What Your Agency Can Do to Prevent Identity Theft

November/December 2006
GEICO Pulls
Misleading Ads
Page 3
Home Depot Moves Beyond
Hammers and Nails
Page 12
Big “I Files Reply
Brief in Zurich Case
Page 16
What Your Agency Can Do to
Prevent Identity Theft
November 23-24, 2006
ACT’s latest report provides tips on safeguarding customers’ information.
November 30, 2006
According to the Federal Trade Commission, there are approximately 10 million identity
thefts annually in the United States, and these thefts cost businesses and consumers an
estimated $53 billion each year. Data portability, hackers, dishonest employees and
security breeches have all led to the alarming amount of identity thefts, but there are
steps agents can take to ensure their customers’ information is protected.
According to the ACT report “Protecting Agency Customer Information from Identity
Theft,” agents should take the following steps to help prevent the theft of valuable and
private information:
Common-Sense Precautions to Mitigate Security Threats
• No more passwords on sticky notes. Passwords should be kept hidden and private.
Agents should note that their carrier agreements are likely to make them responsible if
an unauthorized party gains access to the carrier’s systems using an agency password.
• Escort your visitors throughout the office. Know your night-time cleaning crew.
• Desktops should be password protected and employees should log off of their system
when they go to lunch, attend a meeting or leave in the evening.
• Secure the office when leaving in the evening.
• Keep non-public customer and policy information off of PCs, portable devices and
removable media. Encrypt any of this non-public electronic information that leaves the
agency office. (See sections below for more details.)
• Encrypt back-ups and keep them in a secure place.
• Determine if it’s necessary to keep particular types of sensitive, personal information in
a system or if it can be pulled from a third-party source when needed.
• Consider housing systems and/or back-ups in a hosted data center that has 24-hour
security, the latest security technologies, procedures and data traffic monitoring and
perhaps even an armed guard.
Key Considerations in Setting-Up and Implementing an Agency Security Policy
A successful security strategy requires an agency to take proactive steps and implement
multiple layers of protection. No single security measure is adequate by itself. Some of
the major steps for an agency to consider taking include:
• Thinking through and then implementing a security policy based upon an assessment of
the specific risks an agency faces.
• Developing and implementing written security procedures.
• Employee education and training on all of the security risks, the security policy and the
procedures.
• Conducting security audits by outside experts periodically to identify security “holes.”
• Taking specific steps to secure the physical perimeter of the agency, escorting any
guests in the office and prohibiting guests from accessing agency systems while in the
office.
• Implementing password-protected firewalls that protect the perimeter of systems from
intrusion by unauthorized persons and viruses.
• Diligently managing passwords to ensure that only authorized people gain access to a
system, identities are authenticated and terminated employees’ access is immediately
Education
Page 11
Thanksgiving - IIAB of Arizona’s Offices Closed
__________________________________
CISR Conferment at East Valley Local Meeting
Landmark Restaurant - Mesa
________________________________________
December 6-9, 2006
CIC Personal Lines Institute, Fiesta Inn - Tempe
________________________________________
December 12, 2006
CISR Conferment at Tucson Local Meeting
Viscount Hotel - Tucson
________________________________________
December 25, 2006
Christmas - IIAB of Arizona’s Offices Closed
cut off.
• Limiting employee access so they only view
the information they need.
• Implementing the latest versions of antivirus, anti-SPAM and intrusion software on
desktops, servers, PCs and other portable
devices and continuously updating them.
• Auditing employee activity regularly for
compliance with the security policy and
procedures.
• Monitoring systems traffic continuously for
unusual activity that indicates a breach may
have occurred.
• Implementing specific procedures for backups, PCs, home computers, portable devices
and removable media. Keep non-public
customer and policy information off of these
devices wherever possible and encrypt them
when they contain such sensitive data.
To access ACT’s “The Independent Agent’s
Guide to Systems Security” for more details
and a sample agency security policy go to:
http://na.iiaa.org/ACTDownloads/ACT1031
505.doc (Click on cancel if prompted for
password.)
Jeff Yates ([email protected]) is executive
director of ACT. This article reflects the views of
the author and should not be construed as an
official statement by ACT.
News & Views
Page 3
Weaving a Web of Possibility
Web sites are becoming more crucial to insurance agents as customers rely on Internet for recommendations.
Before the dawn of the Internet, shopping for
insurance used to consist of asking family and
friends for recommendations or just walking
into a local agent’s office. But times have
changed and now, rather than rely solely on
word-of-mouth recommendations, customers
are looking to Web sites for their information,
making a strong Web presence a necessity for
independent agents.
for driveinsurance.com,” says Bill Everett,
product development manager and DRIVE
online experience manager. “First, it reinforces
to DRIVE that we are making the site an
effective tool for consumers who want to
purchase insurance from an independent agent
or broker. And it helps motivate us to keep
making the site even better.”
“All of these things play an important role in
taking a Web site to the next level, but
innovation is the most difficult to achieve
because it is so illusive, yet very powerful when
you get it,” he says. “Once you have that, the
rest of the industry is going to try and catch
up.”
DRIVE, the largest writer of auto insurance
through independent insurance agencies in the
country, launched its Web site in Dec. 2004.
Since then, it has received 2.3 million hits, a
statistic Everett credits to the site’s breadth of
information.
Earlier this year, WMA released its Internet
Standards Assessment Report (ISAR), which
ranked industries on criteria similar to those
used for the awards. The insurance industry
had a poor showing ranking in the bottom 15
in most of the categories. (See “Insurance
Industry Lacks Dynamic Web Presence” in the
“Consumers can go to the sites to find a local April 6, 2006 issue of IN&V.) Rice believes
agency that sells DRIVE, get a quote for an
agents and the industry would have better
auto policy and even send that quote
success on the Web if they avoid making one
Rice understands what makes a good Web site. electronically to the agency of their choice –
of the most common mistakes of Web
For 10 years he has been critiquing companies’ the agency receives the quote in the forma of a development.
Web sites as part of the WMA’s annual
sales lead,” he says. “The site is also our online
WebAwards. Earlier this month, WMA
portal of DRIVE customers to service their
“People think, ‘Oh, I have a Web site’ and then
released the winners of its 2006 WebAwards. policies. They can log in to their policy and
forget about it. A lot of agents put their Web
A total of 2,300 Web sites in 96 categories
make a secure payment, report and track a
sites up and they have a pretty good look and
were scored this year, including several
claim, view and print their policy documents
feel, but four years later they haven’t done
insurance Web sites. Blue Shield of California
and more.”
anything to improve them,” Rice says. “The fact
won the award for Best Insurance Website.
that they don’t regularly re-visit it and ask their
The website for DRIVE Insurance by
The WMA judges scored Web sites for this
customers if it’s helpful isn’t going to do them
Progressive (www.driveinsurance.com) was
year’s WebAwards on seven criteria including: any good.”
among those recognized with WebAward’s
design, content, ease of use, copywriting, use
Standard of Excellence award.
of technology, interactivity and innovation. The Michelle Payne ([email protected]) is
last of which is the most crucial, according to
a Big “I” writer/editor.
