THURSDAY, MARCH 18, 2010 

                                                Big “I” Association News

On the Hill
Dodd Unveils Financial Reform Proposal
Bill does not include federal regulation of insurance; Office of National Insurance proposal might subject agents to data requests.

This week, Sen. Chris Dodd (D-Conn.), Chairman of the Senate Committee on Banking, Housing and Urban Affairs, unveiled a bill he hopes will modernize and reform the U.S. financial markets. The Big “I” applauds Dodd’s efforts to improve financial regulation and for recognizing that insurance regulation should remain in the hands of the states. The association strongly believes that the property-casualty market poses virtually no systemic risk and will work with Congress to make sure it takes that into account as this legislation advances.

The 1,336 page bill includes several provisions that may directly or indirectly affect the independent agency system. The majority of the bill does not focus on the insurance market and, like the House legislation, there is no intrusive day-to-day federal regulation of insurance. Also in a major win for the Big “I”, the consumer protection agency does not include insurance products.

Several sections may affect independent agents and brokers, including:

Office of National Insurance (ONI): ONI would be housed within the Department of Treasury with the intent to improve the coordination of information gathering and sharing between states and the federal government, as well as play a role in international insurance agreements. The language is similar to the language found in the “Federal Insurance Office” provision the House passed in December. The Big “I” is concerned that this Senate provision, unlike the House bill, could inadvertently subject insurance agents to mandatory data requests from the federal government and is working with Chairman Dodd and the Committee to correct this issue.

Nonadmitted and Reinsurance Reform Act: The “surplus lines” legislation, which the Big “I” has advocated for and which was also incorporated in the House bill, is included in Dodd’s bill. This section aims to streamline the regulation of surplus lines insurance and reinsurance through state-based reforms.

Resolution Fund: This section would require financial firms with more than $50 billion in assets to contribute to an upfront fund intended to help dissolve troubled companies that pose a significant risk to the overall financial system. However, this would only apply to insurance companies deemed to be a systemic risk that would come under the authority of the Financial Stability Council.

Liquidation Authority (Resolution Authority): This section would provide the FDIC with federal resolution authority to unwind failing financial institutions (using the Resolution Fund, mentioned above). Insurance companies are specifically excluded from this section unless they operate in a state without an orderly guarantee fund system or if that guarantee fund does not promptly begin its own resolution mechanism within 60 days.

The Senate Banking Committee is expected to mark up this bill next week in hopes of reporting it to the full Senate before the April recess. A party line vote is expected with potential bipartisan negotiations occurring before Senate floor consideration. The Big “I” looks forward to working with Chairman Dodd and other members of the committee to modify the bill and ensure that it does not harm small businesses.

Click here for a summary of additional key provisions:

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


 


P-C Trends
A New Era Begins
Big “I” national Board of Directors vote to have all members support Trusted Choice^®; adopts new association logo.

Earlier this month, the IIABA national Board of Directors approved two very significant initiatives that will usher in a new era for IIABA members, consumers and the insurance industry at large. First, after concluding that a strong national consumer brand is fundamental to the success of members, and completing a thorough review of how best to support members’ use of Trusted Choice^® as the consumer brand, the decision was made to have all members support Trusted Choice^® via a reduced cost for participating in Trusted Choice^®, enabling them to focus their expenditures on living and promoting the brand. Effective March 6, 2010, the new annual fee for Trusted Choice^® will be $60 for agencies with less than 10 employees or $120 for agencies with 10 or more employees. These fees apply to member agencies new to Trusted Choice^® as well as those renewing their participation.

Members will receive communications in the future from state associations about any changes to the amounts or timing of fees they will collect in order to implement the decision to have all members support the consumer brand. The transition period for implementing this new approach to Trusted Choice^® participation will be completed by Sept. 1, 2011. In the interim, agencies with questions about the cost of participating in Trusted Choice^® should check with their state association, as each state association can customize the roll-out to best meet its needs. All agencies new to participation in Trusted Choice^® will need to sign the Trusted Choice^® License Agreement, which includes the Pledge of Performance, as has always been the case. To learn more about Trusted Choice^® and the tools and resources it offers, visit www.trustedchoice.com/faq.

