Industry News

Four out of five millennials are “optimistic” or “very optimistic” that the insurance industry will evolve to attract the next generation of insurance talent, due to productivity and efficiency gains from technology adoption, according to Vertafore’s second annual “Millennial Revolution” study. PIA examined the research results in an article in PIA Connection.

As a PIA member exclusive benefit with The Omnia Group, we recently created educational webinar tracks for a variety of positions within an agency. The first series which started September 14^th features subjects for those in management roles.

The next webinar in the series titled How to Succeed as a First Time Manager will take place on Wednesday, November 16^th at 2pm EST.

Sign up for one or all of the newly created webinars with Omnia by selecting the track that best suits you.

View the full schedule and descriptions at http://www.omniagroup.com/pia-webinar-registration/ Space is limited so sign up now!

Want to learn more about Omnia as a member benefit?

When first contacting Omnia, PIA members receive a free online, instant assessment or a free custom assessment of an agency employee or prospective employee. Plus, if you buy a package of Omnia Profiles you’ll receive one free.

Get started on your track to success today by calling Carletta Clyatt of The Omnia Group at 800-525-7117, x 1226 or email her at cclyatt@omniagroup.com and be sure to tell her you are a PIA member.

Or visit The Omnia Group website at www.omniagroup.com/pia-members/

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Many people in the insurance industry—especially agents—have a particular affinity for the sport of golf. That’s why the news of the passing of Arnold Palmer, whom many considered to be among the greatest professional golfers of all time, hit hard. Palmer passed away at the age of 87 on September 25 in Pittsburgh.

PIA National Past President Tom Adderhold of Duluth, Georgia was General Chairman of the PGA Championship in 2011. Tom shares some thoughts on the passing of Arnold Palmer:

“The world has lost one of the true legends of the game of golf, business and life. Arnold Palmer and television turned a game into a mega-million enterprise and influenced the lives of so many people, both in golf as well as the non-golfer. Mr. Palmer established a Legacy to live by: ‘Be a person of principle.’ He liked to say, ‘Success depends less on strength of body than upon strength of mind and character. Winning isn’t everything, but wanting it is.’”

“Mr. Palmer always had time for the fans, the kids and the volunteers. He gave back in so many ways, such as hospitals and scholarships. He was a ferocious competitor, but always a gentleman. He personally answered his own mail and autographed millions of items with a signature that is legible. I hope we all in the insurance world will adopt his legacy and strive to be the best agents in servicing our customers and our industry.”

Tom Adderhold

Past President, PIA National

General Chairman of the 2011 PGA Championship

PIA National issued this statement on the draft of the Financial CHOICE Act (H.R. 5983). The bill was introduced on September 9, 2016 by its sponsor, House Financial Services Committee Chairman Jeb Hensarling (R-TX). It then went to a committee markup on September 13, 2016.

In PIA’s statement, we express serious concerns about the creation of a new federal office called the independent insurance advocate, stating that “we remain unconvinced of the need to create a permanent insurance office in the federal bureaucracy.”

Days before he is set to speak in Washington, D.C. at a Property Casualty Insurers Association of America (PCI) roundtable discussion about international insurance regulation, former Connecticut Insurance Commissioner Thomas Leonardi gave an interview which reminded everyone about his well-deserved reputation for outspokenness.

In a wide-ranging interview with Best’s News Service, Leonardi said international regulators need to be more transparent in developing global insurance capital standards and maintain an open dialogue with the carriers they seek to supervise, as well as U.S. state regulators.

Leonardi is a steadfast supporter of state regulation of insurance. He sounded a warning about the Federal Insurance Office (FIO), a part of the U.S. Treasury Department.  FIO and the Treasury are now in negotiations for a covered agreement with European regulators, who have pushed the U.S. to adopt a system of federal insurance regulation similar to theirs. There are concerns that possible outcomes of these covered agreement talks could threaten the U.S. system of state-based insurance regulation.

“Since its creation, the FIO has often taken positions in direct contradiction to the views of the state regulators,” Leonardi said. “We are seeing this happen right now in the context of the negotiations around the covered agreement.”

