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Around the PIA Western Alliance States

Posted By Staff Reporter, Tuesday, December 4, 2018


Small Insurer Failing

California's insurance regulator took expedited legal action today to secure the assets of and take control of Merced Property & Casualty Company, in an effort to protect the company's policyholders, including those who suffered losses in the Camp Fire. The volume of claims associated with the catastrophic Camp Fire-the deadliest and most destructive fire in California history-has overwhelmed the small insurer to the point of insolvency.

"California law gives us the authority to take over insurance companies that face insolvency. Protecting Camp Fire policyholders who have already suffered through so much was my first consideration," said Insurance Commissioner Dave Jones. "We are moving aggressively to take the necessary legal action to take control of the company and to trigger the state law enabling the California Insurance Guarantee Association to immediately begin the process of evaluating losses and paying claims."

The department filed with the Merced County Superior Court an expedited request for an order enabling the takeover of the company. The California Insurance Department's Conservation and Liquidation Office, established by law to handle the liquidation of failing insurance companies, is managing the transfer of the company's claims handling to CIGA.

While current insurance policies remain in-force for 30 days, anyone insured with Merced Property & Casualty Company should seek coverage with another insurer immediately. Once the court issues the requested order, the Conservation and Liquidation Office will notify policyholders about where and how to file a claim with CIGA for insured losses or the return of any unearned premium on their policy.

Given the unprecedented scale of recent wildfires, Jones directed the department to conduct additional detailed reviews of every property insurer domiciled in California to make sure they are properly managing their exposures. The department has received no reports of other insurers in a similar situation.

Source link: California Department of Insurance



Earthquake Rate Reduction: Insurance Commissioner Dave Jones has approved a rate reduction for California Earthquake Authority (CEA) residential earthquake policyholders that will bring millions of dollars in premium savings for tens of thousands of homeowners and renters in California.


“The department’s Rate Regulation Branch staff reviewed CEA’s rate filing and determined that the proposed rates should be lowered,” said Insurance Commissioner Dave Jones. “Department staff worked with CEA staff to arrive at approved rates that will result in an estimated total premium savings of $16.3 million to California consumers over a three-year period. Once again, Californians have benefited from the insurance commissioner's rate regulation authority."

The initial proposal in CEA’s rate filing was for a 0.4 percent increase. However, following the department’s actuarial review and recommendations, CEA submitted an amended filing, requesting a rate reduction of 1.7 percent. The proposed effective date is July 1, 2019.

The rate reduction is for CEA’s residential earthquake policy that can cover your home up to a certain amount, personal items in your home, such as furniture, TVs, and computers, and temporary and extra costs to live somewhere else while your area is evacuated or your home is being repaired.

Since Commissioner Jones took office in 2011, the department has reviewed more than 54,000 rate filings and saved consumers and businesses over $3.4 billion through rate reductions. Whether a particular policyholder as a result of this rate filing approval receives a rate reduction and how much, depends on their individual policy and CEA territory.

To make a home more earthquake resistant, the department encourages California homeowners to consider retrofitting their home. A verified retrofit may also allow homeowners to receive additional discounts on their homeowners and earthquake insurance policies. The California Residential Mitigation Program (CRMP) was established in 2011 to help Californians strengthen their homes against damage from earthquakes. CRMP established Earthquake Brace + Bolt to offer up to $3,000 to help California homeowners retrofit their house to reduce potential damage from earthquakes.


Source link: California Department of Insurance



Life Insurance Policy Locator

 The national life insurance policy locator service — https://doi.idaho.gov/consumer/LifeAnnuity/PolicySearch — provides consumers with valuable assistance to search for a policy or to file a life insurance claim. Launched by the National Association of Insurance Commissioners (NAIC) in 2016, the service has helped Idahoans the past two years locate 109 policies that have paid out nearly $1.3 million in death benefits.

The user-friendly locator provides free nationwide access and streamlines the process for searching for ‘lost’ life insurance policies or annuities.  Nationally, nearly 25,000 such policies have paid consumers $368 million in death benefits since the online service became available.  Idaho Insurance Director Dean Cameron says “it’s not uncommon” for a person to unknowingly be designated a beneficiary of a policy or for a policy to be misplaced.

“Securing life insurance coverage is an important action of personal responsibility and financial independence,” he said.  “Therefore, it is recommended that policyholders make their beneficiaries aware of any policy that names them as beneficiary.  When a policy is lost, consumers don’t always know how or where to begin a search for a lost policy.”

