Suprement Court Upholds Obamacare

As you have probably already heard by now, the United States Supreme Court issued its long-awaited decision on the constitutionality of the Patient Protection and Affordable Care Act, commonly known as “Obamacare”, earlier today.  It was a 5-4 decision written in large part by Chief Justice Roberts.  While the four dissenting justices all agreed on why the law was unconstitutional, the five judges who voted to uphold the law had varying reasons for doing so.  The opinion is very long, 193 pages, and can be found at http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf.

The bottom line for those who sell health insurance is that, for now, the requirement that almost all individuals must have health insurance coverage in place by 2014 or pay a penalty still stands, as do all the other provisions of the law regarding the sale of health insurance and how much of the premiums paid must be used for patient care.  I will continue to provide you with updates on the effect of the Supreme Court’s decision, as they become known.

Beware the Dangers of Internet & Social Media Marketing

A client of mine recently told me that it had received a demand for the payment of thousands of dollars from an attorney in California.  The basis for the demand was the client’s use of a photograph that it had copied from another website and put on its website.  Under general copyright law, the person who originally took the photograph is its owner and as such, has the right to forbid its use by anyone else for any purpose, with certain limited exceptions.  The owner can demand to be paid damages for the unauthorized use of their work.

The same thing is true for any written content that is found on a website, a Facebook page, a twitter post, or a LinkedIn profile.  Although in this digital world one has access to all kinds of information, you are not free to use that information without the permission of the person who created it.  In addition to having to worry about wrongfully using another’s work, any original content you may post on your agency’s website, Facebook page, twitter account, or LinkedIn profile may expose the agency to claims for defamation, libel, invasion of privacy, and other similar causes of action by persons who may feel they have been hurt in some way by that content.

A business that is engaged in marketing its products and services over the internet has essentially become a publisher, with all the liability risks that entails.  The June issue of IA Magazine contains a good article on these liability exposures and what can be done to protect against them.  That article also makes the point that insurance agents can provide a valuable service to their customers and generate some revenue for their agencies by advising their customers of these exposures and what can be done to minimize and protect against them.  You will notice that I have not included a link to that magazine article due to my concern over the possibility of a claim of copyright infringement, since it is a proprietary magazine that is available only to members of the IIABA.  To find out more about such copyright issues, click here.

Georgia’s E-Verify Law

July 1, 2012 is the effective date for Georgia’s E-Verify Law for all employers in the state with 100 or more employees.  As of that date, a city or county government can not issue or renew a business license or any other governmental certificate or permit required for a particular business to lawfully conduct its activities unless the business first presents to the local government entity an affidavit in the form approved by the Georgia Attorney General’s Office that states the business is authorized to and does use the federal work authorization program.   Those agents with customers who satisfy the above employee threshold should consider reminding their customers of the applicability of this law.  Just one more value added service that could prevent some red faces when it comes time for the customer to apply for its annual business license or other governmental permit.

The date for determining whether a business has 100 or more employees and thus, will be subject to this law on and after July 1, 2012 is January 1, 2012 and January 1 of each year thereafter.  Only employees who are normally expected to work 35 or more hours per week are to be counted in determining whether the 100 employee threshold has been met.  As of July 1, 2013, Georgia’s E-Verify Law will apply to all employers in the state with more than 10 employees.  For more information on this law and the penalties for not complying with it, click here.

New Recovery Benefit for Damage to Buildings

The Georgia Supreme Court recently announced that its 2001 decision that permitted the owners of motor vehicles to recover for the loss in value of a motor vehicle that had been damaged, in addition to the cost of repairing that damage, also applies to insurance policies covering damage to buildings.  Under this new holding, real property owners whose buildings are damaged by a covered casualty may be able to recover for any reduction in the value of the building “resulting from stigma due to its having been physically damaged”, in addition to recovering the cost to repair such damage.  The Supreme Court held that whether recovery for any such reduction in value was available would depend on the language of the specific insurance policy in question.  Unfortunately, the court did not decide whether a recovery for reduction in value of the building in question was available in this case.  What insurance policy language will permit such a recovery will be decided in later cases.  As they are decided, I will let you know what the courts have to say.

Agents should be aware of this new recovery benefit and advise their insureds of its availability where a claim for reduction in value of a damaged building after it was repaired could be made.  The failure to do so could expose an agent to an E&O claim by the insured.

Service Fees and Insurance Certificates

In speaking with Steve Manders of the Insurance Commissioner’s Office last week about insurance certificate issues, the subject of whether a fee could be charged by an agent for the issuance of such certificates came up.  Mr. Manders was of the opinion that since the issuance of insurance certificates was part of the normal servicing process for insurance policies, no separate fee for their issuance could be charged unless there was an applicable rate filing, rating plan, or rating system filed with and approved by the Commissioner that permitted the charging of such a fee.  At this time, he was not aware of any such approved filing. 

