I just learned that the presentation slides for the webinar that was held a week ago Tuesday by the Center for Consumer Information & Insurance Oversight are now available online. That webinar included a general overview of the Patient Protection and Affordable Care Act, otherwise known as Obamacare, and focused on the insurance exchanges that are to be created later this year under that Act and the role that CCIIO sees insurance agents and brokers playing with respect to those exchanges. The presentation slides for the webinar contain a lot of information about the portions of Obamacare that will take effect on January 1, 2014 and the role that agents and brokers can play in helping both individuals and small business owners participate in the insurance exchanges that are to be created by that date. Although the audio portion of the webinar was not recorded for unspecified “legal reasons”, the slides seem to be pretty much self-explanatory. (Click here to view the slides.)
As mentioned in a previous blog post about the webinar, the CCIIO has also recently issued a guidance memorandum that specifically addresses the role that agents and brokers can play with respect to the insurance exchanges that are to be created later this year. (Click here for that post which contains a link to the guidance memorandum.) It appears that business opportunities will be available for those agents and brokers willing to take the time to familiarize themselves with those insurance exchanges and how they will operate. The website for the vendor that is assisting CCIIO in its efforts to provide technical assistance regarding the insurance exchange and premium stabilization components of Obamacare contains many resources for those who may be interested in learning more about those subjects and a calendar of upcoming educational events. Click here for an article in the IA Magazine that explains how to gain access to those resources.
A belated well done is due to J. Smith Lanier & Co. for its ranking among the top 5 midsize companies to work for in Georgia. This ranking was done by the Atlanta Journal Constitution and the results were published in its April 28, 2013 edition. Hundreds of companies were nominated and the final rankings were based on surveys of the employees of the companies that had been selected from those nominations and agreed to participate in the surveys. A total of 100 companies in three categories (large, midsize, and small) were recognized by the AJC as being the best places to work in Georgia.
J. Smith Lanier & Co. was the only insurance agency that made it into the AJC’s rankings and there were no insurance companies in the top 100 workplaces. However, Infinity Insurance Company did receive an honorable mention. In addition to being ranked the 4th best midsize company to work for, J. Smith Lanier was recognized as the top company of all 100 when it came to ethics. An employee was quoted as saying, “This company has always stood for the highest values and ethical treatment of clients and vendors.” This is high praise for an agency that has been around for over 140 years.
In the same section of the AJC that featured the top 100 places to work in Georgia, there was a ranking of 200 jobs from best to worst that had been compiled by CareerCast.com. The criteria used to rank those jobs included the physical and emotional environment, income growth potential, employment outlook, and level of stress of each job. To my surprise, the top rated job was that of actuary. Insurance agent was ranked number 78, so it appears the insurance industry is a good place to find a job. Unfortunately for the AJC, the lowest ranked job was that of newspaper reporter. (Click here for more information on the job rankings.) In case you were wondering, attorney was ranked number 117, right below funeral director and above ironworker.
As has previously been reported in the IIAG newsletter, the requirement that the workers compensation Form WC-10 be notarized has been eliminated by the State Board of Worker’s Compensation and a new Form WC-10 adopted, effective on May 1, 2013. (Click here for my post on the problems presented by the notarization requirement.) Today, the Insurance Commissioner issued a Bulletin acknowledging that fact and formally withdrawing its Bulletin from late 2012 in which the use of the new form with the notarization requirement was mandated. The latest Bulletin states that either version of the Form WC-10 can be used and “should be recognized by the carriers at audit.” (Click here to see a copy of the Bulletin and a link to the new WC-10 form.)
I recently came across a checklist for reducing worker’s compensation costs that has been developed by Integrity Insurance. It’s a simple two page form that an agent could adapt for their own use in dealing with their existing or potential workers compensation customers. Providing such customers with such a checklist can be a value added service for agents, especially since the form encourages the use of an independent insurance agent to assist the customer with evaluating the factors and implementing the suggested actions identified in the checklist. (Click here for a copy of the checklist.)