Idahoans can access the locator through the Department website to submit a secure and confidential request.  Participating insurers will work to match requests with available policyholder information.  Matches are reported to state insurance departments.  Insurers then make contact with beneficiaries or their authorized representatives.  Tips for beginning and conducting a lost policy search include:

  Obtaining personal information from death certificates, bank statements or cancelled checks.

  Contacting organizations, associations or groups that may offer members life insurance policies.

  Consulting with insurance agents who provided the deceased home or auto insurance coverage.

Idahoans who have questions are encouraged to contact the Idaho Department of Insurance at 208-334-4250.



Democratic Party Leadership: Oregon House Democrats, fresh off election victories that saw the caucus’ majority expand to 38 members, has elected their new leadership team for the 2019 Legislative session. 


Rep. Tina Kotek has been nominated to serve an additional term as Speaker of the House, while Rep. Jennifer Williamson was re-elected to serve in her role as the House Majority Leader.

Oregon Senate Democrats elected the following state senators to leadership positions:

Senate President Designate: Peter Courtney, D-Salem

Senate President Pro Tempore Designate: Laurie Monnes Anderson, D-Gresham

Senate Majority Leader: Ginny Burdick, D-Portland

Senate Deputy Majority Leader: Elizabeth Steiner Hayward, D-Beaverton

In the 2019 Session, Democrats will hold an 18-12 majority in the Senate



Kreidler Issues Fines: Insurance Commissioner Mike Kreidler issued fines in October totaling $103,950 against insurance companies, agents and brokers who violated state insurance regulations.

Insurance companies

Kaiser Foundation Health Plan of Washington, Seattle; fined $30,000, order 18-0378

Kaiser Foundation Health Plan of Washington Options, Seattle; fined $50,000, order 18-0379

The companies erroneously sent a letter intended for Medicare Advantage Plan members only to nearly 168,000 members of its commercial plans in February 2017. The letter caused the members to think their health coverage had changed and misstated the name of the insurer.

Everest Reinsurance Co., Wilmington, Del.; fined $1,000, order 18-0411

The company sold health plans in Washington state in 2017 that were marketed as having different benefits than those the insurance commissioner approved. The company is no longer selling the plans in Washington.

American Service Insurance Co., Schaumburg, Ill.; fined $18,000, order 18-0364

The insurance commissioner fined the company for overcharging 359 Washington consumers nearly $75,000, which it has since repaid with 8 percent interest.

Markel American Insurance Co., Glen Allen, Va.; fined $2,000, order 18-0353

The insurance commissioner’s market conduct unit found problems with the company’s pet insurance product, including:

  Missing documentation in underwriting files.

  Not listing the full premium for some policies.

  Company officers’ signatures were missing from some policies.

  Failing to provide the annual privacy notice to some policyholders.


Agents and brokers

American Eagle Underwriting Managers, Delray Beach, Fla.; fined $500, order 18-0415

American Eagle sells insurance and surplus lines policies. The agency sold one insurance policy in Washington state before it was licensed to do so.

The insurance commissioner disciplined the following insurance producers for failing to notify the agency of administrative actions against them:

  William Tanner, Poulsbo, Wash.; fined $250, order 18-0381

  Jack T. Jarrell, Woodinville, Wash.; fined $250, order 18-0382

  Allied National Inc., Overland Park, Kan.; fined $500, order 18-0358

  John M. Brown Insurance Agency, Inc., Chicago; fined $250, order 18-0387

  Julie A. Burton, King Hill, Idaho; license revoked, order 18-0392

  Calton & Associates, Inc., Tampa; fined $250, order 18-0386

  Jeremy Edward Carlson, Johnstown, Colo.; license revoked, order 18-0391

  Shanelle Francis, Hopkinsville, Ky.; fined $250, order 18-0337

  John W. Kaklis, Clearwater, Fla.; license revoked, order 18-0394

  Fabienne Lunie Nau, Lilburn, Ga.; fined $250, order 18-0309

  Khanh Nguyen, Westminster, Calif.; fined $250, order 18-0384

  Johnathan Perkins, Chicago; license revoked, order 18-0393

Other organizations

Washington Association of Health Underwriters, Seattle; fined $200, order 18-0412

The continuing education provider for insurance producers failed to keep attendance records that satisfied the requirements in state law.