“We’re delighted to have received the award
Rice.
“The most important thing agents can
understand is that consumers use Web sites
today to validate what they are told,” says Bill
Rice, president of the Web Marketing
Association. “One of the first things people do
is check on a person or company’s credentials,
so the Web site has to represent the agent in a
positive light.”
GEICO Pulls Misleading Ads
GEICO insurance company, at the urging of
Connecticut Attorney General Richard
Blumenthal, agreed to pull ads that Blumenthal
said were possibly false and misleading. The ad
at issue is a television commercial that shows
actress/musician Charo appearing with a
GEICO customer who claimed that GEICO
repaired his car within a few days.
also prohibited under Connecticut state law
from steering customers to preferred auto
repair shops.
In a Sept. 13 letter to GEICO urging the
company to stop the ads, Blumenthal said the
ad could be a violation of the Connecticut
Unfair Trade Practices Act. Two days later, in
announcing that GEICO had agreed to stop
running the ad in Connecticut, Blumenthal said
"Ditching this disingenuous ad is a victory for
consumers---and a better business practice for
GEICO.
Blumenthal said that the ads could give
consumers the impression that GEICO was
actually repairing cars directly. Under
Connecticut state law, only entities with a
motor vehicle repair license may repair cars.
GEICO does not have such a license. GEICO is "This incident should send a message that
higher standards in insurance industry dealings
are appropriate and necessary," he continued.
The Auto Body Repair Association of
Connecticut alerted Blumenthal to the ad.
This decision by GEICO only applies in
Connecticut. It is unknown if the commercial
will continue to appear in other markets.
For more information, contact Kathleen
Graber, associate general counsel, at 703-7065432; [email protected].
Inside this Edition . . .
Are Your Piles Piling Up?
Page 4
Industry Firmly in the Black
Work in Peace! Increase Efficiency!
Who to Contact at the Big “I”
Big “I” Takes Aim at Federal Regulation
Page 4
Page 7
Page 7
Page 8
Big “I” Supports Intangible Assets Bill
Page 8
Taylor Proposal Sounds Alarm Bells for Industry Page 8
Education
Page 11
Local Author and Insurance Icon’s Book
Page 15
Big “I” Files Reply Brief in Zurich Case
Page 16
VU Adds Class on Environmental Exposures
Best Practices Spotlights Agency Trends
Nation’s Top Court to Examine Credit Scoring
Page 16
Are They Eligible for Disability Benefits
Page 19
Page 12
Page 12
Home Depot Moves Beyond Hammers and Nails Page 12
Trusted Choice Ad Campaign Launches
Page 15
News & Views
Page 4
Are Your Piles Piling Up?
How many piles do you have? How long
have your piles been sitting there? Do you
really know what is in your piles? Hopefully,
by now you know what I am talking about.
Yes, it is those mountains behind us that
keep getting bigger every day. Those piles of
unfinished work that keep on growing.
Before waiting for that E&O to happen, we
better start doing something about these
piles now. Set up a system of keeping track
of all work, whether big or small. Enter
everything into the system. Manage the
system daily. And, finally, do not stop!
Setting Up A System
We are sure there are lots of ways to set up
a system to keep track of each little thing on
your desk. Just think about it. We can use
the agency management suspense system.
We can use a separate program like
Microsoft Outlook. We probably do not
have to put a whole lot of thought into
determining which way to go. The main
concern is to select a system that is easiest
for us to keep track of every little thing on
our desk. Remember, when utilizing the
agency management system we are already in
the program itself. We do not have to
change to a different program or make sure
that the program is always open. The system
is always open. But, then again, we may say,
“Well, Microsoft Outlook, is an easier
program to keep track of things. The only
thing we have to do is make sure that the
program is open at all times.” Determine
which program you want to start using and
by Grace Bauer
start using it today!
Enter Everything in the System
Even though you may think this piece of
paper or that piece of paper may not be
important, enter every single piece of paper
in every single pile into the system. Include
everything; i.e. phone calls to be returned,
projects, research items, items to be
checked, request from companies, requests
from agency principals. The different types of
tasks are endless. We may think we are too
detailed; however, this process will protect
the agency from a possible E & O, and, most
importantly, will give us peace of mind when
we are going home at night. Most of us, if
not all of us, as our piles keep building up,
have a tendency to take those piles home
with us. “Oh, no! I have not touched that
pile for one week! What is in that pile
anyway? I really do not have the time to
even look through that pile. The phones
keep ringing.” Enter everything in the
system. Protect the agency, and, most
importantly protect ourselves.
Manage The System Every Day
Managing the system every day is easy once
everything is entered in the system. Of
course, enter every task into the system,
date the task, and, think about, categorizing
the tasks; i.e. today, phone calls, projects,
review, etc. Make it easy to reference each
day by categorizing each task. We can easily
then look through our huge list and work on
those items first that may take no time at all,
then maybe work on those tasks that need to
Industry Firmly in the Black
Revenue from agents and brokers expected to
gradually increase until 2010.
Revenue generated by insurance agents and
brokerage is expected to grow an average of
4.2 % in the next five years, according to a study
released by IBIS World, a publisher of business
research and analysis.
IBIS’s report on insurance agencies and
brokerages projects a medium level of risk for
the next year and moderate revenue growth for
the rest of the decade, with revenue expected
to increase from $87.5 billion in 2005 to $107.4
billion in 2010. According to the study, the
strong growth rate is attributed to a soft
market for risk products, which is a result of
large returns on premium dollars invested. The
improved revenue growth is expected to
continue as agencies and brokerages write an
increased share of total insurance policies.
“It is expected that insurance brokerages and
agencies will experience some organic growth
over the outlook, as brokerages and agencies
improve their retail presence,” the report says.
“Primary insurance underwriters are expected
to further their focus on risk assessment,
leaving an increased share of insurance policies
to be written through agencies and
brokerages.”
Growth in the industry gross product (IGP) is
also expected to improve significantly as
business volumes rise, according to IBIS.
“IGP is forecast to grow at an average real rate
of 5.1% per annum over the outlook, increasing
from 441.5 billion in 2005 to %53.2 billion in
2010,” the report says. “Industry assets are
be done today, and then maybe work on
research items. By reviewing and managing
all tasks daily, the job becomes very easy.
We now know what is actually in each pile.
We can actually control our piles. And, we
can now keep work at work!
Do Not Stop
It is so easy to miss one piece of paper and
get back into the same boat again. Do not
stop the process. Make sure to enter
EVERYTHING into the system. Just one
missed entry can bring you closer to that one
E & O you never thought would happen. We
definitely do not want that over our heads.
