Travelers Joins Trusted Choice®

Travelers Joins Trusted Choice®

Industry-leading carrier is latest brand movement company partner.

The Travelers Companies, Inc. has joined the Trusted Choice® consumer branding program for independent insurance agents and brokers. A leading provider of property-casualty insurance for auto, home and business, Travelers is one of the largest independent agency insurance companies in the U.S. A component of the Dow Jones Industrial Average, Travelers is rated A+ (Superior) by A.M. Best, and built its success by providing innovative insurance and risk protection products and services.

“Working with an independent agent is an excellent way for consumers to choose the right insurance to meet their individual needs,” says Brian MacLean, president and chief operating officer of Travelers. “At Travelers, we are dedicated to our continued partnerships with independent agents. With 13,000 agents and brokers around the country who sell our policies, we want to help them grow their business. We’re pleased to support Trusted Choice® as a means to promote the unique expertise and high quality customer service independent agents provide.”

“Travelers is a premier global brand of insurance and one of the largest writers of property-casualty insurance through independent insurance agents,” says Robert Rusbuldt, Big “I” president & CEO. “Joining Trusted Choice® further demonstrates its commitment to the independent insurance agency distribution system and confirms its strong belief that independent agents are the trusted advisors for consumers.”

Trusted Choice® was launched by the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and several independent agency companies to highlight the benefits independent agencies and brokerage firms offer consumers—choice of companies, customization of policies and advocacy support. It is the premier consumer brand for independent insurance agents and provides national advertising and other strategic tools to reach consumers.

Trusted Choice® educates consumers about the benefits of using independent agents and brokers for their insurance needs: choice of companies, customized policies and advocacy support. Trusted Choice® is the consumer marketing identity for over 10,400 independent insurance agencies and brokerage firms and 54 leading insurance companies.

How will the health care overhaul affect your agency’s health insurance sales?

On the Hill

Health Care Reform: An Agent Overview

How will the health care overhaul affect your agency’s health insurance sales?

In the wake of Congress passing and President Barack Obama signing into law the largest health care reform legislation since the 1960’s, the Big “I” is working overtime to analyze its impact on agencies that sell health insurance. Unfortunately, many of the specifics affecting agents’ ability to sell health insurance will be somewhat of a question mark as the law’s implementation occurs over the next four years. Many of the details of how coverage will be placed will be determined by regulations issued by the Department of Health and Human Services (HHS) and individual states in the years to come. More detailed analysis will be ongoing, but at this time, the Big “I” can provide some generalities about what the bill may mean for insurance agents that are selling health insurance policies. This article discusses the bill from the insurance salesman perspective and not that of a small business owner, which of course is another important vantage point of Big “I” members. Next week’s article will review the legislation from this small business perspective.

One of the most important provisions of the new law that will impact agents is the creation of state “Health Insurance Exchanges” for individuals and small groups. The law requires each state to create exchanges by 2014 that individuals and employers can go to for insurance that is provided by participating private insurers. The exchanges will include four tiers of private plans, co-op plans and at least two multi-state qualified health plans contracted out to private carriers by the Office of Personnel Management (OPM). The legislation leaves much of the details of the operation of these exchanges to each state. While agents will be able to place coverage for clients through the exchanges, the marketing or commission regulations are not yet clear. Additionally, consumers will be able to go directly to the exchanges without the assistance of an agent, and some consumers may end up choosing to do so.

Companies, meanwhile, will have to abide by new “medical loss ratios” (MLR) where the insurance plans must spend a certain percentage of premiums on health care delivery costs only. The MLR will be 80% for individual policies and small group plans while for large group plans (>100 individuals), it will be 85%. This means that, starting in 2011, companies will only be able to spend 20% of individual/small group plan premiums and 15% of large group premiums on things such as marketing, administrative costs and agent commissions. Companies would be required to provide rebates to consumers if they fail to comply with the MLRs.

Additionally, insurance companies will be required to abide by new federal requirements such as not discriminating against preexisting conditions, eliminating lifetime benefits caps, restrictions on annual caps and abiding by new individual and small group rating bands. Finally, the law also imposes a direct $2 billion annual tax on health insurance companies. The tax will increase each year until reaching $14.3 billion in 2018. For subsequent years, the fee will increase based on the previous year’s premium growth. These taxes are expected to strain insurance company profitability and their available capital for marketing-type activities.

The law is also estimated to bring approximately 32 million new Americans on to the health insurance rolls. About half of these would be the result of expanded government entitlement programs such as Medicaid and SCHIP. Nonetheless, that still means an estimated 16 million new consumers will be accessing the private insurance market. Although this means agents may potentially lose some customers because of direct competition from the Exchanges and insurance companies may face significant downward pressure on their bottom line that could translate to similar downward pressure on agent profitability, there is at least the opportunity for new customers.