Source link: Washington Department of Insurance

Tags:  Around the PIA Western Alliance States  insurance content  insurance industry  western alliance news 

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Insurance coverage for you agency staff - The PIA Advantage

Posted By Staff Reporter, Tuesday, November 27, 2018

As a PIA member you can choose from several high-quality, competitively priced insurance plans to help protect you, your employees and families. You can customize your protection to best suit your needs.

Plans currently include:

  • Basic Term Life Insurance
  • Voluntary and Dependent Term Life Insurance
  • Short Term Disability
  • Long Term Disability
  • Accidental Death and Dismemberment
  • Hospital Indemnity
  • Business Overhead Expense


This program is offered through the PIA Services Group Insurance Fund and is administered by Lockton Risk Services, Inc


Contact Lori for more information



All plans are subject to certain limitations and exclusions.

Not all Plans are available in all states.

These programs are available only to PIA Members.

Coverage described on this Web page underwritten by: Unimerica Insurance Company, Association Administrative Address, P.O. Box 17828, Portland, ME 04112-8828.

Policies or provisions may vary or be unavailable in some states. Policies have exclusions and limitations which may affect any benefits payable. See the actual policy or the Plan Administrator for specific provisions and details of availability.

Tags:  insurance content  insurance industry  PIA Advantage 

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Please take part in our PIA Agent Survey!

Posted By Staff Reporter, Tuesday, November 27, 2018

Be heard!

Take part in PIA's Annual Survey.

PIA National and National Underwriter is about ready to start the 2019 Independent Agent Survey. This is the third time the association and the publication have partnered to find out what independent agents are thinking.

Starting this week, the survey firm Flaspöhler will be reaching out to many of you with an expanded questionnaire. The results will be presented in NU’s February 2019 issue.

The annual survey is the most comprehensive ever and — among other subjects — looks at:


  Books of business

  Selling practices

  Pain points


Want to take part in the survey?

Send an email to rick.flaspohler@nmg-group.com.

Subject:  Independent Agent Survey in the subject line.


Source link: PropertyCasualty360.com



Tags:  Annual National Underwriter survey  insurance content  insurance industry 

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Update: California’s Deadly Wildfires

Posted By Staff Reporter, Tuesday, November 27, 2018

The Camp Fire that destroyed Paradise, California is 100% contained. It killed 85 people and since hundreds are still considered missing, the toll will no doubt rise.


The fire destroyed 13,000 homes and 5,000 other buildings.


Risk management analysts are predicting financial losses from $9 billion up to $13 billion.

California officials are struggling to find shelter for the thousands of people who’ve been displaced. Some are in tent cities. Others in gymnasiums, churches and in temporary structures. Disease and the spreading of disease has also becoming a deep concern.

Other officials are working on ways to somehow restore some sense of normalcy to the lives of the displaced. California Insurance Commissioner Dave Jones is working with insurers and insureds. He recently put out a news release about an online property insurance locator. The locator service is available to property owners, or the owner's legal representative if they cannot locate the property insurance policy.

The locator: https://www.insurance.ca.gov/01-consumers/105-type/5-residential/Locate-RIPL.cfm

Jones said the locator came about from legislation from Sen. Bill Monning's SB 569.

“Wildfire survivors and family member who lost loved ones in such tragic circumstances are already facing overwhelming emotions and an almost insurmountable road to recovery. Senator Monning's bill created a sensible easy-to-use online tool to help wildfire survivors and family members start the recovery process,” Jones said.

Use of the locator applies only if the property is damaged or destroyed in an area designated as a disaster by the President of the United States or the Governor.

Jones is also worried about the availability of homeowners insurance in light of the number of serious fires experienced lately in the Golden State. He said, “Homeowners in wildfire areas may find themselves shopping for coverage when rates increase or they receive non-renewal notices, as some insurers limit their underwriting. To help consumers shop for the most coverage at the best price, the department has a convenient, easy-to-use online price comparison tool available.”

The tool does not provide actual premium quotes but it does give each company’s average premium and a toll-free number and website address so consumers can ask questions about available discounts or credits, and receive an actual premium quote.


Here is a link to the tool: https://create.piktochart.com/output/14522994-cdi-homeowner-comparison-tool-infographic

Jones said the tool is important since finding an insurer in fire-prone areas of California is a growing problem. In an interview with The New York Times, Jones said, “We’re not in a crisis yet, but all of the trends are in a bad direction. We’re slowly marching toward a world that’s uninsurable.”