Even if you have to put a big reminder on the
system or a big piece paper with a reminder
on the desk, keep entering! DO NOT
STOP!!
Check those piles out today! Do it before it
may be too late. Review and determine
which program to use to keep track of every
single piece of paper on the desk.
Remember, enter every piece even if you
think it is too small. Manage the system daily,
and, finally, do not stop. Just one missed
entry is one step closer to that E & O. Think
of ourselves first. Make sure to keep your
work at work and go home with peace of
mind!
Grace Bauer helps insurance agencies put together
customized insurance procedural manuals to secure
consistency, protect against errors and omissions,
attain security, and increase efficiency. She can be
reached at 800-896-4226.
expected to grow at an average real rate of
5.6% per annum in the same five-year period,
increasing from $147.4 billion in 2005 to $193.6
billion by year-end 2010.”
The number of people joining the industry has
also grown since 2001; however that rate of
growth slowly declined as 2005 drew to a close.
“Some merger and acquisition activity
commenced in 2000 and became more
pronounced as markets hardened,” IBIS’s report
says. “Declining underwriting volumes, mainly
resulting from rising insurance prices, left
agencies and brokerages in a position where
they started fighting for market share.”
Michelle Payne ([email protected]) is a
Big “I” writer/editor.
Risk Placement Services
8700 East Northsight Blvd, Suite 100,
Scottsdale, AZ 85260-3671
Tel (480) 860-5555
(800) 475-2626
Fax (480) 860-5561
YOUR MARKET FOR EXCESS & SURPLUS
LINES BUSINESS!!
Our Target States are: AZ* / CO / NV / NM / UT* / WA*
OR / CA / WY* / MT / ID
* Home Office is in AZ, with Satellite Offices in UT, WA and WY
Our Target Classes include:
Professional Liability
Transportation
Excess & Umbrella
Property
Inland Marine
General Liability
Garage Liability &
Physical Damage
Personal Lines
Programs
We write small, medium, and
large accounts.
We represent only the finest markets that are financially stable, and have excellent ratings.
We have admitted, and non-admitted markets, along with binding and brokerage facilities.
Our staff is knowledgeable, professional, and experienced. Our desire is to have the best
service and attitude.
Our Association Memberships include IIAA, PIA, AAMGA, NAPSLO, PLUS, and various
Surplus Lines State Associations.
IF YOU CURRENTLY USE OUR FACILITY, THANK YOU. IF YOU DESIRE TO ACCESS
RPS, PLEASE CONTACT OUR MARKETING DIRECTOR, AT 480-860-5555.
www.rpsins.com/scottsdale
“You Want What?”
That may have been what Jason of California expected to hear when he called
NCMIC with an eleventh-hour premium financing request from a demanding client …
“I thought it couldn’t be done … But I figured if
any company could get it done, it would be NCMIC
[Finance Corp.].
“We received a request for a deal that came in
after NCMIC’s normal business hours, and it had
to be turned around immediately. And the deal was
a challenging one.
“But we contacted NCMIC via cell phone and they
immediately came up with a tailor-made financing
plan that met the needs of this important client.
As a result, they saved us a $440,000 premium.”
“One of my pet peeves is
getting an automated
voice-response system.
At NCMIC, I know I’m
going to talk with a real
person who wants to
work with me to meet
my customers’ needs.”
—Joe Mauro, Des Moines
It’s not typical in the
often cookie-cutter world
of premium finance,
but through NCMIC’s
stellar Deal Builder
Program, you get creative, customized solutions for your smaller clients
or niche markets. At crunch time, Jason found out how important it is to
have people who care about his business and who will listen.
Plus NCMIC offers you:
✓ A real person to talk to during business hours—so you won’t
get lost in “automated-voice-response limbo.”
✓ People who follow up when they say they will.
✓ 24/7 access to FinancePro technology—so you can create
®
and check on premium finance agreements any time.
Call Anson Holland or Lisa Logan toll free at 1-800-600-9250
To put NCMIC’s Deal Builder Program to work for you!
www.ncmic.com/premiumfinance
FinancePro is a registered trademark of FinancePro, Inc.
©2006 NCMIC NFL 5534
News & Views
Work in Peace! Increase Efficiency!
Are you getting tons of interruptions every
day. Are you questioning why employees
are coming to you when you know they can
easily resolve matters on their own? Is it
driving you crazy and getting out-of-hand?
Are you wondering what you even got done
at the end of the day? Well, if this happens
to be you, start training your employees to
work on their own! Free up your day so
you can work more efficiently! Have a quick
daily individual employee meeting with each
employee you are responsible for. Save time
by utilizing the e-mail system for nonemergency items. Always, ask your
employee how they would handle something
to start teaching them to think like you and
resolve problems on their own. Of course,
remember emergencies may come up during
the day so you need to be flexible. And,
what’s next? Do it over and over again!
Always, consistency is the key! Work in
peace, gets lots done, and increase
efficiency!
The Quick Daily Individual Employee
Meeting
If you want to put a stop to all those
interruptions from the employees, then start
to hold quick daily 10 or 15 minute
individual employee meetings with the staff
you are responsible for. Inform your
employees they are to gather all their
questions at that time, and you will do the
same. Make it a point to review all items
on their list and all items on your list
individually with each employee. Then make
sure they always put aside questions
throughout the day or projects they need to
get with you on until the next day. This
quick meeting is wonderful to start today.
The employees will feel more important
knowing they will have contact with you
every day, and you will actually know what is
going on and be in more control of the
agency . This process will help with
preventing errors and omissions and, at the
same time, definitely help you to stop
interruptions and increase your productivity.
Page 7
by Grace Bauer
may take a little more time to get a
response but the time the e-mail system
saves is tremendous. If questions come up
during the day, use the wonderful e-mail
system. Send a note, make sure to set a
follow-up awaiting a response back, and wait
for the reply. Get your employees to use
the system as much as possible. Believe me,
it takes a little time to rely on it all the time,
but in the end it will save you tons of time.
The only time I hesitate about using the
system is when I have to make an
appointment, and then I think twice. I do
not know if I want to e-mail back and forth
three or maybe four times trying to decide
on a good time to meet because of
schedules. Most of the time now, I make a
phone call to make a phone call
appointment. That is probably a good thing
anyway, since I guess, we should try to be
definitely more personal. After all, our
society is becoming so impersonal. Well,
anyway, use the e-mail system, and, again,
save lots of time and increase efficiency.
Start to work on those items you want to
work on during the day!
When Questions Arise
I know I keep talking about this every time I
write another article, but make sure to
always ask employees back how they would
handle the situation when questions come
up. If the employees answer the question
the same way you would handle it, then let
them go with it. Otherwise, let them know
exactly how you would handle it, and then
they can go from there. This way they will
always think twice before coming to you for
a question knowing they may be able to
handle the situation on their own, and, also,
they eventually will be thinking like you
when you let them know how you would
handle the situation. Again, stop the
interruptions and increase efficiency. Go
home knowing you got lots done for the
day.
