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Washington Legislature Wants to Tax Insurance

Posted By Staff writer, Tuesday, April 16, 2019

The Professional Insurance Agents of Washington/Alaska (PIA) is just one of many groups, associations, agencies and insurance companies opposing a new proposal to add to Washington’s insurance premium tax.


The premium tax — as it stands now — is 2%. It generates $1.4 billion in income for the state. The new proposal — SB 5996 — was introduced in both the Senate and the House. It adds an additional .52% to the current tax. The hope is to bring in $125 million in revenue to use to fund the newly established Wildfire Prevention and Suppression Account.


As most of you know, the current tax is on home, auto and business insurance. This tax applies to all P&C lines including home, auto, commercial property, BOP, medical malpractice, inland marine, construction and contractor liability, municipal and school district excess liability, umbrella policies — and no joke — even the insurance paid to insure mobile phones.


PIA Washington Lobbyist Mel Sorenson testified before the House Financial Committee. Along with others — including PIA Western Alliance Executive Vice President Clark Sitzes — Sorensen said the tax is unfair and unjustifiable.


“Fighting and preventing wildfires is a priority for society as a whole,” he told Weekly Industry News. “The costs should be supported broadly, not just by insurers and the insurance-buying public. SB 5996 will drive the cost of insurance coverage for Washington consumers $125 million higher over the next two years. It’s not fair to homeowners, drivers, and others who need insurance to push the cost of their coverage higher in this way.”


Sitzes pointed out the danger of the tax to consumers. Higher insurance prices could end up with a lot of people forgoing the buying much-needed insurance.


In addition to Sorensen and Sitzes, members from the American Property Casualty Insurers Association (APCIA), the National Association of Mutual Insurance Companies (NAMIC) and the Northwest Insurance Council (NWIC) testified.


Mark Sektnan of the APCIA said, “Taxes on insurance companies and our customers are contributing to support the state budget — including efforts to train wildland firefighters, prevent loss and improve forest health — and insurance consumers are doing their part to protect the investment they make in their homes, vehicles and businesses when they buy insurance. Improving forest health and protecting wildlands and communities is a societal good, and should be a priority shared by all taxpayers, not just insurance consumers.”


NWIC’s Kenton Brine said the increase — if passed — will put Washington-domiciled insurers at a competitive disadvantage to insurers housed in other states. In a document he prepared for testimony, Brine said it’s not that insurers oppose doing something about the destructive nature of wildfires. They just don’t want to bear the entire burden.


“We recognize that a variety factors including population growth, changing demographics, current and past forest practices and climate change are rapidly and dramatically changing the wildland fire threat in Washington,” he wrote.


Brine went on to say insurers are partners with communities all over the state in working onways to stop the carnage. However, he said this “unfairly shifts the societal cost of fire suppression exclusively to insurance premiums.”


He also asked committee members a number of critical — and very good — questions.


“Does the state tax health insurance policies to pay for cancer research and chemotherapy treatments?” he asked. “Is there a tax exclusively on jewelry stores to pay for more police officers? Of course not.


Washington residents, businesses and visitors across the state pay taxes to our state’s general fund to pay for societal costs, like fire and police protection. SB 5996 shifts those costs from all taxpayers exclusively to insurance companies and policyholders with a 25% tax increase only on auto, home, commercial and other P&C insurance premiums, to be paid into a dedicated account managed by the state Department of Natural Resources.”


Plus, Brine wrote, “There are no controls or limits included in SB 5996 on the use of the $125 million tax increase after it is put into the Wildfire Suppression and Prevention Account. At any time, the Legislature could ‘sweep’ these funds back into the general fund for other unrelated purposes, leaving property owners paying more and getting the status quo.”


Source links: Insurance Journal, Northwest Insurance Council, Tri-City Herald

Tags:  Insurance Content  PIA National  Washington insurance premium tax 

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The Farm Bill — PIA National Opposes Cuts

Posted By Staff writer, Tuesday, April 9, 2019

Late in 2018, President Trump signed the current farm bill into law. PIA National supported the president’s decision to sign. It — says Jon Gentile, PIA National vice president of government relations — preserved provisions in the crop insurance program that PIA National says are vital. The bill also honored how important the independent insurance agent is to the crop insurance program.