Adding to the problem is where a huge percentage of the state’s — and the nation’s — population lives. It’s an area called the wildland-urban interface. Or to paint a more accurate picture, they are those peaceful, scenic areas of the country where people like to live to “get away from it all.”

Of California’s 8-million homes, 3-million of them are located in the wildland-urban interface. Of the 3-million in California, 1.7 million are considered highly prone to fire. Nationwide that figure sits at about a third of all homes.

United Policyholders is a consumer advocacy group. It says a lot of homeowners in California are getting notice from their insurers saying coverage is going to be cancelled and that an insurer is going to pull out of that high-risk area. The California Legislature — has since — put a two-year moratorium on dropping policyholders after a “covered disaster.”

As you know, California’s insurance regulations make insurers justify increases with lots of data to back up the claim of rising claims as the reason. Insurers — however — think in some areas justifying increases, or dropping underwriting in those areas altogether, is justified.

Another thing insurers are doing to protect themselves is upping the number of home inspections. Houses with high risks can — and often are — cancelled or certain types of claims are disqualified. When that happens the insured has to go to a non-admitted insurer or to the industry-run FAIR Plan.

It — as you likely know — charges rates that reflect the risk.

Source links: California Department of Insurance — link 1, link 2, The New York Times



Tags:  California wildfires  insurance content  insurance industry 

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​PIA National on NFIP Renewal — How the PIA is fighting for the independent agent on this issue

Posted By Staff Reporter, Tuesday, November 27, 2018

Whether you're a PIA Member or not, The PIA works hard to fight for the independent insurance agent on Capitol Hill.  Here's how:

This may change between now and the time you read this story. However, our experience is that it won’t change at all before the November 30th deadline.

At the end of this week the National Flood Insurance Program (NFIP) expires again. PIA National — and other insurance, real estate and banking groups — want Congress to get to work and get the job done.

A national grassroots alert has been issued. PIA members are encouraged to take a few minutes to send an action alert, which can be found here: https://pianet.com/grassroots/action.

PIA supports a bill introduced by Louisiana Republican Sen. John Kennedy and New Jersey Democrat Sen. Robert Menendez that reauthorizes the program. Kennedy calls it a clean bill that extends the NFIP through May of next year.

That reauthorization does not — however — include any reforms to the program.

“I am increasingly frustrated that we haven’t made long-term fixes to the NFIP. However, this program is absolutely necessary to more than five million American homes and businesses,” Kennedy said.

Both senators say the program needs an extensive overhaul but for right now, Menendez said getting it extended is the most important issue. “But with the NFIP set to expire in about two weeks and no movement on the horizon, it’s critical that we prevent a lapse that would disrupt the real estate market and leave thousands of families uninsured and vulnerable,” Menendez said.

Another renewal possibility comes in the government funding legislation that has to be done by December 7th.

To put pressure on Congress, the PIA has signed onto a joint trades letter sent to House Speaker Paul Ryan, House Minority Leader Nancy Pelosi, Senate Minority Leader Chuck Schumer and Senate Majority Leader Mitch McConnell. The letter says, “A lapse of the NFIP, will leave millions of Americans at risk and cause disruption in the over 20,000 communities across the country that depend on the program.”

he letter also points a finger at Congress and says it’s time to stop the months of debating program reforms and get some work done. “This has already resulted in a series of seven stop-gap extensions and two brief lapses in 2017 and 2018. The NFIP is currently the main source of flood insurance in the United States, and Americans deserve certainty and stability in the flood insurance marketplace to be able to protect their homes and loved ones.”

The letter also notes that flooding is the most common — and the most costly — disaster in the United States.


Here’s a list of the groups adding their signatures to the letter:

American Bankers Association

American Insurance Association

American Land Title Association

Association of State Floodplain Managers

Coalition for Sustainable Flood Insurance

The Council of Insurance Agents & Brokers

The Independent Community Bankers of America

The Independent Insurance Agents & Brokers of America

International Council of Shopping Centers

Manufactured Housing Institute

Mortgage Bankers Association

National Apartment Association

National Association of Home Builders

National Association of Insurance and Financial Advisors

National Association of Mutual Insurance Companies

National Association of Professional Insurance Agents

National Association of REALTORS®

National Flood Association

National Leased Housing Association

National Multifamily Housing Council

Property and Casualty Insurers Association of America

Reinsurance Association of America

The Risk Management Society

United Policyholders

U.S. Chamber of Commerce

Wholesale & Specialty Insurance Association


Source links: PIA National, Insurance Journal

Tags:  grassroots campaign  insurance content  insurance industry  National Flood Program 

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Vacation — Don’t Lose What You Have Left

Posted By Staff Reporter, Tuesday, November 27, 2018

Priceline as you know is a vacation and travel website. It does an annual survey on vacations. Priceline says this year one in four of us — 25% — have nine or more paid days of time off left to use by December 31st.