Finally, the Big “I” anticipates that, for the next few years, many customers (especially small businesses) will find this new, complicated law and the resulting regulations very challenging. As a result, they will need an experienced agent to guide them through the process of obtaining health insurance more than ever. The Big “I” is committed to providing its members with the necessary tools to serve as that trusted health insurance advisor.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.

President Obama Signs Health Care Bill into Law

On the Hill
President Obama Signs Health Care Bill into Law

Final bill specifies that agents and brokers will be able to sell health insurance both inside and outside of exchanges.

Late Sunday night, using some unusual tactics to ensure Congressional approval, the U.S. House of Representatives simultaneously passed the Senate health care reform bill, along with a package of changes to the bill through a rare parliamentary procedure known as “reconciliation”. On Tuesday, President Barack Obama signed into law this bill which represents the most sweeping health care reform package since the Great Society of the 1960s that created Medicare. The reconciliation bill must now be passed by the Senate and the House in identical form before it’s sent back to the president for his signature.

The Big "I” is disappointed that after months of negotiations, hearings, debates and votes in multiple Senate and House committees the final bill does little to stem the skyrocketing cost of health care and will be partially financed through tax increases on certain individuals and small business during one of the most perilous financial periods in American history. However, it’s important to note that, due to the efforts of the Big “I”, significant improvements were made to the legislation throughout the process to ensure a role for the independent insurance agent in the future health care market. Without these changes, the negative impact on the independent agency system would have been much greater.

There will be a number of changes in the delivery of health insurance which both agents and consumers will experience because of the new law. For the first time, individuals will be required to purchase health insurance, and businesses with more than 50 employees will be required to offer health insurance coverage or be forced to pay a fine.

The Congressional Budget Office (CBO) estimates that 32 million new Americans will be on health insurance rolls by 2019, with 16 million of these being new private market consumers, and the remaining 16 million obtaining coverage through a major expansion of Medicaid. Temporary small business tax credits will be available for some businesses with less than 25 employees, and millions of individuals will receive new government subsidies to help them purchase health insurance. The legislation also creates state-based health care exchanges that would serve as catalysts for individuals and small businesses (up to 100 employees) to claim subsidies and purchase health insurance.

In a major win for the Big “I”, the final bill specifies that insurance agents and brokers will be able to sell health insurance both inside and outside of these health insurance exchanges. As a result of the Big “I” grassroots effort and our special “Health Care Fly-In” last summer, individuals and small businesses that choose to purchase through an exchange will still be able to count on the sound advice of independent insurance agents and brokers.

One of the most worrisome aspects for small businesses is how Congress elected to pay for the reform. In order to finance the reform effort, the expansion of Medicaid, and the new subsidies for low-income Americans, a .9% Medicare surtax will be imposed on some individuals as well as small businesses that file as individuals. A new 3.9% tax on nonwage income for these same individuals and successful small businesses will also be imposed. In addition, this tax is not indexed to inflation and therefore will capture more and more taxpayers over time. The Big “I” is greatly concerned about the impact any new taxes will have on small businesses and individuals that are still struggling through the current economic climate.

According to the Congressional Budget Office (CBO), the final price tag is estimated to be $940 billion of taxpayer dollars over ten years. The CBO also projects that small businesses will see little to no decrease in their monthly premiums and individuals will see an increase of 10-13%. The impact on premiums reinforces the Big “I’s” view that this legislation was incomplete at best and, though it increases the number of Americans with insurance, it does not adequately bend the cost curve of health care for the future. Furthermore, it is expected to balloon the federal budget deficit over time, instead of containing costs as necessary. The Big “I” is also concerned that the package did not meaningfully address medical malpractice reform, an issue that the Big "I" has strongly supported including in the final bill in order to help bring healthcare costs down.

Early Thursday morning, the Senate Parliamentarian ruled in favor of two minor Republican “points of order” on the reconciliation bill unrelated to the underlying health care bill. The Senate then approved the reconciliation bill by a vote of 56 to 43. Because of the two points of order, the House of Representatives will have to vote, one last time, on the Senate approved reconciliation text. Final votes on this reconciliation bill are expected this evening or tomorrow morning.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.

UAIIA Newsletter - February 2010

1. UAIIA’s 91st Annual Convention Recently a convention packet was sent out by email for UAIIA’s 91st Annual convention to be held in St. George on April 18th through the 21st. If you didn’t get one, you will be able to find it at www.uaiia.org. Click on the convention button.

It will be a great time to get away to St. George to enjoy golf, great food, entertainment, important industry updates, trade show, CE and networking with our company partners. We hope you’ll be there.