“FIO’s approach is one of ‘we’ll let you know what happens’ as opposed to having the state regulators, that are ultimately responsible for prudential regulation of insurers in this country, actively at the table,” Leonardi said.

State regulators need to be involved in the process, Leonardi said, adding that he supports the Transparent Insurance Standards Act of 2016 (H.R. 5143), a bill endorsed by PIA that sets objectives for U.S. negotiators regarding international insurance standards, grants Congress 90 days to approve or reject proposed agreements, and mandates a public comment period.

“The state regulators regulate 6,600 insurance companies in this country and that is not going away anytime soon,” Leonardi said. “It’s really important that the Fed and FIO not enter into an agreement that is not supported by the state regulators. Otherwise you have chaos.”

Louisiana Gov. John Bel Edwards says his state had more than $8.7 billion in damage in both insured and uninsured losses from catastrophic flooding in August, and the figure will increase as officials finish assessing damage to roads and other public infrastructure.

A storm that started Aug. 12 dumped as much as two feet of rain in some parts of Louisiana over two days, and the flooding has been described as the worst disaster in the U.S. since Superstorm Sandy struck the East Coast in 2012.

READ: 6 Tips for Flood Survivors on Avoiding Fraud and Scams

Edwards said documented flood damage has affected more than 55,000 houses in Louisiana, and that could double as aid applications and inspections continue. He said initial evaluations show the majority of flooded households were resided in by people with low to moderate incomes, and 20 per cent of flooded homes were resided in by renters.

READ: Agent Tools for Flood Insurance

More than 6,000 businesses flooded, with more than $2.2 billion in damages to buildings, equipment and inventory, Edwards said. He also said there are “conservative estimates” of more than $110 million in damage to agriculture.

Louisiana Insurance Commissioner Jim Donelon says officials have said that the August flood event will be the fourth most costly event for the National Flood Insurance Program (NFIP). Approximately 28,000 claims have been filed with the NFIP, and Donelon expects that number to rise to approximately 30,000.

Aetna Inc. warned U.S. officials more than a month ago that it would pull out of Obamacare’s government-run health insurance markets if antitrust officials attempted to block its $37 billion merger with Humana Inc.

In a July 5 letter to the Justice Department from Chief Executive Officer Mark Bertolini, Aetna said that challenging the merger “would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support” of plans sold under the Affordable Care Act (ACA). Such a challenge would leave the insurer “with no choice but to take actions to steward its financial health.”

READ: In Reversal, Aetna Pulls Back From ACA

“If the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint,” Bertolini wrote. He said that the cost of litigation and debt taken on by Aetna, the need to plan for a breakup fee it would owe Humana, as well as cost savings already anticipated as a result of a successful deal, would all factor into Aetna’s need to pull back.

“By contrast, if the deal proceeds without the diverted time and energy associated with litigation, we would explore how to devote a portion of the additional synergies (which are larger than we had planned for when announcing the deal) to supporting even more public exchange coverage,” Bertolini said in the letter.

An agreement that would provide regulatory equivalency for U.K. and U.S. insurers could be fast-tracked for approval after Britain exits the European Union, according to Michael McRaith, the director of the U.S. Federal Insurance Office. U.S. and European Union officials are currently negotiating such a regulatory agreement, and until the U.K. completes its “Brexit,” the covered agreement would also apply to Britain, which is home to the world’s hub for specialty lines of insurance. A separate agreement covering UK and U.S. insurers probably would be needed once Britain goes through with the split.

“Our view is, until the U.K. withdraws from the EU, that we are dealing with the EU,” McRaith told members of the U.S. Treasury’s Federal Advisory Committee on Insurance, which is comprised of state insurance regulators and consumer groups along with many of world’s leading insurance companies, including Marsh & McLennan Cos., Inc., American International Group Inc., Lloyds of London and Liberty Mutual Co., and other insurance research and analysis groups.

READ: NAIC, Industry Renew Calls for Equivalency

There are concerns that possible outcomes of covered agreement talks between the U.S. Treasury Department and the European Union could threaten the U.S. system of state-based insurance regulation. PIA strongly supports the Transparent Insurance Standards Act of 2016 (H.R. 5143), which enhances Congress’s oversight of international deliberations relating to insurance standards by requiring the U.S. Treasury Department and Federal Reserve to consult with Congress and state insurance regulators before approving any international insurance standards.

