young Insurance Professionals association (YIP) and board member Shawn Carter of Capital Premium Finance said the purpose of the organization is to offer young agents the opportunity to develop professionally, network with peers, participate in industry activities and make positive contributions to the community.

“We want to help those coming into the industry for the first time to understand the different processes and the different ways they can grow and progress as an agent,” Carter said. “It’s an opportunity to network with other young agents.”

Carter noted while this is specifically created for people 35 and under, it also applies to those 35 and above that are new to the insurance industry. All attending the YIP events will benefit. Part of that benefit comes from involvement of older, more experienced PIA member agents and company members in YIP.

“The focus is to help the perpetuation of the industry. A lot of baby boomers are retiring now and we see a lot of agencies being handed down to a son or a daughter, or other family members,” Carter said. “This helps these young agents and the next generation of the industry with networking opportunities.”

 

The first meeting of the OYIPs

5:00pm to 8:00pm

RAM Breweries and Restaurant

515 SE 12th Street

Salem, Oregon 97301

 

PIA Oregon and the YIP leadership are looking for other leaders to fill important positions within the association. Needs range from committee members to YIP leadership.

Carter said the point of YIP is to present something new to attending agents during each event. This is practical, up-to-date information that can be immediately applied to the next work day and at client meetings.

 

Click here for more information on YIP and to join.

Tags:  Oregon Young Insurance Professionals  OYIP Event 

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​Bankruptcy — PG&E & California’s Wildfires

Posted By staff reporter, Tuesday, January 15, 2019

 

 

Pacific Gas & Electric says it is going to file Chapter 11 bankruptcy. Experts say the company will owe at least $30 billion for the deaths of dozens of people and damages it caused to thousands of homes in California wildfires in 2017 and 2018.

That price tag is a minimum. It will likely be much higher. 

The purpose of the Chapter 11 filing is to hold off creditors while still providing electric power and natural gas to its 16 million customers in Central California and Northern California.

The lawsuits will continue but with the filing, a bankruptcy judge will consider all of the claims in one proceeding. It also puts the claims on hold for awhile to buy PG&E some time to get its finances in order.

PG&E equipment is being investigated as the cause of the Camp Fire that destroyed Paradise, killed 86 people and destroyed 15,000 homes. The firm is also being blamed for downed power lines in Santa Rosa last year that killed 22 people and burned down thousands of more dwellings.

PG&E board chairman Richard Kelly said the reorganization is “the only viable option to address the company's responsibilities to its stakeholders. The Chapter 11 process allows us to work with these many constituents in one court-supervised forum to comprehensively address our potential liabilities and to implement appropriate changes.”

The company tried very hard to avoid bankruptcy by getting the California Legislature to to change the law that makes it totally responsible for fires even though it made every effort to make sure its equipment was properly maintained.

A Chapter 11 bankruptcy will allow PG&E to sell assets to raise cash more easily. Company interim CEO John Simon said, “We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion. We expect this process also will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure."

Source link: The Press Democrat, NPR

Tags:  PGE bankruptcy 

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