CCIIO is the acronym for the Center for Consumer Information & Insurance Oversight, which is the government agency charged with overseeing the implementation of the insurance exchanges that will be a central feature of the Patient Protection and Affordable Care Act, otherwise known as Obamacare. CCIIO has recently issued a guidance memorandum on the role that it expects insurance agents and brokers to play in connection with the insurance exchanges. In that memorandum, CCIIO states that agents and brokers will be able to assist consumers and businesses in obtaining insurance through the exchanges by either working through the websites of insurance companies or directly on the websites of the exchanges. In particular, CCIIO thinks that agents and brokers “will play a critical role” in helping employers and employees obtain coverage through the Small Business Health Options Programs that will be created.
In states like Georgia that have chosen not to create their own state health insurance exchange, agents and brokers will have to register with the Centers for Medicare and Medicaid Services (“CMS”), which is the parent agency of CCIIO. CMS anticipates being able to start registering agents and brokers online sometime this summer. The registration process will involve participating in an online training program. After the registration process is completed, the agent or broker will be provided with a user ID number that will be necessary in order for the agent or broker to be paid for their services in assisting employers and employees in obtaining and maintaining insurance coverage through the insurance exchange. The federally created or assisted insurance exchanges will not determine the amount of such compensation. Instead, the insurance companies who participate in the exchanges will continue to determine the amount of such compensation, which they will pay. However, as of now, that compensation must be the same as the company pays for issuing insurance coverage outside of the insurance exchanges. Click here for the complete guidance document which contains answers to many frequently asked questions.
For those interested in learning more about the role that CCIIO sees agents and brokers playing with respect to the insurance exchanges, there is a webinar on this subject tomorrow, May 14, 2013, beginning at 1 pm. Apparently, agents and brokers have had some difficulty in registering for this seminar, so IIABA has provided detailed instructions for doing so. Click here to see those instructions.
Regardless of how you may feel about Obamacare, it appears that the federal government anticipates that there will be a need for agents and brokers in implementing it and recognizes that they should be paid for their services. Given the amount of confusion there is likely to be, there would seem to be a great need on the part of consumers and businesses for knowledgeable assistance in determining what their best course of action would be. Providing such assistance has traditionally been the role filled by health insurance agents and brokers, so it appears there will be life after Obamacare for them after all.
The Office of the Insurance Commissioner has recently announced the adoption of a new regulation governing the issuance of insurance certificates. (Click here for a complete copy of the regulation.) That regulation will be effective on May 22, 2013. It essentially follows the provisions of the statute on insurance certificates that was adopted by the Georgia legislature in 2011, fleshing out some of its requirements, and imposes some new requirements on insurers regarding the procedures to be followed by their agents when issuing such certificates.
The new regulation specifies that only insurers may file a request with the Insurance Commissioner’s Office to approve a form insurance certificate and it permits the use of expired ACORD and ISO forms, as long as ACORD and ISO permit their use “during periods of transition.” Of most importance for insurance agents are the new requirements imposed on insurers, the type of references that may be made in an insurance certificate to other contracts, and how agents may respond to requests for confirmation that the insurance policy in question satisfies a contractual requirement.
The new regulation requires insurers to provide ”written instructions” to their agents ”clearly outlining the insurer’s procedures and each party’s responsibilities for issuing and servicing certificates” and requires these procedures to address three subjects: (i) the issuance of a notice of cancellation to certificate holders who have the right to receive such notice under a statute or the underlying insurance policy, (ii) the retention of copies of all certificates issued by agents, and (iii) the monitoring of certificates that have been issued to ensure compliance with the insurer’s procedures and any applicable law or regulation.
The new regulation states that an insurance certificate may contain a reference to or contract number for a “construction or service contract for identification purposes only” and provides that this may include a “project number, project name, project description, or a general description of work to be performed.” However, “nothing in the certificate can refer to any language or contents in the construction or service contracts.”