We’re pleased that Congress was able to agree on a compromise Farm Bill that includes strong support for the federal crop insurance program,” Gentile said. “The overwhelming votes in favor of the bill in both the House and Senate and the president’s signing of it signal strong, bipartisan support for the key crop insurance provisions it includes.”


In his 2020 financial year budget President Trump has taken a different approach to the Federal Crop Insurance Program. The budget statement runs 150-pages and the pages relating to the program said it eliminates “subsidies to higher-income farmers and reducing overly generous crop insurance premium subsidies to farmers and payments made to private-sector insurance companies.”


PIA National opposes the changes to the crop insurance program in Trump’s budget. To begin with, Trump is proposing a 15% cut to the Department of Agriculture. In that decrease is deep cuts to crop insurance totaling $26 billion over the next decade.


According to the PIA National Advocacy Blog, the Trump cuts will have three impacts:


  It reduces the average premium discount for producers to 48% — it is currently at 62%

  The administration says that will save $22.1 billion over 10-years

  Next, it caps the rate of return at 12%

  This — says the Trump administration — saves $2.9 billion over a decade

  Lastly, crop insurance eligibility is limited to farms with an adjusted gross income of $500,000

  This will save $641 million over 10-years


PIA National says this is just not a good idea.


“Crop insurance is the cornerstone of the farm safety net. During a time of depressed prices in rural America, now is not the time to slash the federal crop insurance program, which so many farmers and ranchers rely on to stay afloat,” PIA National’s Advocacy Blog says. “This budget proposal would make crop insurance unaffordable and unavailable for many people. Furthermore, a 5-year Farm Bill with strong support for crop insurance was just signed into law in December.”


PIA National said it strongly opposes these — or any cuts — to the crop insurance program and will diligently work with members in the House and Senate to make sure the cuts do not make it through Congress. “We urge Congress to reject these cuts and to support a strong federal crop insurance program that recognizes the vital role that independent insurance agents play in the delivery of the program,” the Advocacy Blog stated.


Source links: Insurance Business America, PIA National

Tags:  Federal Crop Insurance  insurance content  insurance news  Jon Gentile  PIA National  President trump 

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​ FIO Director Bags the Job & Moves On

Posted By Staff Reporter, Monday, November 19, 2018

Steve Dreyer took the Federal Insurance Office (FIO) Director’s job in June. Last Friday was his last day on the job. He took the FIO job after an extensive vetting process and now feels it wasn’t the best career decision.

His background says he’s probably a good choice. Dreyer spent 25-years working for Standard & Poor’s Ratings Services (now S&P Global) where he specialized in insurance and infrastructure and enterprise risk management.

Not to be, he said, and he resigned.

“Although we have been able to accomplish quite a bit during my time here, upon reflection, I have recognized that working in government turned out to be quite different from my time in the private sector, and I believe that my experiences can be best applied in other pursuits,” Dreyer said after announcing his departure to staff.

Dreyer is the second FIO director. Michael McRaith headed the office from its inception in 2011. Steve Seitz will now serve as acting director.

PIA National has always opposed the FIO and believes it usurps the regulation of insurance by states.

Source link: PropertyCasualty360.com

Tags:  Federal Insurance Office  FIO  PIA National  Steve Dreyer 

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PIA National & Other Groups Respond to Mid-Term Election

Posted By Staff Reporter, Tuesday, November 13, 2018

Democrats will control the U.S. House of Representatives when the 116th Congress is sworn in next January. Republicans will keep control of the Senate and have added to the number of seats the party holds.

So getting anything done for the two-years to follow will require bipartisanship.

PIA National is asking those in leadership in Congress to find bipartisan solutions for the insurance issues before us. Spokesman Jon Gentile — PIA National’s Vice President of Government Relations — said, “PIA will continue to advocate for policies that help independent insurance agents protect consumers: a strong National Flood Insurance Program and crop insurance program, the strengthening of employer-sponsored healthcare, and opposition to proposals that chip away at the successful state insurance regulatory system,” he said.