By the way, if you know someone who is deserving of receiving agent, young agent or company person of the year, I encourage you to make a recommendation. There is a form included with the paper newsletter or you can find one at: www.uaiia.org/_private/2010nominationform.pdf.

2. Proof of Insurance So what is the best way of providing proof of insurance coverage to a lender? We have a one page memo with a concise explanation for agents to use with their clients regarding Evidence of Property Insurance Form (ACORD 27) and Evidence of Commercial Property Insurance form (ACORD 28). To access this memo, go to www.uaiia.org/_private/proofofinsurance.pdf.

Should you have any questions about this memo, please contact bill.wilson@iiaba.net.

3. Job Opening – Resumes Wanted After 23 plus years with UAIIA, Steve Baugh will be stepping down as Executive Director due to health related issues. Resumes for this position will be accepted between now and April 10th. Salary will be commensurate with experience. In addition to a resume, we would like a letter stating why you would like the job and your salary requirements. A position description can be found at www.uaiia.org/_private/jobposition.pdf. Please send these items to stevebaugh@uaiia.org. A new Executive Director will be hired no later than September 1st, 2010 and quite possibly prior to that date.

4. Acting Commissioner Announced Neal T. Gooch was recently appointed as Acting Insurance Commissioner of the Utah Insurance Department. Governor Gary R. Herbert said that the appointment would extend “until the selection of a permanent Commissioner is made.”

Mr. Gooch has had extensive experience with the Insurance Department. Beginning in 1986 while serving in the Attorney General’s Office, he was made general counsel to the insurance department. He served in that capacity until August of 1997 when appointed by Commissioner Merwin U. Stewart as deputy commissioner then asked to continue in that capacity by Commissioner D. Kent Michie in 2005.

5. Allstate Agents To Be Terminated Thousands of existing Allstate agents are to be eliminated within the next two to three years as the company sheds those it thinks are not meeting specified production quotas, according to the National Association of Professional Allstate Agents.

Association Executive Director Jim Fish said many of these agents are “older agents – 50 to 60 years old – who might be servicing their book of business and maintaining high retention and loss ratios, but that isn’t enough for Allstate.”

“They (Allstate) are looking to add high-value, production-oriented new agents” to hit marks on new business and premiums the NAPPA says are established by Allstate. Fish said the “so-called” Allstate independent agents are anything but, constantly controlled by the company in “every aspect of the business” from hours of operation and holiday schedules, to personnel requirements.

6. Thanks to Utah InsurPac Contributors In 2009, UAIIA was the first state in the country to meet their goal for InsurPac contributions. InsurPac allows us to help national legislators raise money for their campaigns. This in turn gives us access to them for discussion of our issues. Some people don’t like how this works, but that’s how the game is played back there and we need to protect our interests.

Craig Wiseman is UAIIA’s 2010 InsurPac Chairman. If you would like to donate, you can reach him at (801) 377-3060.

The Independent Agents and Brokers of America, through InsurPac, has now become a million dollar political action committee. We thank the following members of our association for their contributions in 2009.

Platinum Club ($2,500)

C. Brett Nilsson

Gold Club ($500)

Douglas Ball

J. Curtis Breitweiser

Joseph E. Hansen

Pioneer Club ($250)

Kay L. Howland

Eric Kingdon

Kenneth Miller

Craig Timothy

James Welch

Craig Wiseman

Robert Wiseman

Founders Club ($150)

Steve Baugh

John Fogg

Roy Nikas

Tom Stanger

Allen Steadman

Greg Vause

General Contributor

Celeina Cullum

Howard Green

Cheryl Lyman

Richard Tatton

Michael Vowles

7. Helping Hands For Haiti Dr. Jeffrey Randle from Utah has provided housing for orphans in Haiti and a medical clinic. Currently the clinic and housing has been destroyed by the earthquake and the orphans have been sleeping in a field with no tents. You may have seen Dr. Randle on the local news after the quake. His practice is in Salt Lake City and he is planning to go to Haiti shortly.

If you would like to help with a donation, go to: www.helpinghandsforhaiti.com.

8. Scholarship Applications Available Do you have a child who is a senior in high school with a 3.0 grade point average? If so, they may be eligible for one of our 2010 college scholarships. Each year with the help of generous donations from individuals, companies and associations, we raise enough money to give away several scholarships. For further information, go to: www.uaiia.org/_private/scholarship.htm and check out how many recipients there were in 2009.

9.The Pain May Continue Some economists have declared the Great Recession over, but its lingering effects will continue to chip away at commercial property/casualty premiums through 2010 according to insurance experts.