The new regulation specifically states that an insurer or agent can not be required to issue an opinion letter or other document in addition to or in lieu of an insurance certificate. This clarifies the statutory language on this subject by establishing a bright line rule that agents can now refer to in the event they are asked to do something beyond the mere issuance of an insurance certificate. When that something consists of a request that an agent state whether an insurance policy satisfies a particular contract provision, the regulation states that an insurer or agent “may provide the certificate holder with the certificate and an actual copy of the policy, insurance binder, or relevant policy provision to demonstrate contractual compliance.”
Finally, the new regulation limits the use of insurance certificates that contain only a statement that the certificate does not amend or otherwise change the provisions of the underlying insurance policy and does not also contain a statement that it is being provided only for informational purposes. Such certificates must specify the purposes for which they can be used and can only be used for those purposes. Examples of such purposes found in the regulation are “mortgagee requirements or lending transactions.” Any person requiring or using such certificates for an improper purpose can be fined up to $5,000 by the Insurance Commissioner and an offending agent’s license could be suspended or revoked.
Ten days or so ago, 22 members of the IIAG spent time in Washington, D.C. speaking to our Representatives and Senators about issues that are of importance to Georgia insurance agents. They were part of the annual IIABA National Legislative Conference. Led by the IIAG’s President Bob Monk and Executive Director Aubie Knight these 22 agents listened to speeches and other presentations by important members of Congress and spent time with almost all of Georgia’s Congressmen. Their conversations with Georgia’s Congressmen focused on four main topics: the National Association of Registered Agents and Brokers Reform Act of 2013 (“NARAB II”), the Terrorism Risk Insurance Act (“TRIA”), crop insurance, and tax reform.
NARAB II was refiled in March of this year in both the United States House of Representatives and Senate. It had been filed in 2012 (click here for my post about its filing), but because final passage of the Act did not occur before the end of that Congressional session, it had to be refiled this year. Georgia’s David Scott was again a co-sponsor of this legislation in the U.S. House. It seeks to streamline the process of obtaining licenses by non-resident agents and has passed the U.S. House on two prior occasions, only to fail in the Senate. Mr. Knight reports that there are positive signs for its passage by both the House and Senate this time around. For more information on NARAB II, click here.
TRIA was originally passed in 2002 in response to the effect of the events of 9/11 on the insurance markets and was extended in 2006 and again in 2007. It is now set to expire on December 31, 2014. Under TRIA, the federal government acts as the insurer of last resort for losses caused by acts of terrorism. There are significant monetary thresholds that have to be met before the federal government would be responsible for any such losses and if those coverage triggers are met, the federal government can impose surcharges on all commercial insurance policies to help recoup any payments it may have to make. Mr. Knight reports some opposition to the extension of this Act by those who are philosophically opposed to government intervention in support of private businesses. The extension of this Act is a legislative priority for the IIABA and it has created a Terrorism Resource Page where both historical and the most recent information about TRIA can be found. Mr. Knight is not hopeful that anything will be done by Congress until sometime next year and is concerned about possible disruptions in the marketplace as a result.
As far as crop insurance was concerned, Mr. Knight reports that President Bob Monk carried the ball, as he was the only member of the group who had ever written such insurance policies. The focus of the discussion about crop insurance was on the role that the federal government plays in that program, which is similar to but not as significant as the role it plays under TRIA. All the members of Georgia’s Congressional delegation were receptive to the points made by the group’s members about the need for tax reform that benefits small business owners like the members of IIAG.
Mr. Knight encourages all IIAG members to participate in this annual lobbying effort, at least once. Making your voice heard is an important part of the legislative process and the more voices that our Senators and Representatives hear the more likely they are to pay attention to issues that are important to insurance agents.