Emergency Items
Now, we all know there will be times when
The Wonderful E-Mail System
the interruption just has to happen. Accept
What did we do without it!! The wonderful the interruption, answer the question, and
e-mail system is just that – wonderful!! It
let it go. Let the employees know that, “yes,
please get with me if you feel it is an
emergency.” Otherwise, if it can wait,
either e-mail or just wait until the next day
when we meet to discuss the areas.
Remember, to keep the door open. Let
your employees feel like you are there for
them all the time, but always set the
guidelines. This procedure will help you gain
the extra time you need to work more
productively throughout the day. We do
not want to work after hours. Life is too
short!!
Do It Over and Over Again
Of course, we all know to keep the
momentum going, and do it over and over
again. We have a tendency, at times, to
start a process, and then after one month’s
time the process stops. Something comes
up, and we forget all about what we were
doing to keep our time to ourselves. Do
not stop. Keep the process going, and
continue to keep your day free from
interruptions.
Keep the brief meetings going every day
with the employees. Make the employees
feel more important and protect the agency
from that horrible word, an error and
omission. Use the e-mail system all the
time. Save lost time when calling someone
or getting out of your chair to visit with an
employee. Get just the answer back and,
again, save lots of time. Of course, when
questions arise, remember to question the
employees. Get the employees to start
thinking like you and handle situations on
their own. Keep the door open, and make
sure employees can come to you when
emergencies arise. And, of course, finally,
do it over and over and over again. Stop the
interruptions, get lots done, and go home
knowing you had a very productive day!
Grace Bauer helps insurance agencies put
together customized insurance procedural
manuals to secure consistency, protect against
errors and omissions, attain security, and
increase efficiency. She can be reached at
800-896-4226.
Who to Contact at the Big “I”
Below is our staff listing by Departments .
Accounting: Karen Blacker - [email protected]
Big I Markets: Joni Fairbrother - [email protected]
Board Meetings: Terri Edwards - [email protected]
Convention: Terri Edwards - [email protected]
Education: Ray Garcia - [email protected]
Errors and Omissions: Joni Fairbrother [email protected] and/or Mike Radcliffe [email protected]
Legislative: Lanny Hair - [email protected]
Membership: Terri Edwards - [email protected]
Regulatory: Joni Fairbrother - [email protected] and/or
Lanny Hair - [email protected]
Technical Questions: Joni Fairbrother [email protected] and/or Lanny Hair - [email protected]
News & Views
LEGISLATION
Page 8
Big “I” Takes Aim at Federal Regulation
Rusbuldt questions FreedomWorks organization’s
support of federal insurance bureaucracy.
Big “I” CEO Bob Rusbuldt sent a letter late last
week to Dick Armey, chairman of
FreedomWorks, regarding the organization’s
support of the National Insurance Act of 2006,
which would create a federal regulator for the
insurance industry. The Big “I” opposes federal
regulation and Rusbuldt’s letter expressed
disappointment that FreedomWorks had
embraced “the creation of a massive new
federal bureaucracy.”
“We encourage you to reconsider your
decision to take a position that is clearly
contradictory to the mission of
FreedomWorks to fight for ‘less government,’”
Rusbuldt wrote. “As you know, the NIA would
create a new Office of National Insurance
within the treasury department. Currently,
there are approximately 13,000 people
working to regulate the business of insurance
across the country, but the NIA authorizes an
unlimited number of new offices and federal
government employees to comply with the
provisions of a new federal bureaucracy. While
the IIABA believes that significant reform of
insurance regulation is needed, the creation of
such a dual state-federal structure with
overlapping bureaucracies would cause many
more problems than it would solve.”
In the letter, Rusbuldt offered to speak with
Armey about the Big “I” approach of using
federal legislation to reform the existing statebased regulatory system and called for an open
dialogue on the issue.
“The IIABA and its members are energized
against all efforts to create a new federal
bureaucracy and I know many of our members
will be disappointed to learn that
FreedomWorks has moved away from its
mission and has instead decided to support one
of the largest additions to the federal
bureaucracy in recent history,” Rusbuldt
wrote. “I am hopeful that once you and your
organization have given this proposal additional
thought, you also will come to understand that
supporting the large bureaucracy, which would
be created under the NIA is not in the best
interests of the American public.”
Big “I” Supports Bunning-Conrad Intangible Assets Bill
Legislation would shorten write-offs, create more
accurate amortization schedule.
The Big "I" is supporting a bill introduced late
last week in the Senate that would allow
purchasers of eligible small businesses to write
off as much as $5 million of acquired intangible
assets over the course of a five-year period.
The bipartisan legislation, S. 3974, introduced
by Sen. Jim Bunning (R-Ky.) and Sen. Kent
Conrad (D-N.D.), would allow purchasers to
more accurately amortize intangible assets
acquired through the purchase of small
businesses and provide better liquidity to Main
Street businesses.
The Senate bill parallels legislation that was
introduced in the House, H.R. 4960, "Tax
Fairness for Small Business Act," earlier this
year by Chief Deputy Majority Whip Eric
Cantor (R-Va.) and Rep. Earl Pomeroy ( DN.D.).
"The top tax priority of the Big 'I' is commonsense tax reform on intangible assets acquired
through the purchase of one small business by
another," says Charles E. Symington Jr., Big "I"
senior vice president for government affairs
and federal relations. "Our members applaud
Senators Bunning and Conrad for introducing
this legislation that will provide tax relief to
businessmen and businesswomen across
America, and we appreciate the bipartisan
leadership we've seen on this issue in both
chambers of Congress."
Current law requires intangible assets to be
depreciated over 15 years, even though these
specific types of assets, such as customer lists,
have much shorter shelf lives. In fact,
experience has shown that these types of
intangible assets have shelf lives closer to five
years. The Big "I" consistently has supported
shortening the depreciation schedule for
intangible assets so that it reflects their useful
economic life.
"Modernizing the depreciation schedule will
help small businesses by allowing their
intangible assets to be amortized more
accurately," says Brendan Reilly, Big "I" assistant
vice president of federal government relations.
"A shorter depreciation schedule also would
allow Main Street businesses to reinvest more
money in themselves and their operations."
Taylor Proposals Sound Alarm Bells for Industry
Consumers, agents stand to lose if
recommendations are implemented.
Representatives from a Democratic
Congressional group have put forth a number
of recommendations that are raising eyebrows
in the insurance industry.
Reps. Gene Taylor (D-Miss.) and Charlie
Melancon (D-La.) issued recommendations in
their positions as chairman and vice-chairman,
respectively, of the House Democratic Caucus
Hurricane Katrina Task Force. The suggestions
include ending the McCarran-Ferguson
antitrust exemption for property insurance,
requiring homeowners insurance to cover all
perils—including flood damage—and
establishing stronger federal oversight of
property insurance practices.