A National Association of Insurance Commissioners’ (NAIC) panel has drafted recommendations to reform the National Flood Insurance Program (NFIP) as part of a congressional 2017 reauthorization, including measures designed to aid private flood insurance market growth. The panel has put forward objectives that include support for long-term reauthorization of at least 10 years in order to avoid short-term extensions and program lapses; encouraging greater private market growth; and encouraging mitigation to reduce losses.

The committee draft also supports final passage of H.R. 2901, the Flood Insurance Market Parity and Modernization Act, which clarifies that private flood insurance meets the mandatory purchase requirement. The bill passed the House in an overwhelmingly bipartisan 419-0 vote on April 28.

PIA supports the long-term reauthorization of the NFIP when it comes up for renewal in 2017.  PIA opposes the immediate privatization of the National Flood Insurance Program (NFIP), but supports sensible solutions for encouraging the growth of the private flood insurance market with measures like H.R. 2901.

The Federal Aviation Administration issued a rule in June that will make it easier to use unmanned aircraft systems — better known as drones — for commercial purposes such as aerial photography, equipment inspection and news gathering.

Insuring your drone, however, is anything but simple. Drones pose myriad risks, including damage to the drone itself, to people or property hit by a drone and invasion of privacy claims.

READ: The Latest on Drone Regulations

Homeowners or renters policies might — or might not — cover some or all of these risks if you’re flying a drone for fun, but it won’t cover business use. See PIA National’s one-page issue sheet, Hobbyist Drones (PIA member login required).

If you use a drone to make money, your general business insurance might cover the drone itself, but you usually need a specific aviation-liability policy to cover damage it inflicts on people or property. As with any type of insurance, you must read the exclusions carefully, and if you don’t understand them, talk to your agent.

PIA National is pleased to announce that National General Insurance has joined The PIA Partnership. “We are extremely pleased that National General Insurance, a distinguished company with a solid track record of supporting the American agency system, has joined The PIA Partnership,” said Robert W. Hansen, Jr., PIA National President. “Their participation demonstrates National General’s ongoing commitment to the continuing success of professional independent agents across the country.”

“National General is excited and honored to be part of an organization as critical to our industry as PIA and we expect our membership in The PIA Partnership will further the great work already accomplished for PIA members and National General agencies and brokerages,” says Rick Pierce, Senior Vice President of Independent Agent Development for National General Insurance.

Current PIA Partnership companies include:  Central Insurance Company; Encompass Insurance; Erie Insurance; Liberty Mutual Insurance; MetLife Auto & Home; National General Insurance; Nationwide Independent (formerly Harleysville Insurance);  Progressive Insurance; Selective Insurance Group; State Auto Insurance Companies;  The Hanover Insurance Group; The Hartford; and The Motorists Insurance Group.

Pennsylvania insurance agent Don Ruschak still goes to work every day at the agency he created in 1957. The 85-year-old who opened Ruschak Associates Insurance & Real Estate nearly 60 years ago still wakes up each morning at 6AM and heads into the office. Even though Ruschak turned over his business to his sons years ago, he says he just can’t keep away.

“I love helping people, especially those who are going through a difficult time,” Ruschak told the Herald-Standard, which covers local news in Ruschak’s Charleroi, Pennsylvania hometown. “That’s what attracted me to the insurance business initially, and that’s what keeps me going today.”

“Age doesn’t hold me back,” he said. “I still go out and inspect homes, and I help with appraisals. Working helps me to stay youthful. I tell other seniors to keep working as long as they can. The longer you work, the better you feel.”

WASHINGTON — The Executive Board of NetVU, the Network of Vertafore Users, has voted to formally support the position of the National Association of Professional Insurance Agents (PIA) regarding the Buy Button as conceived by PIA.

The Buy Button is the ability for agents to bind a policy in a once-and-done fashion, in real time in their agency systems, from among their appointed carriers, regardless of the point of engagement or policy sale. The technology exists to do this, but has yet to be used in this manner.