In the meantime, Gentile added — even though this is now a lame-duck Congress — it’s important for the 115th Congress to still be working on those goals as well.

Gentile and the PIA are not alone. Maggie Seidel of the American Insurance Association (AIA) added, “The AIA’s work on behalf of its members and their policyholders has always been — and will continue to be — bipartisan. We look forward to continuing to work with House Democrats and Republicans on a number of important P&C issues in the new Congress.”

Top on the mind of insurance these days is reforming the National Flood Insurance Program (NFIP). Craig Poulton heads the private flood insurer Poulton Associates. He hopes the current Congress can get reforms done but says the House has put in the work but the Senate has not.

“The House had discussed and had come up with a set of reauthorization criteria that they were ready to act on and again, the Senate said, don’t pass the bill yet, let us look at it, and they just continue to keep it stalled,” Poulton noted.

What happens next? Whatever it is, Poulton isn’t optimistic. “Even though Democrats are in charge of the House, most of them had already looked at this issue and said, here are the kind of reforms we need to do, so if they see any light at the end of the Senate tunnel, I would expect the House to be willing to do something along the lines of what they’ve previously proposed. It’s really the Senate where the bottleneck is, and it’s more geographic than it is political.”

Nat Wienecke of the Property Casualty Insurers Association of America (PCI) is somewhat optimistic about flood reforms. Since California Representative Maxine Waters — who has had a hand in previous flood reform legislation — is now going to head the House Financial Services Committee, Wienecke expects new flood legislation early next year.

But like Poulton, he wonders if anything is going to get done. “The question is, can the Senate find 60 votes and what does that compromise look like, and that challenge doesn’t change as a result of the election,” Wienecke noted.

Gentile said the PIA wants a long-term NFIP solution with reforms accompanying the legislation. “Since we also support efforts to encourage the development of the private flood insurance market, the expanded Republican majority in the Senate could present a good opportunity for the entry of additional private flood resources into the marketplace,” he said.

He — and the PIA and other insurance associations — hope the looming flood issue can generate some bipartisan cooperation.

“We hope these changes to the composition of Congress will encourage a renewed spirit of bipartisanship in terms of creating opportunities for insurance agents to expand their businesses and increase the take-up rate for flood and other essential lines of insurance,” Gentile said.

Wienecke said the PCI also wants Congress — and Waters specifically — to look at data protection. “I have a reasonably high degree of confidence that one of the major issues that will come up in this Congress is the issue of consumer data privacy, and I would expect to see Congress discussing and debating with legislative solutions to consumer data privacy similar to the California legislation that passed or GDPR in Europe,” Wienecke said.

He’s also very surprised that — with all the controversy lately over data theft and data loss from applications like Facebook — nothing was done. 

“With all the hearings that we’ve had with the social media companies this year, there was no bill or effort in this Congress to do that. That is almost impossible for me to see in the next Congress — I would be shocked if there weren’t legislation in the next Congress on consumer privacy,” he said.

In conclusion, Gentile said the PIA expects a split-controlled Congress will be a positive and not a negative. “While a lot has been accomplished under two years of singular control — including passage of tax reform, which led to many agents and brokers being able to qualify for a very helpful pass-through tax deduction — we now may see other positive actions as the result of this split Congress,” he added.

Source links: PIA National, Insurance Business America

Tags:  116th Congress  Democrats House  PIA National  Republicans Senate 

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PIA National, the NFIP Extension, Flood Dangers Rise

Posted By Administration, Tuesday, February 20, 2018

The National Flood Insurance Program (NFIP) isn’t working. With over $25 billion in debt it’s obvious the NFIP hasn’t worked well in quite a while. The program’s carnage began with Hurricane Katrina in 2005 and was exacerbated with Super Storm Sandy in 2012.

Then along came last year’s Hurricane Harvey and his cousins.

The NFIP is in dire need of repair. Congress has avoided it and keeps kicking the proverbial can down the road. The program expired at the end of September and it has been extended for the fifth time since the new fiscal year began on October 1st of last year.

The expiration date now is March 23rd when the temporary federal government funding runs out. Professional Independent Agent (PIA) National Vice President of Government Relations Jon Gentile said it’s time for Congress to go to work. “Congress must use the time between now and then to move away from short-term measures and provide a long-term reauthorization of this program,” he said.

