That issue concerns the question posed by the title of this blog post.  In the past, I have been informally told by the Insurance Commissioner’s Office that the issuance of insurance certificates is considered to be an integral part of the placing and servicing of an insurance policy and thus, the Unfair Practices section of the Georgia Insurance Code, which prohibits charging anything more or less than the stated premium “for insurance”, would prohibit the charging of a fee for issuing an insurance certificate.  But what if an agent was also a licensed counselor? Would the issuance of an insurance certificate be considered an “ancillary service” for which an insurance counselor can charge a fee while also receiving a commission on the same insurance policy? 

My answer to the above questions is that a good argument can be made that an agent who is also a licensed insurance counselor can charge a fee for the issuance of an insurance certificate if he or she follows the requirements of the statute that allows for the charging of a fee for “ancillary services.” (Click here for an article explaining those requirements.) That is because “ancillary services” are defined in that statute as services “in excess of acquisition services”, and it is clear that the issuance of insurance certificates is a service that has nothing to do with the “acquisition” of the underlying insurance policy.  This is an issue that deserves clarification in light of the increasing burden being imposed on agents who have construction industry and other customers who need insurance certificates issued.  As you meet with your legislators and Commissioner Hudgens or members of his staff, I would encourage you to encourage them to address this issue.

GINA has not gotten a lot of attention up to now, but with the coming implementation of the major provisions of the Patient Protection and Affordable Care Act, otherwise known as Obamacare, all covered employers should be aware of it, as it contains a trap for the unwary employer.  That trap is found in how “genetic information” is defined.  As you would expect, such information includes the results of genetic tests on the current or potential employee or his or her family members.  However, it also includes information about a current or potential employee’s family medical history.  So not only can an employer not ask about the results of any genetic tests a current or potential employee may have had, it can not ask any questions about such an employee’s or family member’s medical history (e.g.,  have you ever had the measles). 

That GINA will become a focus of the EEOC with the coming of Obamacare is indicated by the fact that it recently announced its first enforcement action and filed a separate class action against employers for violating it.  The enforcement action also illustrates another trap for the unwary covered employer.  In that action, which resulted in the payment of a $50,000 fine by the employer, the prohibited questions about an employee’s medical history were asked by a third-party medical provider.  Even though the employer was not aware of the fact that such questions were being asked, it was still liable under GINA.  An employer can protect itself against liability for such third-party actions by telling current or potential employees not to answer questions about family medical history or genetic information that may be posed by a third-party medical or other provider.  (Click here for more information on GINA and FAQs for small businesses regarding it).

Agency owners and insurance agents with customers who are covered by GINA should familiarize themselves with its major provisions.  For agents, offering to review the applications used by customers for potential new employees or for health insurance coverage for existing employees to determine if they contain any questions prohibited by GINA would provide be a value added service for existing customers and could be a way to approach potential new customers.

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.

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.

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.) 

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 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.

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. 

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.