Currently, agents must leave their systems, or bridge to the carrier system, to bind a policy. The buy button will empower agents to bind coverage in real time for prospects or clients who call on the phone, walk into the agency, meet, or visit online.

“The goal of NetVU’s formal support of this initiative is to be able to provide consistent messaging to our members, carriers and vendors in support of making buy button functionality a reality for independent agents,” said NetVU Chairman of the Board Keith Savino.

In January 2016, PIA National initiated an industry-wide dialogue on the concept of independent agents offering real time binding of insurance policies, which could include a level of purchasing capability on their websites. PIA convened a meeting among all stakeholders—carriers, agents and technology vendors—held at the headquarters of ACORD, the Association for Cooperative Operations Research and Development, in Pearl River, New York, to discuss the topic.

In March 2016, PIA adopted a position in support of the buy button concept. That position was then endorsed by NetVU.

“This is all about empowering agents, carriers and consumers,” said PIA National Executive Vice President & CEO Mike Becker. “The buy button will create new opportunities to reach markets that currently go untapped for most agents. It will expand choices for consumers and build business for our carriers. PIA thanks our colleagues at NetVU for their support of PIA’s initiative.”

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

The recent flooding in Houston could be considered a 1-in-100-year event, but that label is a misnomer in that it can mislead people into thinking that such flooding literally happens once every 100 years and that they will thus be safe for 99 years out of 100. The U.S. government has used the label to suggest that a flood of that severity has a 1 percent chance of happening in any given year, not that it could happen only once per century. However, the label does not take into account other conditions that can alter those probabilities, such as climate change, El Niño, and La Niña.

“That’s why the 100-year event is such a moving target, especially in an urban environment. Someone builds a couple of parking lots, and you just turned a 100-year event into a 70-year event because of the impervious surfaces,” says Chuck Watson, director of research and development at Enki Research. Weather Research Center founder Jill Hasling suggests that residents of places like Houston that get more than one flood per year buy flood insurance. “If you are not in the flood zone, buy it anyway; it will just be cheaper,” she said.

U.S. Justice Department Assistant Attorney General for National Security John Carlin says Internet-connected and driverless cars could be targets for hackers, including hostile nations and terrorists, and he urged the automotive industry to ensure that such vehicles have built-in cybersecurity protection. The market for Internet-connected cars could reach a value of $42 billion by 2025, with more than 220 million vehicles on the roads. Toyota Motor Corp., Google, Ford Motor Co., and Baidu Inc. intend to introduce driverless cars in as soon as five years.

“There is no Internet-connected system where you can build a wall that’s high enough or deep enough to keep a dedicated nation-state adversary or a sophisticated criminal group out of the system,” said Carlin.

Questions about the auto industry’s responsiveness were raised last year when Fiat Chrysler waited 18 months to tell federal safety regulators about a security flaw in radios being installed in more than a million vehicles that security researchers exploited in July, seizing control of a Jeep just to show it could be done. The episode led to the recall of almost 1.5 million vehicles — the first auto recall prompted by cybersecurity concerns.

PIA recently commented on the National Association of Insurance Commissioners’ (NAIC) Cybersecurity Task Force’s Preliminary Working and Discussion Draft of its Insurance Data Security Model Law. PIA’s comments expressed reservations about the model law approach generally and expressed concern about the need for a model law that would be passed with the expectation of adoption in some form in each state, in light of the fact that state laws on this subject already exist in 47 jurisdictions. PIA is also aware of potential conflicts between the Preliminary Draft, existing state law, and existing federal law. PIA continues to monitor this important issue and intends to provide verbal feedback on the Preliminary Draft at the forthcoming NAIC National Meeting in New Orleans.

Is the Internet rising up in the small commercial marketplace—taking the place of agents? No.

What is actually true is that small business owners strongly prefer independent insurance agents as they make choices in today’s online world. But at the same time agents need to be more engaged online—using the Internet to demonstrate and reinforce the value they provide.

These are among the findings of recent research by The PIA Partnership, PIA’s national agency-company council. Read all about “Small Business Insurance & The Internet—The Voice of the Commercial Lines Customer” in this in-depth article in Rough Notes magazine.