The Trade Adjustment Assistance Extension Act of 2011 contains a little known provision that can have a significant impact on insurance agencies and all other employers who are subject to the unemployment compensation tax. Beginning on October 21, 2013, a state must prohibit an employer whose failure to make a timely or adequate response to a claim for unemployment benefits results in the payment of such benefits to an employee who was not entitled to receive them from being relieved of liability for the payment of such benefits, if the state agency responsible for the payment of such benefits determines that the employer has “established a pattern of failing to respond timely or adequately to such requests.” The law gives a state agency the ability to adopt stricter standards, including the denial of relief from liability for such benefit payments in the first instance.
As most employers over the past few years are keenly aware, the amount of unemployment compensation benefits paid to former employees is one factor used to determine the rate of unemployment compensation tax that will be payable by that employer in the future. At this time, the Georgia unemployment compensation law only states that an employer’s account “may be charged” for the payment of such benefits ”due to the employer’s failure to respond in a timely manner to the notice of claim filing.” That will become mandatory on and after October 21, 2013, if the employer has engaged in a pattern of such conduct.
Such a pattern will exist if an employer makes a habit of not responding to such claims when they are justified and then fails to respond to one that turns out not to be justified. This coming change should be communicated to all the customers of an agency for whom it writes unemployment compensation insurance. They should be advised to respond timely and adequately to all claims for unemployment compensation, whether justified or not. One more way that an agency can provide value added service to its customers.
Worker’s compensation insurance was involved in another trap for the unwary that was illustrated by a call I recently received on the Free Legal Service Program that I operate on behalf of IIAG (click here for more information on this program). The agent who called me had issued an insurance certificate for a worker’s compensation policy that her agency had written for a contractor. Unfortunately, unbeknownst to the agent, the insurance company had canceled the policy on a date before the date the insurance certificate was issued. The agent had assumed that the policy was still in force because she had not received notice of its cancellation from the insurance company and her customer had said nothing even though it had received the cancellation notice over two months prior to the date the insurance certificate was issued. Now the agent was looking at an E&O claim from the contractor to which the certificate was issued, which had to pay more premium to its worker’s compensation insurance carrier since the agency’s customer did not actually have such insurance.
The moral of the above story is always check to make sure an insurance policy is in force before issuing an insurance certificate for it. Do not assume that the insured will tell you a policy has been canceled or that you will always receive a mailed notice of cancellation from the insurance company. Performing this check can be made easier if the agency has real time and download communication capabilities with its insurance companies. Click here for a recent post on this subject.
This month’s cover story for the IA Magazine focuses on the various ways in which successful agencies are paying their producers. According to a recent study by Reagan Consulting, for the most part, there was little or no correlation between agency growth and the use of many standard producer compensation models (e.g., paying less for renewals than existing business, stair stepping of rates for new business produced). Instead, the agencies that were experiencing above average growth set high performance standards for their producers and rewarded those producers who met them and penalized those who did not.
One of the agencies discussed in the article was Pritchard and Jerden, which is based in Atlanta. Its producer compensation model involves establishing annual goals for both retaining business and writing new business. Those producers who meet their goals are paid at the top commission rates and earn an annual bonus based on the amount of growth they produced. As an incentive to meet their new business goals, at the beginning of each year, five percentage points is withheld from renewal commissions for all the producers. Once a producer meets his or her minimum requirements for new business, the amount withheld is paid in a lump sum. Producers who fail to meet minimum growth requirements two years in a row have to meet those requirements for the next two years consecutively to regain their original renewal rates. For more examples of successful producer compensation models, click here to read the full article.
How producers are compensated has been identified as an important factor in attracting young people to the insurance industry. In a recent post, Jim Schubert of Southern States Insurance in Douglasville discusses six ways to increase the recruitment of young people and to retain them once they are recruited. One way is to provide appropriate compensation incentives for the conduct you want from them. His agency pays the same commission rates for new and renewal business as a way to encourage its producers to establish strong relationships with their existing customers and thereby, make it easier to fend off attempts by other producers to take their business. He also creates competitions among the producers with both large and small rewards for the winners. His final piece of advice is perhaps the best and can be applied to both young and established producers, “Above all find out what really motivates your young agents. Sometimes, its just good ole fashioned recognition.” (Click here to read the rest of the ways to increase the recruitment and retention of young producers.)