The second major decision that the IIABA Board of Directors made was to update the IIABA logo to be harmonious with key elements of the Trusted Choice^® logo. The new association logo still includes the words "Independent Insurance Agent", but they are embedded within the iconic eagle “swoosh” used by Trusted Choice^®. IIABA will use its updated logo for lobbying and industry communications, as it represents the association. However, member agencies participating in Trusted Choice^® will be encouraged to co-brand their agencies with the Trusted Choice^® logo, which was designed in response to attributes consumers indicated were important to them. The logo transition process includes filing for a trademark with the United States Patent & Trademark Office, and preparing the final graphic files with with guidelines for use. As soon as those steps are completed, the new logo will be made available to members. 

In the nine years since Trusted Choice^® was launched, more than 10,000 agency locations chose to join the branding program, with 53 carriers providing significant support as company participants. With the strategic decision to have all members support Trusted Choice^®, there is an enhanced opportunity for state associations to target member education and convention programming to assist membership in “Living the Brand”. Trusted Choice^® was developed and based on consumer research – which continues to be validated in subsequent research – that consumers value choice, customization and advocacy, the very attributes that independent insurance agents offer to their customers. The competitive environment that prompted the launch of Trusted Choice^® has increased, especially in the face of the large advertising budgets of direct writers and captive agency carriers. Trusted Choice^® provides professional marketing resources and the opportunity to leverage the collective efforts and scale of Trusted Choice^® members for Internet Search Engine Optimization (SEO). It also enables agencies to piggyback on the state association and national promotion of the Trusted Choice^® brand, through local, state and national advertising. In the coming month alone, Trusted Choice^® ads will run on the Fox Network and TNT, and will appear in Smart Money magazine. In addition, Trusted Choice^® will be a sponsor for American Public Radio’s Marketplace and will continue its aggressive Facebook advertising campaign. Advertising campaigns will continue throughout the year.

Stay tuned to Insurance News & Views for further developments and availability of the new logo to take advantage of all that it and the Trusted Choice^® brand offer.

Dave Evans (dave.evans@iiaba.net) is the executive director of Trusted Choice^®.


 


On the Hill
Big “I” Grassroots Campaign Targets House Blue Dog and Moderate Democrats
Agents heed call to oppose health care bill.

The Big “I” has launched a grassroots phone campaign targeting 75 members of the U.S. House of Representatives from 40 states as part of the continuing efforts to send a strong message to Congress expressing the association’s opposition to the health care reform legislation. Initial reports indicate that thousands of independent insurance agents have already heeded the call to action and are flooding congressional offices with phone calls.

The targeted representatives are mostly moderate Democrats who are either leaning against the legislation, are undecided or have major concerns with either certain provisions or with the process the Democratic leadership has used to move the bill. Many are also members of the “Blue Dog Coalition,” a Democratic organization that advocates fiscally conservative views. Late last week, House Democratic leaders announced that they will attempt to pass the Senate version of the health care reform bill, as well as a “reconciliation bill” to make changes to that legislation (once it becomes law), by the end of this week. It remains uncertain whether Democratic leaders have the necessary 216 “yes” votes to pass the bill. Republicans have announced that they are unified in their opposition, which means that Democratic Leadership can only afford to have 37 Democrats oppose the bill. If 38 Democrats vote no, the bill will not pass.

Although the Big “I” supports efforts to enact real and substantive private market reform to provide all Americans with access to affordable health care and to lower health insurance costs, the association feels that the current House health care reform bill is not the right solution.