“We are very troubled by a number of these
recommendations,” says Charles E. Symington
Jr., Big “I” senior vice president for
government affairs and federal relations.
“Repeal of the McCarran-Ferguson Act and
federal regulation of the property insurance
market run contrary to everything we believe
is best for the marketplace and for consumers,
and we will be working diligently to make our
case that these points, even if well-intentioned,
are misguided.”
consumers, not to mention our members.”
And, of course, the last point is extremely
troubling, because it goes beyond even the
“optional” federal charter suggestions being
put forth now by supporters of federal
regulation.
“We have said all along that the current statebased system needs reform, greater uniformity
and reciprocity and more efficiency, but federal
regulation is not the way to get it done,”
Symington says. “Regulation at the state level is
closer to consumers and better able to assess
their needs than a new federal bureaucracy in
Washington, D.C., could ever do, and possible
“Consumers are better served when they have federal regulation of property insurance with
its many local issues would deprive consumers
a wide variety of choices,” Symington says.
of a tremendous store of institutional
“Anything that would create additional
regulatory burdens for small and medium-sized knowledge and expertise.”
companies ultimately leads to fewer
Cliston Brown ([email protected]) is Big “I”
competitors in the market, which is bad for
director of public affairs/government relations.
On the first point, the Big “I” believes strongly
that repealing the McCarran-Ferguson
exemption would disproportionately harm
small insurers, reduce competition in the
market, and provide fewer choices to
consumers.
Geo. F. Brown & Sons, Inc.
Sometimes Change has its Advantages!
Recently a major carrier exited the Liquor Liability market in Arizona and
we understand this is a problem. Not to worry, Geo F. Brown & Sons, Inc.
can deliver.
We’re proud to announce the arrival of a new, better and more encompassing program to meet your needs. GFB, along with the A.M. Best “A”
rated carriers of the RSUI Group, Inc. can offer you a competitive Liquor
Liability and Package program in Arizona.
Now Featuring –
All classes of business
coverage including –
Special rating
consideration for –
Entertainment
Dance Floors
Late Close
Bars & Taverns
Restaurants
Private Clubs
Retail Stores
Special Events
Adult Entertainment
Nightclubs
Loss experience
Server training
Cab assist programs
Neighborhood locations
Competitive rates, and knowledgeable underwriters
Non-admitted carrier
And that’s not all.
Straight up
or on the rocks,
tap or bottle,
red or white,
we have the
program for you.
With GFB you get access to our fine binding authority and brokerage markets. These carriers are very interested in all of your needs, including that
unrelated to our Liquor program. We can perform for you on many classes
including habitational, light manufacturing, garage, any service business
as well as Professional Liability and Umbrella.
GFB is committed to providing you with the knowledge, experience, superior products and support you expect. Service matters to us. We want you
to know us and we want your business.
Think of GFB for all your brokerage needs, we are ready to serve.
Call us today at 1-800-527-6089, or
visit our Web site at www.gfbgroup.com.
Now available in Arizona, Florida, Georgia,
Illinois, Indiana, Iowa, Minnesota, New Jersey,
New York, Pennsylvania and Wisconsin with
more yet to come.
EDUCATION
News & Views
2006
December 6-9 CIC Personal Lines Institute
Registration
Form
Tempe
December 12 Errors & Omissions Loss Control Seminar Phoenix
December 14 CISR William T. Hold Seminar (ALS)
Page 11
Phoenix
2007
January 10
CISR Agency Operations
Phoenix
January 11
Commercial Property Coverage - Basic
Phoenix
January 11
Sedona
January 24
CISR Insuring Personal Auto Exposures
Construction Defect Issues - Members
Only
CISR Commercial Property Coverages
Phoenix
January 30
CISR Commercial Casualty Insurance
Lake Havasu
Agency/Company______________________________
February 1
Commercial General Liability - Basic
Phoenix
Address_____________________________________
January 18
Phoenix
February 7-10 CIC Commercial Casualty Institute
Tempe
February 14
CISR Insuring Personal Auto Exposures
Phoenix
February 15
CISR Agency Operations
Tucson
February 27
Errors & Omissions Loss Control Seminar Tucson
March 1
Introduction to Insurance Seminar
Phoenix
March 6
CISR Dynamics of Service
Phoenix
March 7
CISR Commercial Property Coverages
Kingman
March 8
Errors & Omissions Loss Control Seminar Phoenix
March 14-16
CIC James K. Ruble Graduate Seminar
Tempe
Mr.
Ms.
Name:
___________________________________________
Designations__________________________________
City, State, Zip________________________________
Telephone(______) ____________________________
E-mail address:________________________________
Date of Seminar _________________________
Check enclosed for ___________, payable to ITEC
Charge to credit card below:
Visa
MasterCard
American Express
Exp Date of Credit Card:__________________
Mar. 19-April 5 P&C Licensing Plus Seminar
Phoenix
March 20
CISR Personal Residential Property
Yuma
Card #: ____________________________________
March 27
March 28
Personal Automobile Coverage - Basic
CISR Commercial Casualty Insurance
Phoenix
Phoenix
Print Name:_________________________________
Card holder Signature:
Registration Fees
CISR Seminars -- $140 per person/per seminar
CISR Dynamics of Service -- $150 per person
ITEC Seminars -- $75 Member/$100 Non-Member
E & O Loss Control -- $60 Member/$85 Non-Member
Licensing Plus Seminar -- $185/ $210 Non-Member
CIC Seminars -- $360 per person/per seminar
Cancellation Policy: ITEC/CISR Cancellations received within 7 business
days of a seminar will incur a $25 non-transferable fee. CIC Cancellations
received within 7 business days of an institute will incur a $105 nontransferable fee.
ADA Policy: We comply with Title III of the American with Disabilities Act
Please let us know in advance of any special needs.
___________________________________________
Registrations will not be accepted without form of payment.
News & Views
VIRTUAL UNIVERSITY
Page 12
VU Adds Class on Environmental Exposures
All Agents Should Protect Customers from Environmental Dangers
Independent agents and brokers can now
earn their environmental Strategist (eS)
designation through the environmental
Strategist class offered online through the Big
“I” Virtual University.
reference library containing hundreds of
published environmental risk related articles,
a quarterly eStrategist™ newsletter and full
access to the glossary of environmental
acronyms and terms.
the insured may have is their agent’s E&O
insurance,” concluded Bunbury.