Gentile — and the PIA and other insurance and environmental groups — want major reforms in the NFIP and those reforms keep getting put off.

“The NFIP is a program that requires certainty. It is also in great need of reforms. PIA will continue our advocacy for a long-term reauthorization of the program that recognizes the essential role independent agents play in providing expert advice to consumers," Gentile said.

Seth Chandler is an insurance law expert at the UH Law Center. He — like Gentile and the PIA — is tired that people “in non-flood areas are continuing to subsidize people in flood areas. The way to make it [the NFIP] sustainable is to both increase the premiums, particularly in the more flood-prone areas and also to use science to draw maps that more accurately reflect risk.”

The need for flood insurance reform has never been greater. Whether you believe it is climate change or not, the weather lately is weird and it’s driving changes that are increasing the danger of flooding.

A recent New York Times report brings how frightening that is home to roost. There are 21,600 facilities in the U.S. that store large quantities of toxic materials. The Federal Emergency Management Agency (FEMA) — that runs the NFIP — says over 1,4000 are in areas that are now considered to be at high flood risk.

The reason all this happened is because of how important being close to water is to some industrial operations. A good example is the 34,400 pounds of ultra toxic sodium peroxide and 300 pounds of benzene that leaked out of a Chevron Phillips chemical plant in Baytown, Texas during Hurricane Harvey.

These are toxic areas in the PIA Western Alliance state sites (It is hard to count on the map we saw so in the case of California, Oregon and Arizona the count is a close estimate):

Alaska — 2 sites

Arizona — 24 sites

California — 79 sites

Idaho — 3 — sites

Montana — 2 sites

Nevada — 9 sites

New Mexico — 3 sites

Oregon — 17 sites

Washington — 12 sites


Source links: Houston Public Media, Insurance Journal, Business Insurance America, New York Times

Tags:  Flood Dangers Rise  Insurance Content  Insurance Industry  Insurance News  PIA National  the NFIP Extension  Weekly Industry News 

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PIA National, the FIO, Insurers & A New Systemic Risk Bill

Posted By Administration, Tuesday, December 6, 2016

Jon Gentile

As Weekly Industry News reported last week, PIA National is calling for the demise of the Federal Insurance Office (FIO). It was created by the Wall Street reforming Dodd-Frank Act and is charged with “advising” Congress on insurance issues.


So far, PIA National says it’s been pretty good at keeping with its congressional instructions. It is — however — no secret that FIO Director Michael McRaith wants the FIO to be more hands-on in insurance regulation and at one time said insurance ought to be treated — regulation-wise — like banks and other security institutions.


Jon Gentile — who is the PIA National Vice President of Government Relations — said, “If the goal is to eliminate unnecessary federal regulation, getting rid of the FIO makes good sense. Doing so would reaffirm that regulation of insurance should continue to be the responsibility of the states. PIA will remain vigilant in its efforts to ensure that no new paths to the federal regulation of insurance are created as part of any Dodd-Frank rollback.”


The push to do away with the FIO came from a report it issued stating Congress ought to consider a uniform national standard regarding state guaranty association coverage limits. It also said it might be necessary for Congress to consider whether sex and gender are appropriate rating factors for insurers to use in underwriting.


"These are issues with interstate implications, especially given an increasingly mobile society and, therefore, are of national interest. For these reasons, if coverage limits are not standardized nationally by the states, then Congress should consider prescribing nationally uniform standards." It also said "Federal legislation may be necessary to address the issue of sex- or gender-based discrimination in the insurance industry,” the report said.


Property Casualty Insurers Association of America (PCI) vice president Dave Snyder pooh-poohed the report as an attempt by the FIO to interfere with state regulation. And that regulation — Snyder said — is well-functioning. “The whole report is political propaganda and does not merit serious attention from state regulators,” he said.


Another Dodd-Frank created regulating body the Financial Stability Oversight Council is charged with determining which financial institutions pose a systemic risk to the nation’s entire financial system. PIA and other insurance organizations opposed adding insurers to the council’s jurisdiction as — maybe other than AIG at the beginning of the Great Recession but not now — none of them pose a risk to the nation’s economy like the big banks.