Website CEO Brett Keller translates. If you have vacation remaining, say goodbye to it unless you use it between now and then. “Too often, people begin the year expecting to take full advantage of the vacation time they're given, but find themselves scrambling to use those days as December approaches, he said. “Our advice is to treat your paid time off like any other work project. Plan ahead, keep track of the days available, and don't let the year end with that time unused.”

A different study from job placement and recruiter service Glassdoor finds most employees want to make use of that time off yet an average of just 54% of us actually use most of the vacation available.

A miserable 23% use all of the time off they’re entitled to use.

The U.S. Travel Association’s study Time Off said it is a loss of 200 million vacation days. That’s $62.2 billion in lost benefits. Breaking it down even more, in 2017 dollars it is $561 of donated work time — on average — per employee in the U.S.

By the way, the Time Off study says employers should note that employees who use all of their personal time — or at least the majority of their personal time — are significantly happier than those who don’t use it all.

Last, Liz Dente of Priceline says if you have vacation remaining at least do something. And it doesn’t have to be planned out or expensive. “It doesn't have to be a trip to Italy, spend a day sleeping in and shopping — take pressure off,” she said.


Source link: CNBC

Tags:  insurance content  insurance industry  Priceline  vacation time 

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The Perfect Day — Is There Such a Thing?

Posted By PIA Staff Reporter, Tuesday, October 30, 2018

The U.S. Highbush Blueberry Council (USHBC) — blueberry growers — commissioned a study on perfect days. Apparently perfect days are perfectly important to blueberry growers.

The study checked in with 2,000 adults and the results — says StudyFinds.org — are fascinating. Weekly Industry News agrees with the website. The results are very, very interesting.

Apparently, the average person only has 15 perfect days out of every 364 and a quarter days. Just 15? Wow. Equally interesting is what makes a day perfect. It’s little things. Not big things.

The perfect day — on average — for those 2,000 adults:

  Starts with waking up at 8:15 a.m.

  It’s a sunny day with the temperature reaching a balmy 74-degrees

  The perfect day means three-hours outside

  Four hours are spent with family

  Three hours are spent with friends

  Then it’s home to spend the last three-hours of the day watching TV

  The perfect day ends with bedtime at 10:15 p.m.

Vicki De Bruin of USHBC said, “Who doesn’t love sleeping in, sunny skies and spending time with loved ones. These simple pleasures put the biggest smiles on our faces — and it’s even better when we know these seemingly indulgent treats are actually really good for us.”

The survey also looked at what it calls mood-boosters make a cloudy day bright.

  58% said finding money in their pocket

  55% said waking up without an alarm

  51% loved lying in bed listening to the rain

  49% said being on the receiving end of a small act or small acts of kindness

  48% said petting a dog

  47% liked the idea of giving a small act or small acts of kindness to another person

  46% say they are happy when they hear a sunny weather forecast

  37% say music boosts their mood

The Beatles were the mood-boosting best band followed by The Eagles and Michael Jackson.

While there are just 15 perfect days per year, the average recipient said they have 204 good days in a year.