“This is a very important aspect of
commercial insurance that agents may be
overlooking,” says Madelyn Flannagan, vice
The class will equip agents and brokers with “The eS designation is important because
president of Education and Research for the
the knowledge to produce and deliver better every commercial business faces either direct Independent Insurance Agents & Brokers of
or indirect environmental issues,” says Chris America (Big “I”). “By partnering with the Big
all around products to their clients, by
understanding and analyzing the risk involved Bunbury, eS and president of Environmental “I” Virtual University, Environmental
Strategist, Inc. “Insurance professionals do
in environmental issues. The class aims to
Strategies, Inc. brings the issue of
demystify environmental insurance, a product not always think about the not-so-obvious
environmental coverage to the forefront.”
potential forms of environmental exposure. If
that has long been viewed as an extremely
you’re insuring a greeting card store three
specialized coverage. eS designees will be
To access information about this program
able to seamlessly incorporate environmental doors down from a dry cleaner, and the dry and to review the complete listing of courses
cleaner has a chemical spill that closes the
risk management and insurance into their
available on the Big “I” Virtual University, visit
surrounding shops for a week, it’s an indirect www.independentagent.com, click on Virtual
everyday routine.
University.
environmental exposure.
Designates receive the certification by
Chris Bunbury, eS
“Agents and brokers that are not discussing
successful completion of the informational
environmental issues with their clients should Environmental Risk Managers, Inc.
seminar and online course content, and are
provided with a variety of additional benefits know that when their client is underinsured
for one year including unlimited use of the
for an environmental loss the only coverage
Best Practices Spotlights Agency Trends
The following are key findings from the
recently released 2006 Best Practices Study
published by the Big I:
Only 24% of agencies in the over $25 million
category, versus 40% in 2004, indicated that
Personal Lines will be an important revenue
source for them in the future. Interest in
individual life-health as an important source
of agency revenues in the future dropped
significantly in all revenue categories except
the $10 million to $25 million group, where
28% versus 22% in 2004 said it will be an
important source.
to fewer agencies desiring to sell than fewer
agencies desiring to acquire. The largest
agencies are still active with 58% reporting an
acquisition during their last fiscal year
new producers, especially agencies in the
larger three revenue category study groups
where more than 60% of the agencies
reported they had hired new producers.
Interestingly, there was a significant increase
in the numbers that were hired from other
industries versus the insurance industry.
Net revenue growth rates dropped from
double-digit rates to single-digit rates. The
average growth rate was 7% for agencies with
revenues under $5 million and 9% for
By studying the leading agencies and brokers
agencies with revenues over $5 million.
in the country, the association hopes to
provide member agents with meaningful
Despite declining net revenue growth rates, performance benchmarks and business
revenue per employee increased in all but
strategies that can be adopted or adapted for
two Best Practices Agencies studied where it use in improving agency performance, thus
remained at past levels.
enhancing agency value. For more
information about the Best Practices program
Acquisition activity has slowed slightly, but
go to http://www.independentagent.com
the study concludes that the slowdown is due Best Practices Agencies continued to hire
Home Depot Moves Beyond Hammers and Nails
Home Depot to offer business insurance through its business tool box program. The program which began last April offers a myriad of
services including payroll processing, office supplies etc. The move to insurance is through Benefit Protect for health insurance and NSM
Insurance group for property casualty insurance. Their website http://www.hdbusinesstoolbox.com says it can provide business interruption,
personal property, and commercial auto. We find it interesting there is no mention of workers compensation insurance maybe they are all
independent contractors.
OUR INDEPENDENT AGENCIES
ARE THRIVING!
With access to many competitive companies and preferred
commissions and profit sharing without minimums, SIA of Arizona and
SIAA Independent Strategic Members ARE thriving!
As soon as you join SIA of Arizona and SIAA, your agency will reap the
benefits, including increased agency income and value, preferred
commissions, profit sharing overrides and growth bonuses.
To secure your future, keep the customers you have and to gain new
ones, you need SIA of Arizona and SIAA!
Contact SIA of Arizona TODAY to find out if you qualify to participate
in our tremendous growth!
Dan Skinner
P: 480.464.3478
E: [email protected]
W: www.siaaz.com
1,950 Member Agencies
$4.1 billion in premium
www.siaa4u.net
TRUSTED CHOICE
News & Views
Page 15
Trusted Choice Ad Campaign Launches
New Ad Strategy Begins with Ads on Fox News
Trusted Choice® television advertising
returns when ads touting the benefits of using
the more than 6,600 participating agencies hit
the nation's airwaves.
Ads on Fox News are the first to run in this
year-long advertising campaign. Trusted
Choice® is now running ads for two weeks
every month on different cable stations,
including CNN, the Travel Channel, the
Weather Channel and more.
with Greta van Susteren, The Big Story, From
the Heartland, War Stories and more. Fox
News is a leader in election coverage and has
high ratings, making it a natural choice for
national TV advertising.
"The programs, times and channels have been
carefully selected to reach the Trusted
Choice® target market," says Trusted Choice
®
Executive Director Dave Evans. "Trusted
Choice® has worked hard to coordinate with
our membership to ensure their customized
agency advertisements do just the same. This
"Trusted Choice® advertising is heading in a
new direction, strategically," says Big "I" CEO ad campaign will be the most effective to
Robert A. Rusbuldt. "Running ads on popular date, driving consumers to the Trusted
cable TV stations for two weeks out of every Choice ® Web site and their local Trusted
Choice® agencies to ensure they receive the
month maximizes consumer's exposure to
choices and coverage they deserve."
Trusted Choice ®. The increased frequency
of national Trusted Choice® ads, combined
with more agencies than ever before running Evans notes that branding is about building
consumer awareness of excellence and
tie-in ads in conjunction with the national
experience.
campaign, lead to a greater consistency of
exposure to consumers. This will reinforce
to consumers that using a Trusted Choice ® "Successful brands ensure consumers receive
agency is the smart, safe and preferred way
excellent service and/or products. Trusted
to buy insurance."
Choice® agencies have a pledge of
performance for consumers, and advertising
Trusted Choice® will be running ads on Fox is just one component of ensuring that
News. Trusted Choice ® will be advertising
customers are aware that buying insurance
during popular programs such as Fox &
from a Trusted Choice ® agency is the smart
way to buy insurance," says Evans.
Friends, Hannity & Colmes, On the Record
Trusted Choice® is promoted through a
combination of national, state-level and localagency advertising, promotional and
marketing activities; insurance company
branding; public relations campaigns; and
Internet communications.
Launched in October 2001 by the Big "I" and
several agency companies, 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 nearly 6,600 independent
insurance agencies, brokerage firms, their
branch locations and 39 leading insurance
companies.
A Big “I” Member Agencies may join Trusted
Choice® for an annual fee of $250 if the
agency has 9 or fewer employees and $499
annually if they have 10 employees or more.
Discounted three year fees are available.
To find out more information or to join
Trusted Choice® go to Web address:
www.TrustedChoice.com.