The House of Representatives has approved a PIA supported bill the Systemic Risk Designation Improvement Act to replace the significantly important financial institution (SIFI) arbitrary designation limit of $50 billion in assets with another system. Bill sponsor and Missouri Republican Rep. Blaine Luetkemeyer said it “would protect U.S. taxpayers from actual risk posed to the financial system. Decisions on what institutions are deemed systemically important should be based not on size alone, but also on activity and other factors that actually demonstrate systemic risk.”


He and 233 Republicans and 20 Democrats agreed and passed the bill. If it gets through the Senate and to either President Obama or Trump’s desk, before a SIFI designation is given the council and other regulators would have to consider the asset size of a bank holding company, the interconnectedness of the institution, and the complexity of the holding company’s nature.


Rep. Jeb Hensarling — a Republican from Texas and the chair of the House Financial Services Committee — said Dodd-Frank co-author, Boston Democrat and former Rep. Barney Frank agreed the law is arbitrary and supports the adjustment. Hensarling said he’s even been known to admit the arbitrary nature of the designation is a mistake.


“What we’re trying to do here today with this bipartisan bill is try to provide a solution, try to fix a genuinely recognized mistake in Dodd-Frank.  And what those who oppose this bill are trying to do is to preserve that mistake in the law,” Hensarling said.


Insurance groups like the American Insurance Association (AIA) agree the change will be a good one. AIA vice president of federal Affairs Wes McClelland said, “Given the strengths of the insurance business model, it is clear that the property/casualty industry was not and is not a source of systemic risk to the financial system. Therefore, in testing for enhanced supervision of financial institutions, the bill appropriately recognizes that risk assessment should be based on a range of factors wider than just size.”


California Democrat Rep. Maxine Waters is the ranking Democrat on the committee. She said the bill will let President Donald Trump deregulate 27 of the nation’s largest banks. “H.R. 6392 would repeal Dodd-Frank’s $50 billion threshold, above which banks are subject to closer regulatory scrutiny, and prevent the Federal Reserve Board from regulating these banks. Instead, it would hand over that responsibility to the Financial Stability Oversight Council, or FSOC. To regulate the banks, the FSOC would have to go through a byzantine and litigious process of designation, which takes two to four years to complete,” she said.


In the meantime, the international Financial Stability Board (FSB) identified nine insurance companies last week as SIFI. Two of those insurers are U.S. companies — AIG which already has an SIFI designation and MetLife whose designation was overturned by a federal judge — are on that list.


Source links: PIA National, PropertyCasualty360.com, Insurance Journal, Insurance Business America



Tags:  Insurance Content  Insurance Industry  Insurance News  Insurers & A New Systemic Risk Bill  Jon Gentile  PIA National  the FIO  Weekly Industry News 

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PIA National Sponsored Study: Your Website & You

Posted By Administration, Wednesday, August 24, 2016

For years insurance technology experts have been nagging the industry’s leaders about the importance of keeping websites up to date and working smoothly. Technology is evolving and you need to evolve with it. Those are the technology experts. Marketing experts are preaching from the same pulpit. The chant goes something like: keep up, keep up, keep up.


But independent insurance agents — at least most of them — don’t appear to be hearing the call. Or if they are hearing it, they aren’t acting. A poll done by Insurance Digital Transformation says 60% of independent agents say their websites are “average to poor.”


Just 8% brag that their website is up to speed and rated excellent.


PIA National administered the survey with ACORD User Groups Information Exchange and the IIABA’s Agents Council for Technology. The poll found 70% of agents have plans in place to raise the level of their websites.


But — as they say — the best laid plans of mice and men…etc. These independent agents and agencies are not following their plans.


The report generated from the survey shows less than 25% of agents have comparative raters to help customers quote home and auto. Just 16% use chat or instant messaging to communicate with potential customers or with current customers.


As to why? No one is quite sure and the report puzzled out this comment: This is a relatively inexpensive technology and easy to implement, so the low percentage is surprising.”