A new Advisen Ltd. Briefing says that the damaged economy will keep rates from rising while at the same time sales, payroll and other measures of exposure used to calculate premiums may fall further. The cumulative effect will be another year of lower written premiums – a boon for insurance buyers – but a painful and potentially damaging situation for some insurers and agents.

10.Twitter Insurance? Bloggers may be wise to purchase insurance. A lawsuit was filed last year against Courtney Love by a designer who claimed to have been libeled by the rock singer on MySpace and Twitter. A number of similar lawsuits involving social networking sites have been filed, and those who share their disputes in cyberspace expose themselves to lawsuits and could face large legal bills. Bloggers may find it worth the expense to buy insurance to protect themselves against lawsuits involving claims of libel or defamation. The Media Law Resource Center reports that a court awarded an Ohio woman $129,794 in damages because a blogger said that her property was haunted, and another blogger was ordered to pay $1.8 million in damages for referring to a plaintiff as a failed lawyer.

11.Easy C.E. The 2008 Legislature passed a bill that gives members of a professional association 2 hours of continuing education credit yearly for their membership. You can receive this credit through UAIIA only by contacting our education coordinator Cheryl Lyman by email at cheryllyman@uaiia.org with your license number and what year/years you would like credit for.

This bill went into effect June 1, 2009. If you belong to more than one professional association, your Sircon account will probably show additional CE credits. It will be your responsibility to make sure that you have only included 2 hours of association credit per year in your total continuing education credits.

12.24/7 Customer Service Have you ever thought about outsourcing your agency customer service? InSite Support Services, Inc. can give your agency 24/7 customer service. For further information go to: www.insitesupport.com or call 803-405-7265 or toll free: 866-446-3555.

Insurers Would Owe Under Proposed U.S. Financial Tax (Wall Street Journal)

18 Jan 2010

A handful of large insurance companies, most of which turned down government bailout funds, would likely owe money under the proposed Financial Crisis Responsibility tax.

The proposed tax, unveiled Thursday by President Barack Obama, would amount to 0.15% of total assets minus high-quality capital, such as common stock, and disclosed and retained earnings. Insurance-policy reserves would be untaxed, being already subject to federal fees, according to the White House, but analysts and insurers note that some details are yet to be clarified. The fee must be approved by lawmakers.

Quite a few insurers qualify for the tax, according to analysts. According to a fact sheet from the Obama administration, the fee would cover large insurance and other companies that own insured depository institutions.

American International Group Inc., MetLife Inc., Prudential Financial Inc., Allstate Corp., Lincoln National Corp., Hartford Financial Services Group Inc., Ameriprise Financial Inc. and Principal Financial Group all are eligible for the tax, based on total adjusted assets, according to a Friday report by Credit Suisse.

A note from Citigroup on Friday included all those companies except Allstate.

AIG's main business is insurance, but it was the company's financial trading business that led to its multi-billion-dollar bailout. It would owe the most tax of the insurers, at an estimated $388.8 million based on a full year, according to the Credit Suisse estimate, and $367 million according to Citigroup.

Two other life insurers that took bailout funds would fall under the tax, according to analysts. Hartford Financial received $3.4 billion from the Treasury's Capital Purchase Program and would owe tax of about $28.2 million by Credit Suisse's estimate.

Lincoln National received $950 million from the program and would owe tax of about $29.4 million, according to Credit Suisse.

In an emailed statement, Hartford said it was evaluating the proposal but that it was too early to tell what effect it would have on the company. "This is an initial proposal that is likely to go through a number of modifications over the course of the next several months," the statement said.

Lincoln National didn't respond to a request for comment.

Prudential and MetLife, two insurers that declined funds from the Trouble Asset Relief Program, would owe significantly more, according to Credit Suisse and Citigroup. Prudential would owe about $85.2 million, and MetLife just over $81.5 million, Credit Suisse said; Citigroup pegged Prudential at $84 million, and MetLife at $97 million.

Prudential spokesman Bob DeFillippo said the company was working on understanding the proposal and didn't yet have a comment.

A MetLife spokesman agreed with the assessment that the company is included in the current proposal of companies that would owe the tax but said the company is still looking at the details of the proposed tax.

Allstate would owe $34.1 million, according to Credit Suisse. A spokesman said, "At this point, we don't have enough information to determine whether or to what extent a company like ours, which did not accept TARP funds and whose assets primarily are funds held on behalf of contract holders or insurance policy reserves, would be affected by this fee."

Ameriprise and Principal Financial didn't reply to requests for comment.

One consequence of the tax falling on the biggest insurers is that it would make them less competitive, said bank analyst Mike Moebs of Lake Bluff, Ill. "This will help smaller insurers," he said. "It will put them in good position to compete," particularly in specialized insurance markets.