Local Author and Insurance Icon Tells of His Triumph Over Tragedy
Many within the Arizona insurance industry
know Steve Welker. Steve has served the
Arizona insurance community for over 30
years. He has been an employee of an
insurance company, an insurance producer,
and finally as owner of his own agency. In
1994 Steve sent the Arizona insurance
community in shock when he was involved in
a terrible auto accident while driving to the
hospital for the birth of his twin boys.
Because of that accident, Steve lost his vision
and suffered several life threatening injuries.
Steve hasn't always been blind. And most
people have never been blind. So most people
can't fully understand Steve—but Steve Welker
can understand them. That’s what his inspiring
book, The World at My Fingertips is all
about: it's about a tragedy that has been
turned into a triumph of spirit in a world so
many of us simply take for granted—but that
Steve Welker cannot.
They attracted national attention as Leeza
Gibbons featured them on her network
television talk show.
It was all working—until April 30, 1994.
Then, in a matter of seconds, everything
changed! In one seemingly senseless,
unfathomable moment of disastrous
coincidence, just days before the birth of
their twin boys, both Steve and Kristi were
severely injured in a car crash, and Steve lost
his sight forever.
way to the public through me; but Steve and
Kristi Welker did more than bless us with
their story. They softened hearts and healed
souls. They educated and empowered. They
offered a quiet example of selflessness and
hard-fought-for love that has sustained them.
Steve Welker lives in Ahwatukee with his
wife, Kristi and twin boys, Dylan and Colton.
Steve is President of the Arizona Center for
the Blind and Visually Impaired and a
spokesman for the United Way. He has been
active in the insurance field, in Arizona, for
The World at My Fingertips tells their story almost 30 years, having worked for Westfield
of tragedy transformed to triumph in a truly Insurance, Transamerica Insurance and
Schaefer-Smith-Ankeney. Kristi recently
nourishing, soul-satisfying way, driven from
earned her Doctorate of Psychology and
within by an indomitable spirit (Steve's)
coupled with an iron will (Kristi's) and a love works as a psychologist in Ahwatukee.
that transcends every appearance of negative
For more information about The World at
reality, no matter how dark and foreboding
My Fingertips visit the author’s web site,
the world might seem.
http://www.worldatmyfingertips.com. Or
It all begins on a happy note, with Steve and As Leeza Gibbons has written in her
contact Steve directly at (480) 730-6200 or
his wife, Kristi joyfully anticipating the birth of foreword, “I always consider it a blessing
[email protected].
their twins-conceived in a most unusual way! when someone allows their story to find its
News & Views
COURTS
Page 16
Big “I” Files Reply Brief in Zurich Settlement Case
Answers questions about filing of amicus curiae brief
The Independent Insurance Agents & Brokers of
America, Inc. (Big “I”) filed a reply brief on
October 20, 2006 refuting the opposition to its
amicus curiae brief filed last month in New
Jersey federal court. The class action lawsuit
concerns the producer compensation and
disclosure issue and related Zurich Settlement
agreement.
The Big “I” amicus curiae brief focused on the
burden imposed on agents and brokers by the
Zurich Settlement agreement entered into in
March 2006 mandating that agents and brokers
provide insureds with the company’s
compensation disclosure form. Opposition to
the Big “I” brief was filed by the intervening
Attorneys General who signed the Multi-State
Settlement Agreement with Zurich, the plaintiffs
and Zurich. The essence of the opposition was
that the Big “I” amicus curiae brief was filed
prematurely; none of the opposition questioned
the credentials of the Big “I” to advise the
Court regarding the impact that the Zurich
Settlement will have on brokers and agents.
“The Big “I” amicus brief provides the Court
with important information about the negative
consequences consumers as well as insurance
brokers and agents will experience if the Court
approves the portion of the proposed Zurich
Settlement requiring brokers and agents to
provide their customers with Zurich’s
Mandatory Disclosure Form,” says Big “I”
President Alex Soto, also president of Miami,
Fla. based InSource, Inc. “Imposition of this
form on agents and brokers will inhibit agents
and brokers’ communication with their
customers and increase customer confusion
regarding incentive compensation.”
Contrary to suggestions in the opposition filed
to the Big “I” amicus brief, the Big “I” does not
oppose “pre-binding disclosure” of incentive
compensation; rather, it opposes the proposed
requirement that brokers and agents provide
their customers with Zurich’s Mandatory
Disclosure Form, explains Soto.
Parties the opportunity to revise the Mandatory
Disclosure Form provision voluntarily,” says
Debra L. Perkins, Big “I” EVP and general
counsel.
“Zurich represented to the Court that
compensation disclosure was something that
the state insurance regulators and Attorneys
General that signed the Multi-State Settlement
‘required Zurich to undertake’ so the Big “I”
believes that the Court’s order should reflect
what Zurich acknowledged –that the obligation
to deliver the Mandatory Disclosure Form to
consumers belongs to Zurich, not to insurance
brokers and agents,” explains Perkins.
The Big “I” has worked tirelessly to ensure this
issue is addressed in the same transparent
manner in which all other aspects of insurance
transactions should be handled.
“The Big “I” was not a party to the negotiations
and had no opportunity to raise its concerns
about the Mandatory Disclosure Form before
the Zurich Settlement requiring it was
executed,” Rusbuldt adds.
The Big “I” continues to support the latitude
that agents and brokers should have to
customize their interactions, including about
compensation disclosures, to the specific
requests and needs of their customers,
“By filing now, the Big “I” is giving the Settling
To read the complete reply brief, please visit
www.independentagent.com.
Nation’s Top Court to Examine Credit Scoring
Insurers hope Supreme Court will overturn Ninth Circuit’s sweeping decision.
In any given year, only a few dozen cases ever
make it to the Supreme Court’s docket, and
very few of those have a major impact on the
state-regulated insurance industry. However, in
the coming months, the nation’s highest court
will hear a case that has sweeping repercussions
for the industry. Billions of dollars and the
continued viability of some of the country’s
leading insurers could be at stake.
favorable credit information would improve the
rates or terms of a policy. In essence, the Ninth
Circuit said an adverse action notice must be
provided to a person who does not receive the
insurer’s lowest possible premium because of a
less-than-perfect credit history, even when the
credit information is better than average and
results in a considerably lower premium.
The FCRA’s penalties for willful violations were
intended to be harsh and applicable in rare
instances, yet the Ninth Circuit’s distorted
perspective of these provisions carry significant
consequences. If the Ninth Circuit is correct in
its findings about when adverse action notices
must be issued (and many observers believe
that portion of the initial opinion is accurate),
then it is possible that the nation’s personal
The most troubling feature of the Ninth Circuit lines insurers have committed millions of
The case to be heard involves insurance
opinion---and the issue that will be most hotly
technical and inconsequential violations. With
companies’ use of consumer credit reports and contested when the Supreme Court hears the
potential liability of $100 to $1000 per
the obligations that insurers using such
case---is the lower court’s finding that the
consumer, the costs could quickly escalate into
information have to consumers under the
insurers involved in these instances “willfully”
the billions of dollars and threaten the solvency
federal Fair Credit Reporting Act (FCRA). The violated the law. Under the FCRA, insurers who of some insurers.