Mr. Manders was relying on the provision of the Georgia Insurance Code that prohibits charging anything more or less “for insurance” than the premium specified in the policy in question or in any rate filing, rating plan, or rating system filed with and approved by the Commissioner.  In his view, that provision prohibits the charging of anything in addition to such premium for services that are normally provided in connection with obtaining and servicing the insurance policy in question.   

Mr. Manders also informed me that a regulation regarding insurance certificates will soon be issued by the Commissioner’s Office.  In part, it will require the delivery of a copy of all issued insurance certificates to the insurance company that issued the underlying policy, so the company will know what has been issued to its insureds by its agents.  Stay tuned for further updates on this new regulation.

Commissioner Targets Insurance Fraud

At the annual convention of the Independent Insurance Agents of Georgia last weekend, Insurance Commissioner Ralph Hudgens announced that a major focus of his office has been and will continue to be insurance fraud.  Due to additional funding obtained last year, the Insurance Commissioner’s Office has hired 7 new investigators and 2 new attorneys for its Enforcement Division.  The commissioner described a sting operation that his office conducted in conjunction with a local Atlanta television station aimed at insurance fraud involving roofing contractors, which ended with the arrest of 5 contractors, as an example of his office’s increased focus on this criminal activity.

Commissioner Hudgens also encouraged those in attendance to report any instances of misconduct by agents that may come to their attention. He pledged that “something will be done” in response to any such reports, as well as those related to insurance fraud.

New Counselor’s License Available

An announcement of importance to all Georgia insurance agents who sell group life and health insurance policies was made at the annual convention for the Independent Insurance Agents of Georgia last weekend.  Tammy Holmes, who heads the Agent’s Licensing Division of the Georgia Insurance Commissioner’s Office, informed the annual meeting that, effective July 1, 2012, a limited group life and health counselor’s license will be available.  The holders of such a license will be able to charge a fee for their services in addition to receiving a commission on all group life and health policies they may sell.  This limited license will be available to all insurance agents who have been licensed for the sale of group life and health insurance policies for 5 years or more, without having to take an examination.  Those who have not held such a license for that period of time will have to take an examination.  The application for such a license should be available in the near future on the agents licensing page of the Insurance Commissioner’s website, click here.

The Insurance Commissioner’s Office is taking this step in light of the significant reductions in commissions for group life and health policies that have occurred as a result of the new health care legislation enacted at the federal level.  However, please note that the same requirements that the holder of a counselor’s license must meet to obtain both a fee and a commission for the sale of the same commercial lines property and casualty insurance policy will apply to the sale of group life and health insurance policies.  For a general description of those requirements, click here.

Take Advantage of the new Restrictive Covenant Law

Most people have heard that a new law governing restrictive covenants in Georgia went into effect in 2011, but many employers have failed to take advantage of the benefits provided them under that law.  Perhaps the most far reaching change effected by the new law is the ability of a judge to rewrite a covenant that would otherwise be unenforceable to make it enforceable.  No longer do employers have to worry about making sure every word of their restrictive covenants complies exactly with the duties being performed by their employees.  The drafting and enforcement of true non-compete covenants is now also much easier.

But to take advantage of the new law’s benefits, a new restrictive covenant agreement must be entered into after the effective date of the law.  Such agreements that were entered into before that date are still subject to the sometimes nonsensical and draconian requirements of the old law.  Click here for an in depth article on the changes made by the new law.

All insurance agency owners who have not yet taken advantage of the new law’s benefits,  should seriously consider having their producers and all other employees who have contact with customers or access to confidential information sign new restrictive covenant agreements that incorporate the changes made by the new law.

New Agent Licensing Bill

Days before the annual Big “I” Legislative Conference, U.S. Senators Jon Tester (D-Montana) and Mike Johanns (R-Nebraska), introduced legislation to reform the agent licensing system,  The “National Association of Registered Agents and Brokers Reform Act of 2012”, commonly referred to as “NARAB II”, provides for a uniform system for reciprocal licensing of non-resident insurance agents and brokers.  Its introduction follows the introduction of similar legislation in the U.S. House of Representatives by Rep. Randy Neugebauer (R-Texas) and Georgia’s own David Scott.  The NAIC has agreed to endorse the Senate bill.  To review a copy of that bill, click here.

Stay tuned for futher developments regarding this important legislation.

Increase Your Compensation

In these difficult economic times, agents need to constantly be on the look out for ways to increase the compensation they get from every policy they sell.  For commercial risks, the Georgia Insurance Code provides a way to get both a commission from the insurance company and a fee from the insured.  But to do so, an agent must hold a counselor’s license in addition to a property and casualty license and must obtain the consent of the insured after making certain written disclosures to the insured.  If you are interested in finding out more about how you can obtain both a commission and fee for the placement of a commercial lines policy, click here.

I am interested in hearing from agents who hold a counselor’s license about their experiences with following the requirements imposed by the Insurance Code.  Please let me and the readers of this blog who would like to increase their compensation know how difficult you have found it to follow those requirements and perhaps more importantly, what has been the reaction of your customers when approached about paying a fee for your services.