I am interested to hear from my readers about your experiences in determining what works best in compensating producers. The IA Magazine article makes it clear that no one size fits all in this area. Let us know what works best for you.
Last week, I posted an article about the second annual Real Time Day, which is tomorrow, April 9, and offers various web-based resources for agencies to learn about the benefits of having real time and download communication capabilities with their insurance markets. Adding these capabilities will add value to an insurance agency by enabling it to process applications and claims faster and more efficiently. (Click here to read the full article.) A week from tomorrow, on April 16, will be the sixth annual National Healthcare Decisions Day, which at first blush would not seem to be very relevant to a property and casualty insurance agency or agent.
However, for personal lines agencies and agents, National Healthcare Decisions Day offers a way to provide a value added service to your customers and to show them that your are concerned about more than just selling them an insurance policy. Its purpose is to raise awareness in the general population of the need to plan in advance for health care decisions that may have to be made in the future. The coalition of national, state, and community organizations behind this event seeks to ensure that “all adults with decision-making capacity in the United States have the information and opportunity to communicate and document their healthcare decisions.”
Even after the prolonged agony of the Terri Schiavo case, which demonstrated the need for advance care planning (click here if you need a refresher), fewer than half of adult Americans have executed an advance care planning document in which they express their wishes about the health care treatment they are to receive in the event they are diagnosed with a terminal condition or find themselves in a coma from which there is no reasonable hope of recovery and thereby, become unable to communicate their wishes to their treating physicians. The website for this event has an extensive list of resources that can be used to educate your customers about this issue and provide them with various types of advance care planning documents, generically referred to as Advance Directives. As it turns out, the name for this type of document that has been adopted by the Georgia General Assembly is the Georgia Advance Directive for Health Care. A copy of it and an explanation of its provisions can be found here.
If you are looking for a reason to contact your personal lines clients or even your commercial lines clients to remind them of you and the services you can provide, National Healthcare Decisions Day provides a good reason and one that will indicate to your customers that you have their best interests at heart, not just the sale of insurance to them. Of course, if your agency also sells life and health insurance, this would be a good time to remind its personal and even commercial lines clients of that fact.
The past two weeks, I have posted articles about how an insurance agency and agent can use technology to streamline their business operations and better connect with today’s insurance consumer. (Click here and here for the two articles.) Another aspect of the use of technology by insurance agencies and agents involves communications with their insurance company markets. The Real Time/Download Campaign, an industry group composed of agencies, brokers, companies, vendors, and agent associations, is sponsoring its second annual Real Time Day on April 9, 2013. It’s goal is to expose agencies who do not already have real time and download communication capabilities with their insurance markets to the benefits of those capabilities. Those benefits include the use of a single consistent system to communicate with multiple insurance companies and the ability to process policy transactions and manage claims from the customer’s file.
On Real Time Day, among other things, there will be web broadcasts featuring discussions with real time and download users and technology consultants, webinars and education events sponsored by agency management system user groups, and presentations by insurance companies and vendors on using real time tools. Participants will be able to see how these capabilities can save them time and money in the conduct of their everyday business activities. Click here to go to the Campaign’s Real Time Day website for more information on the events that will be taking place on April 9. For those of you who would like to get some information now on how real time and download capabilities can save time and money, click here to go to the guide that has been created by the Campaign to explain the benefits of those capabilities and the actions that need to be taken to acquire and implement them.
Those readers who have already implemented one or both of these capabilities, please leave a comment to tell us your experience with them and any advice you may have for agencies thinking about implementing them.