FCRA requires insurers to alert consumers
incorrectly adhere to the adverse action
when they take an “adverse action” based on
requirements or negligently violate the law are Each of the major insurer trade organizations
information contained in credit reports. These liable for actual damages incurred by
filed briefs earlier this summer urging the court
are the typically pro forma notices that provide consumers. However, if “willful” noncompliance to accept the case and overturn the decision,
an affected consumer with the name and
is found to exist, insurers can be liable to each
but they are not the only ones following this
contact information of the reporting agency that consumer for damages between $100 and
case. Other groups, including the U.S. Chamber
provided the report to the insurer, a statement $1,000 (plus punitive damages).
of Commerce, the Business Roundtable and the
explaining the consumer’s right to obtain a free
free market-oriented FreedomWorks
copy of the report, and a description of how
The Ninth Circuit---a court best known by
Foundation, all have weighed in against the
the consumer can dispute the report’s accuracy. many for ruling that elements of the Pledge of
Ninth’s Circuit’s expansive opinion.
Allegiance are unconstitutional---found that
The FCRA was not entirely precise in specifying insurers who relied in good faith on
Besides having strong, substantive arguments on
exactly when insurers should provide such
interpretations of the law that were later
its side, the insurer community has at least one
notices, and some in the industry believed the
determined to be unreasonable, implausible,
other reason to be hopeful. The author of the
notices were only required when a person’s
creative or untenable could be deemed to have Ninth Circuit opinion is Stephen Reinhardt,
credit information has an adverse or
committed willful violations. The circuit court
perhaps the most liberal judge on that court
unfavorable impact on the insurance rates or
even found willful violations when insurers were and one of the most overturned appeals judges
terms that otherwise would have been
diligently attempting to comply and following
in history of American jurisprudence. The
provided. The U.S. Court of Appeals for the
the plausible (but perhaps incorrect)
insurance industry is hoping that Judge
Ninth Circuit recently issued a decision that
interpretations of the law provided by attorneys Reinhardt’s latest opus meets a similar fate.
went a step further and determined that the
and even district court judges in previous
Wes Bissett, Big “I” senior vice president
notices are also required whenever more
opinions.
government affairs and state relations
We have the expertise.
,AV/K
CKAYT
We havethe markets.
We will get you competitiveterms fast!
CTNCY
please
Representing
Trarclem
finecompanies.
andother
forinfurmation
byemail,
Dan
Moore
conbst
atdan0ggapncy.com
(Imbrella & Equipment
BreakdownPrograms
ll'e'te Cnt lou ('m,ered Qt
D esigneclE speciallyfor :
Condos- Co-ops- Townhouses- ApartmentsHOA'S- PUD'S-Habitational
Accounts& our
NewProgram for Commercial Building Owners
. Limitsfrom$1,000,000
to $50,000,000
.
.
Cover ageincludesExcess,G.L.,D&O & Auto
CompetitiveRates- rrA" Rated Carriers
($5OO
M i n i m u mP r e m i u m )
For additional informdion or quote call:
Preferred Property Program 888-548-2465
Ask for Carmen, Ken, Vinnie or Steve
www.umbrellaproqram
News & Views
Page 19
Do Your Clients Mistakenly Think They are
Eligible for Disability Benefits?
Independent agents must identify risk
exposures, review current insurance policies in
place and identify any gaps in coverage. It’s not
difficult to convince a customer that a risk with
potential financial consequences exists.
However, one of the biggest challenges an
agent faces is educating clients that the
government-provided “safety net” of disability
and survivor benefits are solely not adequate
to meet their needs. Not many people
understand how government-provided
disability benefits actually work.
A common misperception is that everyone is
eligible for disability benefits. In reality, similar
to the rules for retirement benefits eligibility,
people have to qualify for disability benefits.
Yet many young people and individuals who
were out of the workforce for a particular
period of time (for example, a mom who
stayed home with her children for a number of
years) may not be currently eligible.
Basically, when it comes to disability benefits
eligibility, individuals earn one credit for each
$970 of wages or self-employment income.
When they've earned $3,880, they've earned
four credits for that year. Because younger
people haven't been in workforce long, the
eligibility rules take into account:
• Before age 24: A person may qualify if he has
six credits earned in the three-year period
ending when their disability starts.
• Age 24 to 31: A person may qualify if he has
credit for working half the time between age
21 and the time he becomes disabled. For
example, if he becomes disabled at age 27, he
would need credit for three years of work (12
credits) out of the past six years (between ages
21 and 27).
• Age 31 or older: In general, unless he is blind,
a person must have earned at least 20 of the
credits in the 10 years immediately before he
became disabled.
Today, it is not uncommon for young people
to take some time to “find themselves.” This
journey might include a prolonged stay at
college and/or a part-time job and college
classes. Also, some young people end up
“working under the table” in a job for cash,
meaning their employer does not reporting
their employment to the government and does
not pay payroll taxes on them, so the worker
is not receiving credits toward Social Security
eligibility. As a result, a coverage gap can exist
for a young person who worked sporadically
and went to school. The same is true for a
young mother who was out of the workforce
for a while.
Parents should talk with their adult children
about whether their employer covers them for
disability benefits (and remember: Social
Security requires a very strict definition of
disability to receive payments, which means
total disability for at least one year). Many
employers, particularly smaller ones, don’t
provide disability benefits.
According to the American Council of Life
Insurers, 30% of small employers (10 to 100
employees) have never even been contacted by
an insurance agent about disability insurance.
For independent insurance agents, this gap
creates an opportunity to talk to employers
about offering disability benefits to their
employees. In fact, independent agents provide
the majority of commercial insurance for smalland medium-sized employers.
Are some of your commercial clients among
the 30% that have never been contacted by an
insurance agent about disability insurance?
Don't let that be the case. Help your
customers safeguard their employees’ financial
future and in turn boost the bottom line of the
agency.
Dave Evans ([email protected]) is a certified
financial planner and IA l-h contributing editor
The Premier Property and Casualty Trade Association
INDEPENDENT
INSURANCE
AGENTS AND
BROKERS OF
ARIZONA, INC.
The Mission of the Association is to ensure the success of independent
insurance agents and brokers throughout Arizona by focusing on
providing access to profitable markets, cost-competitive products,
advocacy, timely industry information, and superior education
333 East Flower Street
Phoenix, Arizona 85012
programs.
Phone: 602-956-1851
Toll: 800-627-3356
Fax: 602-468-1392
Email: [email protected]
We’re on the Web
www.iiabaz.com
Independent Agents and Brokers of Arizona
2828 North 36th Street
Phoenix, Arizona 85008
Affix Mailing label here