Cal Durland is an industry consultant and advocate at Insurance Digital Revolution. He said agents and agencies are also failing to update their websites to give consumers access in the format they prefer. Whenever I need to find something, I take out my phone and Google it. So does someone who is perhaps new to the area and is looking for insurance — but these agency websites just aren’t robust enough to keep them.”


And with that he gave some important advice to those same agents and agencies. “Your website needs to be more than just a brochure. It needs to host everything from the ability to quote car insurance or chat with staff, all from their phone. There’s a whole slew of functionality that’s just not reading,” he said.


PIA National Executive Vice President Mike Becker said consumers want to use mobile apps to help them with their insurance needs. Yet just 21% of agencies say their website has that capability. Just a few more — 23% — say they have a client portal on their website. He said independent agents ought to make these functions a high priority even if their clients are demanding them or asking for them directly.


Agents can’t assume that no news is good news. When it comes to customers’ digital requirements, that’s never true. Look at banking — many institutions did not know how popular online and mobile banking would be with their customers until they adopted it. The same is true for insurance. These technologies provide quick, easy and on-demand access to policy and billing information, quoting and rating,” Becker said.


Here are some other findings from the survey:


  Agents and agencies need to add automation tools that improve work flow.

  40% of those surveyed say disjointed work flow is a huge challenge.

  Carriers not making their sites available through agency management systems is also problematic.

  That said, agents aren’t really taking advantage of those carriers that do make them available.

  60% of agents say they are not using claims download programs.

  Just 6% are finding ways to add quoting to the website for commercial lines.

  For personal lines that figure is 16%.


That means — Durland said — many agents are manually reentering data when they switch from a carrier portal to their own management system. That not only slows down the process but it increases the risk for error. Years ago, you heard a lot of push for a single-entry, multiple-company interface. The industry is still stepping into that,” he said.


ACORD’s Greg Maciag and the PIA and others involved are encouraged by the results. Many agents want to become digital, they just need guidance on where to start,” Maciag noted.


As to the need to for agents and agencies to keep websites current, Laird Rixford — Insurance Technologies Corporation (ITC) president — said all agents who know anything about anything know a strong website presence is critical to agency success. These successful people know Facebook, Instagram and LinkedIn are important, too but that an optimized website is where the rubber meets the road.


Whenever a consumer is looking for insurance they start with internet — that happens whether they’re looking at the big insurance firms or local agents. The first thing that someone wants to do is research, that’s where the online experience begins,” he said.


So it’s important — he said — to not make these three critical mistakes.


A design that is outdated: Rixford said your website can’t look like it was done a decade ago. That puts you at a distinct disadvantage. The design has to capture your attention and have a good call to-action. Companies with modern sites look like they know what they’re doing; they look like they’re on the ball.”


A current looking design is even more critical when you consider how long you have to snag the viewer. Rixford said it’s three seconds. If they’re not impressed instantly, they’re gone. If they decide your site is worth staying on, you have another four to five seconds to convince them to stay. Having good design, layout and call-to-actions will help you do that.”


Blog, blog, blog: Rixford wants you to think of a blog this way. It’s like talking with and educating your clients and prospects about the business of insurance. Having stories published on a regular basis shows that you care. Not just about the future of your prospects and clients, but about your web presence because nothing is more detrimental than an abandoned website or blog,” he said.


Plus, search engines — like Google — are much more sophisticated today than they were a decade ago, or even a couple of years ago. So you must publish fresh, unique content to end up higher in the results when someone does a search. A regularly updated blog makes you seen as a valuable content resource for search engines.


Never, ever have an About Us page that is blank: This is where you get to tell your story. That page says:


  Who you are

  What you’re about


By leaving this section blank and not telling your story, you’re missing the chance to create a personable impression of your agency,” he said.


And — pullleeassseee — don’t have an About Us page packed with boring content about when the agency was founded and what services you offer to your clients and potential clients. Rixford said do this:


  Share your history as a human story

  Make it something clients and prospects and random visitors can relate to

  Showcase your employees with a head shot and a personal, well-written bio that says who they are as people and not just as insurance agents


All of that is a nice personal touch that gets you noticed.


Last — and not from Rixford but from the PIA sponsored Insurance Digital Revolution survey — do something and do it now. Stop putting off updating your website. This is critical to the success of your business going forward.