Here’s the rest of the top-40 mood boosters discovered in the survey

  Long, hot shower — 44%

  A meaningful, long hug from somebody you love — 42%

  Seeing a friend you haven’t seen in a long time — 42%

  The first sip of coffee of the day — 41%

  Plopping down on your bed after a long, tiring day — 40%

  Walking into an air-conditioned building on a hot day — 40%

  Baked treats (i.e. fresh blueberry pie) — 40%

  Watching the sunset or sunrise — 37%

  Holding hands with someone you love — 36%

  Getting new clothes — 35%

  Cuddling your partner before getting up to start your day — 34%

  Cuddling with your pet after a long day — 33%

  Waking up to birds chirping — 33%

  Petting a cat — 33%

  Cooking your favorite meal — 31%

  Happening across a smell you enjoy, from cookies to the smell of rain — 31%

  Exchanging a genuine smile with a stranger — 31%

  Sunlight on your skin — 31%

  Getting a new haircut — 30%

  Finding a good new book to read — 29%

  Having a pleasant conversation with a total stranger — 28%

  Meeting a new person you genuinely like — 28%

  Eating a healthy food that makes you feel good about yourself — 28%

  Long soak in the tub — 27%

  Going to the movies — 27%

  Receiving a bouquet of flowers from someone you care about — 25%

  Going for a walk alone — 25%

  A lazy drive to nowhere in particular — 25%

  Having a nice, long stretch after sitting for awhile — 24%

  Ordering delivery — 24%

  Nice glass of beer or wine after a long day — 24%

  Realizing you’re going to have a good hair day — 23%


Source link: StudyFinds.org

Tags:  highbush blueberry council  Insurance Industry  Weekly 

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An Insurance Agent Nightmare? Google Gives Insurance Another Shot

Posted By Staff Reporter, Tuesday, October 23, 2018

In 2016 Google tried insurance. Failed. Bagged the idea of providing auto insurance to the general public. But did Google fully dump the idea of being involved in insurance?


Maybe not.

Capital G is the investor. It’s Google’s equity investment fund firm. Capital G has picked up a minority interest Applied Systems. Many independent insurance agents use the technology and cloud-based software provided by the company.

Agents may — says Applied Systems CEO Reid French — see this Google’s second foray into insurance as a threat. He assures us that it is not.

“There are many agents that have wanted to have greater access to high technology. The vast majority will view this, with the facts, as super-duper positive for Applied and for the industry,” he said.

No financial terms were disclosed but French said it is a significant investment. “It’s not small. They made a legitimate commitment…it’s real money,” French added.

Google says it is going to give as much as it gets. Applied Systems will have access to artificial intelligence, machine learning and digital marketing. Those are huge for any business.

Another worry of insurance — and consumers — is that Google will use this as a way to gather consumer data for its own use. French said this is not true at all.

If you were going to be misinformed, you might say Google entered this partnership to get access to all the insurance data that exists in Applied’s cloud or customer applications. The short answer is none of them have any rights to our customer data,” French said.

One thing it will do — he said — is learn the business of insurance. “Our industry deserves the ability to use that kind of technology, and I think it sets us up really, really well for the next digital age of insurance,” French said.

By the way, if you’re curious. Applied Systems picked up $388 million in revenue through the third quarter of this year.

Capital G is also upping its investments in other companies like Lyft, Airbnb, SurveyMonkey and Zscaler. It’s CEO Gene Frantz said the company wants bring “some of the world’s leading experts at Google and Alphabet [together] to drive innovation within the global insurance ecosystem.”

By the way, we know that Amazon — like Google — has been poking at the idea of getting involved in insurance. Rumors now are spinning wildly that Uber is also going to get into insurance and set up an insurance company for its drivers.

Uber’s Curtis Scott said no, no, no. The company will be an “intelligent purchaser” of insurance and work with insurance carriers, agents and brokers to place insurance for its drivers and that’s as far as it will go.

“No, to be honest, we’re trying to get out of the insurance business. Insurance companies are good at being insurance companies and that’s hard to do,” he said.

The company has — however — partnered with Allstate, Farmers, James River Insurance and Progressive to help its drivers purchase commercial insurance. Other companies — not working directly with Uber but that provide coverage for ridesharing drivers — include Geico, Slice, State Farm, American Family, Liberty Mutual, MAPFRE, Mercury, Erie, Travelers, and MetLife.


Source link: Carrier Management, Insurance Journal

Tags:  applied systems  capital g  Google  insurance content  insurance industry  pia western alliance 

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Too-Big-To-Fail — Prudential Gets Some Relief

Posted By Staff Reporter, Tuesday, October 23, 2018

MetLife fought the too-big-to-fail designation and won. So did AIG. Now Prudential is off the hook, too.

Some background. As part of 2010’s Wall Street Reforming Dodd-Frank Act, all large banks were automatically given the Systemically Important Financial Institution (SIFI) designation. It’s also called too-big-to-fail. That means their failure could be very destructive to the U.S. economy so they are now subject to more regulation and increased financial scrutiny.

