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                                                Big “I” National News

On the Hill
Big “I” Focuses Grassroots Efforts on Health Care Debate in the Senate
Agents heed call to oppose government-run health care plan.

This week, the Big “I” launched a grassroots phone campaign targeting all 100 United States senators sending a strong message to Congress expressing the association’s opposition to the creation of a government-run health care plan, and highlighting the importance of preserving the private delivery of health insurance. Thousands of independent insurance agents have already heeded the call to action and are flooding congressional offices with phone calls and e-mails. The next few days are critical as the debate over health care rages on in the Senate.

Over the last few weeks, the Senate Health, Education, Labor and Pensions (HELP) Committee and the Finance Committee have each debated and reported very different health care reform bills. Senate Majority Leader Harry Reid (D-Nev.) is now shepherding negotiations between the HELP and Finance Committees as they merge the two bills into a product that they hope to debate on the Senate floor in late October or early November.

As negotiations continue behind closed doors, a number of important issues to independent insurance agents are up for debate. First and foremost, whether or not to include a government-run health insurance plan (“public option”) that would unfairly compete with the private insurance marketplace, limit consumer choice and increase the taxpayer burden is on the table. Spirited debate is expected regarding a proposed employer mandate that would shrink small business output and force small businesses to cut jobs. As lawmakers try to find revenue to pay for the estimated $829-$900 billion price tag, the Big “I” is also concerned that they could potentially look to new taxes on small businesses that would force thousands to either cut jobs or close their doors.

Finally, while the Finance Committee bill explicitly states that agents and brokers are allowed the immediate right to enroll individuals and employers in any health insurance plan available in the state exchanges, the HELP Committee bill has no such provision. The Big “I” continues to fight to ensure that independent agents and brokers are able to enroll individuals and small businesses in any plan offered in the state exchanges.

The latest grassroots effort is already a hot topic in the industry and one of many Big “I” efforts on behalf of its members. For more information about the grassroots campaign, please contact Jen McPhillips, Big “I” director of grassroots programs and InsurPAC, at 202-863-7000; jennifer.mcphillips@iiaba.net.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.



Pulse on the P-C Markets
Demand for Special Events Coverage on the Rise
Agents, carriers seek ways to simplify coverage process.

Special events insurance encompasses a wide range of insured needs and often requires a good deal of expertise and detail work on the part of agents. Demand for special events coverage is on the rise, and carriers are offering a variety of packages and online forms to make writing business easier.

“The trend seems to be that more and more facilities are requiring their events to have coverage, even small events,” says Lorena Hatfield, marketing resources manager at K&K insurance group. “Often, people will show up at a facility without insurance and didn’t know they needed it.”

Hatfield says some carriers, including K&K, are offering new ways to bind special events coverage on short notice. Hatfield is also seeing an all-around demand for higher limits as events get more and more complex, and she says many carriers are bundling multiple coverages for a single event in order to make the policy more straightforward and easier to write. A prime example is weddings, where bundling coverages for the rehearsal dinner, ceremony and reception can simplify the process.

Agencies that specialize in events insurance are also finding ways to simplify the coverage process while bringing in more business. Hank Ham, an agent at the Henry Ham Agency in Denver, says very large events, such as state fairs and festivals, often require insurance for every single vendor. Instead of making them all purchase separate policies, Ham encourages the event organizers to work off of a master policy form that he provides. This method easily covers all entities under one form – and brings in more business for the agency.

However, while there are many ways to simplify special events coverages, Ham is finding that some aspects of the marketplace are becoming increasingly complicated. In particular, he must often negotiate with large event sponsors to address their sometimes unreasonable insurance demands.

“Sponsors’ requirement for high limits can negate the need for sponsorship due to the cost of the extra limits,” says Ham. “More and more, we find ourselves in a position of negotiating directly with the sponsor about what we can provide and at what cost.”

Ham adds that carefully analyzing exposures, working with insureds to address every aspect of an event and being proactive about loss control are essential to providing effective events coverage. He says there are thousands of events in each state that require full liability coverage and a savvy insurance professional.

“Often, someone will call seeking coverage and producers just give a price,” says Ham. “You have to find out the exposures and what they’re doing for loss control. If you are willing to spend the time, it brings in more business.”

Veronica DeVore (veronica.devore@iiaba.net) is Big “I” writer/editor.

Editor’s note: This article is the fourth in a series exploring trends in specific coverage areas. Click here for a detailed product listing of special events markets. 

P-C Trends
A Comparison of Loss Ratios and Contingency Payments
Will insurance brokers soon be dancing in the streets?

Last week, media reports noted mega brokers Aon Corp, Marsh & McLennan Cos. and Willis Group Holdings LLC want contingent commissions that were lost in the wake of the Elliot Spitzer investigation reinstated. This week, a satirical commentary by the online blog “Riskbitz” reported that “impromptu street parties broke out in the world’s financial centers as insurance brokers heard that they will soon be allowed to reinstate contingent commissions.” The satire raises the question of what will happen in 2010 and beyond for contingency commission payments to property-casualty insurance industry agents and brokers. But how do p-c industry loss ratios affect overall direct contingency payments?