Source links: Two from Insurance Business America — link 1 and link 2

Tags:  PIA  Pia National  PIA National Sponsored Study: Your Website & You  Webisite 

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PIA & Other Industry Groups Fight Auto Insurance Affordability Plan

Posted By Administration, Wednesday, July 20, 2016

PIA National has come out against a plan by the Federal Insurance Office (FIO) to institute guidelines to make auto insurance affordable to — as the FIO calls them — “affected persons.” In opposing the idea, the PIA joins several industry groups who also think the idea has no merit.


FIO Director Michael McRaith said affected will be defined as traditionally underserved communities and consumers, minorities, and low- and moderate-income persons. So if the average auto liability premium is more than 2% of the median income in those neighborhoods, the insurance will be deemed unaffordable.


Access to affordable auto insurance is crucial for consumers who commute to work, drive kids to school, and meet the needs of their families. This new methodology reflects important feedback FIO has received from a number of key stakeholders, and it is a meaningful step toward better understanding the affordability of auto insurance for consumers and underserved communities all across the country,” he said.


Consumer groups like McRaith’s point of view and support the guidelines. The insurance industry — for the most part — does not.


PIA National Senior Vice President for Industry Affairs Pat Borowski says the organization appreciates that the FIO let the industry chime in before making its decision. We appreciate the engaged process that FIO extended to the industry and the subsequent follow-ups for additional information and asking additional questions. We further appreciate the FIO’s efforts to balance the many comments, and make a number of changes that have improved the outcome, as compared to the original proposal,” she noted.


But in the end the FIO’s designation of unaffordable is unacceptable. “We still do not see if or how FIO will account for several other critical factors, such as the differences — most of them significant — that exist among all drivers as to their individual or collective household driving records. Assessing auto insurance affordability is much more complex than determining the affordability of housing costs under HUD methods,” she said.


Borowski said the PIA’s analysis of the problem shows the FIO does not give enough weight to a number of variables including the non-insurance related factors that impact the price of insurance and regional variables.


Jimi Grande of the National Association of Mutual Insurance Companies (NAMIC) said the FIO is stepping outside of its authority. By law, the FIO monitors the markets and will report to Congress, which can act on those reports or not. What’s troubling is that even though the FIO itself recognizes that ‘affordability for any individual consumer can be assessed accurately only within the context of that consumer’s circumstances,’ the conclusions others draw from the office’s reports based on aggregated data will not take this fundamental fact into account, or ignore it outright to further an agenda,” he said.


Borowski and the PIA worry that the problem fix will lead to a government subsidy similar to what happens with ObamaCare.


The Insurance Research Council agrees with PIA that the figure of 2% is arbitrary. No standards — the IRC contends — exist to support McRaith’s figure. It does agree an affordability index that compares coverage to income is appropriate over time but it is not a good method of deciding whether insurance is affordable or not affordable.


Grande said that’s the biggest problem with the FIO stance. The methodology ignores all existing government data on auto insurance expenditures and even the fundamental principle that insurance should be priced according to risk, which means the same standard would be considered for a driver with a perfect driving record and one with multiple accidents. There is great danger in arbitrarily establishing a threshold for which our government will deem a product affordable. What’s next – whether the car itself is considered affordable? The gasoline fueling it? Is there a need for the government to determine if auto repairs are affordable?”


Like PIA National’s Borowski, Grande appreciated the FIO listening to the industry but its solution and the end result remains a troubling standard that may not provide an accurate picture of the highly competitive auto insurance marketplace.”


Robert Gordon — a senior vice president for the Property Casualty Insurers Association of America (PCI) — agrees. He said, Individual finances, wealth and discretionary income may vary greatly from family to family. For most consumers, the cost of buying a car and maintaining and fueling it far exceed any insurance costs, making the regulatory fixation with insurance affordability somewhat misdirected. In particular, rapidly escalating distracted driving, traffic congestion and alcohol and drug use have been negatively impacting auto accident frequency and loss costs, which are the primary determinants of insurance rates and affordability,” Gordon said.