Other financial institutions are targeted in Dodd-Frank as well. Among the targets are insurance companies. AIG automatically — and rightfully — received the designation. So did MetLife and Prudential.

MetLife fought the designation in court and won. As noted at the beginning of this story, the Financial Stability Oversight Council (FSOC), headed by Treasury Secretary Steven Mnuchin, dropped AIG’s designation and now has dropped Prudential’s.

The reasoning of Mnuchin, the Trump administration and FSOC, is to move away from specific companies and to instead focus on broader risks. “The Council’s decision today follows extensive engagement with the company and a detailed analysis showing that there is not a significant risk that the company could pose a threat to financial stability,” Mnuchin said. “The Council has continued to act decisively to remove any designation that is not warranted.”

Prudential — who almost fought the designation when it was first given but decided against taking action — is happy to lose the SIFI moniker.

In a statement, Prudential said, “We are pleased with this decision, which affirms our longstanding belief that Prudential never met the standard for designation. This outcome reflects Prudential’s sustainable business model, capital strength and comprehensive risk management, which have and continue to enable us to fulfill our promises to our customers, deliver consistent performance and meet regulatory obligations.”

The National Association of Insurance Commissioners (NAIC) has fought the FSOC and the SIFI designations for insurers behind the scenes. The association — and other insurance groups and individual insurance commissioners — has said all along that the state regulations insurance companies are under is sufficient to monitor what they are doing financially. 

During the Obama administration those arguments fell on deaf ears. Now things have changed. And changed for the better. Current NAIC President and Tennessee Insurance Commissioner Julie Mix McPeak put it in perspective and said, “This action reflects a greater appreciation of the state insurance regulatory regime and enhancements made to our group supervisory tools.”

Maine Insurance Commissioner Eric Cioppa is the NAIC president-elect. He also agrees with the decision. “The rationale justifying the de-designation reflects a revised analytical approach that is consistent with the insurance business model and its regulation,” he said. “My predecessors have done an excellent job educating the Council on how insurance is regulated and the tools state insurance departments employ to address any potential risks.”

Not everyone is happy with the FSOC decision. Gregg Gelzinis of the Center for American Progress said the decision makes no sense. He contends Prudential’s financial footprint is larger today than it was when the company received the SIFI designation.


“Under Secretary Mnuchin’s watch, the number of nonbank financial companies facing enhanced scrutiny has dwindled to zero. If another such company triggers or aggravates the next financial crisis, decisions such as this will be to blame,” he said.


Last. The other non-bank SIFI designation was given to GE Capital. The company did some restructuring and its SIFI label was removed in 2016.


Source links: Insurance Journal, NAIC

Tags:  AIG  insurance content  insurance industry  metlife  PIA Western Alliance  Prudential 

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Not Doing Cyber Security Could Violate Federal Law

Posted By Staff Reporter, Tuesday, October 23, 2018

The U.S. Securities and Exchange Commission (SEC) has spoken. It says companies that fail to do proper cyber security for its data could be breaking federal law. The idea of law breaking came about in a report that investigated nine unidentified companies who’ve suffered cyber attacks. It wonders if they had the proper internal accounting protection controls in place.

Those systems are required by law.

The investigation focused on business email compromises. This is a way cyber criminals get access to bank accounts and other information. They pose as company executives and other employees to get information sent to them. Scams like this — says the FBI — have netted these businesses $5 billion in losses since 2013.

Stephanie Avakian is the co-director of the SEC Enforcement Division. She said these scams aren’t that sophisticated. They rely upon human inattention to succeed.


“We did not charge the nine companies we investigated, but our report emphasizes that all public companies have obligations to maintain sufficient internal accounting controls and should consider cyber threats when fulfilling those obligations,” she said.


The warning from the investigation is clear. Regulators, Congress and consumer groups are watching, and are growing more and more focused on requiring companies to do all they can to keep data secure.

By the way, those regulating regulators ought to also pay attention. On October 4th the Pentagon said the system it uses to maintain travel records was hacked. The Department of Defense said 30,000 records were accessed.

As an FYI, the department says it does not administrate those records. That has been outsourced to a third party contractor. It also says the 30,000 records isn’t all that many when you consider the Department of Defense is the nation’s largest employer.

It has 1.3 million enlisted men and 742,000 civilians work for the department.

Source links: Reuters, Insurance Journal, Forbes

Tags:  cyber security  federal law  insurance content  insurance industry  US securities and exchange commission 

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