Data from 1998 to 2008 on loss ratios and contingency payments show there is a solid correlation between falling loss ratios (red line) and increasing contingency payments (green line). However, one would expect that contingent payments based on the industry’s profitability would rise and fall inversely with the industry’s loss ratio, which is clearly the case from 1998 to 2004.


 
The question on the minds of industry watchers is what will happen in ensuing years with respect to these payments. Based on loss ratios for 2009, 2010 and 2011 should see an increase in contingent payments. Why? Industry loss ratios though six months are down to about 72% and 2009 looks, so far, to be a modest year from a catastrophe loss perspective. The X factor is the impact of changes in contingency payment practices implemented in the wake of the Spitzer investigations in 2004.

Paul Buse (paul.buse@iiaba.net) is president of Big I Advantage^SM and a licensed p-c agent.


P-C Trends
New Insurance Exchange Announced
Pilot planned for select lines in 2010.

Earlier this month, LexisNexis and the Council of Insurance Agents & Brokers (CIAB) unveiled plans for a new insurance exchange that promises all types of agents access to single entry and multiple bids for all lines and types of insurance. A pilot is planned for selected lines of middle-market commercial insurance by the summer of 2010.

So far, organizations taking part in the exchange are CIAB and LexisNexis. LexisNexis brings with it not only ChoicePoint, its affiliate and data supplier to the insurance industry, but also the resources of its parent company, Reed Elsevier. Reed first purchased Mead Corp. of Ohio in 1994, renaming it LexisNexis and then adding ChoicePoint in 2008.

The concept of an insurance exchange brings with it the benefits of multiple quotes with a single entry of data from agent/broker to insurer and back again. Gone may be the days of entering the same data multiple times and re-entering data returned from insurers into an agency management system and client proposals. The exchange also brings with it the ability to gather large amounts of risk analysis and marketplace data. With access to other sources of risk data, the exchange has the potential to allow insurers to price risks more accurately as well as give the insurance industry real time data on prices of insurance. One can essentially view the concept as an electronic insurance-specific version of the Chicago Board of Trade, with a “dash of Bloomberg” available to agents on the Internet.

The announcement notes that the exchange will follow current industry standards, specifically Association for Cooperative Operations Research and Development (ACORD) standards. ACORD President & CEO Gregory Maciag referenced the announcement of the exchange on his blog. Maciag noted the interface is planned to for PCs and non-PCs alike, the exchange will handle both structured and non-structured data and it will rely on the same interfaces with agency systems that insurer portals use today. 

“Both the Council and LexisNexis have long relationships with ACORD, and we’re pleased that ACORD standards will be a cornerstone of their new insurance exchange,” Maciag writes. “We look forward to the success of the exchange and will do everything possible to support it.”

The Big “I” Agents Council for Technology (ACT) will watch the development of the exchange with interest, as ACT works closely with ACORD and counts LexisNexis among its members. ACT Executive Director Jeff Yates says ACT has an ongoing interest in improving agency workflows for efficiency and better client service. He states that ACT’s focus is “to pursue practical, incremental improvements that are based on a transactional model between particular agencies and carriers.” Yates adds that ACT seeks to facilitate successful technology applications, such as Real Time, Download and the electronic transfer of documents, such as financial statements, loss runs and policies.

Paul Buse (paul.buse@iiaba.net) is president of Big I Advantage^SM and a licensed p-c agent.


P-C Trends
Make the Most of Snail Mail
With restrictions on e-mail and telemarketing, look to targeted traditional mail to reach consumers.

While people receive hundreds of e-mails every day, more than two-thirds of it is typically junk mail or “spam.” This is why spam filters have become so important in helping to cut down on the amount of unwanted e-mails. With the advent of the “Do Not Call” telemarketing laws, independent agents looking to reach out to new clients may find it difficult to find effective avenues to introduce their agency to new potential customers. As a result, many independent agencies are revisiting direct mail. But, with the cost of postage and paper, it’s important to maximize the value of direct mail.

According to a recent study by the postage supply company Pitney Bowes, an average of 44% of all direct mail received by consumers is tossed out without being opened. Why? Consumers tend to reject mail not personalized for them. Thus, it is critically important to have correct, adequate mailing lists that contain current information. A good start is using the recipient’s full name on both the envelope and the letter. Tailor the subject of the mail to specific customer segments. The same Pitney Bowes study found that 57% of consumers said mail targeted to their tastes and interests would have some impact or very high impact on their relationship with the business. And, 36% indicated they continue to do business with specific companies because of targeted mail. Yet, the study indicated that only 20% of direct mail is actually targeted to the recipient. For example, if an agent had a listing of classic car collectors and drivers in their service area, they could tailor the message to target this unique audience.

For existing customers, many insurance companies now put messages on policyholder statements advertising additional policies or riders and suggest they contact their independent insurance agent to discuss these options. Independent agents can and should reinforce new or improved policy features to keep in touch with their customers to keep the agency top of mind. 

Dave Evans (dave.evans@iiaba.net) is a certified financial planner and IA l-h contributing editor.