American Insurance Association senior council Lisa Brown said the FIO’s definitions are all wrong. Factors such as state-based tort reform laws, consumer choice in levels of coverage, and state minimum insurance requirement laws do not appear to have been taken into account while FIO devised this methodology. It is essential that we have an effective and efficient system of insurance supervision that fosters the growth of vibrant private, competitive insurance markets. We believe that government regulation should be employed in ways that support the growth of the auto insurance market and look forward to working with FIO to address these concerns,” she said.


The IRC gets the last word and it’s an important one. The affordability of auto insurance is ultimately a function of how state auto insurance systems are defined and administered by the states. Efforts to improve affordability should address the primary cost drivers.”


Source links: PIA National, Insurance Journal


Tags:  Insurance Content  Insurance Industry  Insurance News  PIA  PIA & Other Industry Groups Fight Auto Insurance A  Pia National  Weekly Industry News 

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Meet the I.I.I.’s Replacement for Dr. Robert Hartwig

Posted By Administration, Wednesday, July 20, 2016

Sean Kevelighan
If insurance ever had anything close to a rock star it is Insurance Information Institute (I.I.I.) president Dr. Robert Hartwig. His youthful looks, intellect — and most importantly — knowledge, made him popular with all media and not just insurance media.


No one explains insurance more succinctly and in layman’s terms like Hartwig.


Earlier this year Hartwig — who has headed the I.I.I. since 2007 — announced he’s stepping down as the institute’s president and CEO. Hartwig will be a faculty member of the University of South Carolina’s Darla Moore School of Business and the co-director of the Moore School’s Risk and Uncertainty Management Center.


His replacement is 43 year old Sean Kevelighan who most recently headed the global public affairs of the Zurich Insurance Group. He — among other important posts — was the press secretary for the White House Office of Management and Budget during the second Bush administration.


In accepting the position, Kevelighan said, It’s an honor to have been given this opportunity. Insurance is the lifeblood of any economy, as it enables individuals to be better prepared for the unexpected and, in turn, to live more freely. Over the years I have truly grown passionate about insurance and, quite frankly, feel it deserves more credit for the value it brings to society.”


Hartwig likes the choice. Although my decision to leave the Institute after 18 years was an extremely difficult one, it is made much easier knowing that I will be leaving the organization in such capable hands. I love this organization and this industry and I’m confident that Sean will be a strong, strategic leader for the I.I.I. and a persuasive spokesperson for an industry that I remain fully committed to,” Hartwig said.


Bruce Kelley — who is the president and CEO of EMC Insurance Companies and the board chairman of the I.I.I. — also likes the choice of Kevelighan and explains why he was picked.


Over nearly two decades, Sean has attained impressive accomplishments in public affairs and communications as well as a deep technical knowledge of insurance issues. The search committee screened dozens of high-caliber candidates, but the final vote was unanimous. Sean is an ideal fit for the CEO role due to his success as a media spokesperson in both corporate and government settings, as well as his international insurance industry experience,” Kelley said.


Source links: Insurance Journal, PropertyCasualty360.com


Tags:  Around the PIA Western Alliance States  Insurance Content  Insurance Industry  Insurance News  Meet the I.I.I.’s Replacement for Dr. Robert Hartw  Pia National  Weekly Industry News 

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Auto Insurance Leads for PIA Members

Posted By Administration, Wednesday, May 25, 2016

Is your agency looking for auto insurance leads? Do you have hungry producers who will contact hot leads in your area? If so, you may want to participate in a pilot program that PIA is putting together with one of the nation’s largest auto insurance lead generation companies.


The pilot will take place over a two month period starting in roughly mid-June. Your participation will help PIA determine if this could be a good program for other PIA members.


PIA members who participate in the pilot program will receive $500 worth of matched leads (you buy $500 worth of leads and get $500 worth of leads free).


PIA members who complete the program will receive a $50 gift card (e.g. Visa, American Express, or similar).


If this sounds interesting to you, please email Alexi Papandon in PIA’s national office at alexipa@pianet.org for more information. Your email does not obligate you to anything.

Tags:  Auto Insurance Leads for PIA Members  Insurance Content  Insurance Industry  Insurance News  Pia National  Weekly Industry News 

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