The health care reform bill does not substantially bend the cost of providing medical care, which is the true driver of private health insurance premiums. The legislation also contains billions of dollars in new taxes and fees that will directly increase the cost of private health insurance premiums for consumers. Additionally, even though a government-run public option has been eliminated from consideration, the public program expansions (e.g. Medicaid) in the current legislation will exacerbate the cost-shift by providers to the private market, which already averages almost $1,800 a year per privately insured family.

Finally, House leadership faces much criticism for their plans to use procedural gimmicks to advance the bill without due congressional consideration. Democratic leaders plan to use the reconciliation process, which was designed to only apply to budget matters, to make changes to the Senate-passed version. This maneuver avoids Democrats from needing the 60 votes in the Senate required to overrule a potential filibuster. It is possible that House Democrats also may use a little-known maneuver, called a “self-executing rule”, to “deem” the Senate legislation as being passed by the House, in order to avoid taking a tough political vote on the Senate bill. Thus, instead of having an up-or-down vote on legislation that will affect 18% of our nation’s economy, they may simply “deem” the legislation passed and then vote on the changes made by the reconciliation bill.

This week’s grassroots initiative is very timely given that this could be the final vote cast on health care reform by the House this year. If you receive a Grassroots Action Alert from your state association, the Big “I” urges you to heed the call.

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


P-C Trends
2010 Chile Earthquake: By the Numbers
Damage estimates aren’t the only way to compare the impact of different natural disasters.

The impact of the 2010 Chile earthquake is still being sorted out, but estimates of insured damages are between $2 billion to $8 billion. Compared to top ten disasters in the United States, the insured damages of the Chilean earthquake, while significant, would not make the United States top ten. However, considering its impact on the people in Chile and its insurance industry, independent agents should take notice of the event and consider their clients’ exposure to the peril of earthquake.

The Feb. 27, 2010 8.8 magnitude earthquake occurred about 200 miles south of the Chilean capital of Santiago and caused 500 deaths and damaged 500,000 homes (about 1 in 10). While commercial buildings are expected to fare better due to compliance with building codes, reports of damage to infrastructure like roads remains uncertain. This situation has made estimating the total amount insured damage difficult and estimates vary considerably, but Eqecat, AIR Worldwide and the Chilean Insurance Association indicated damages should be about $3.3 billion.

Naturally independent agents in the U.S. compare the Chile catastrophe to domestic events. At the estimated $3.3 billion in damage, the event would not make the top ten list of the most costly catastrophes in the U.S. as tabulated by the Insurance Information Institute. The graph below illustrates that the 2010 Chilean earthquake should be less costly than the smallest of the top ten catastrophes. (Much smaller, for example, than the Northridge earthquake in 1994 and even smaller than the lowest-ranking hurricane on the list, Hurricane Rita in 2005).



Source: Costs-Information Institute, Eqecat, AIR Worldwide and Chilean Insurance Association. Deaths- www.wikepedia.org articles by catastrophe. Dollars adjusted to 2008 as needed.

Of course, insured loss costs are not a complete picture and that is apparent from the disproportionate number of fatalities caused by the earthquake.  At 500 deaths, the earthquake would go from not making the top 10 U.S. disasters to to third place behind the Sept. 11, 2001 attacks and Hurricane Katrina.  Moreover, considering the Chilean earthquake occurred in a country of only 17 million people(about the size of Texas), the dramatic impact on the Chilean citizens is clear. Perhaps more dramatic is the fact that the total p-c insurance premiums in Chile are about $2.3 billion (less than the state of Delaware), making losess about 150% of p-c premiums in the country for the entire year.

Earthquakes are perhaps the mother of all disaster perils and independent agents need to remember that most standard insurance policies exclude the peril of earthquake. Special handling is required, typically requiring the support of a specialty underwriter.  What is often not recognized is the exposure to earthquake outside of California. To learn about the earthquake history in your state, visit link. Another handy reference is the U.S. Geological Survey with information by state at link. USGS has a wealth of maps as well. Check out the pictorial of damaging earthquakes from 1750 to 1996 at this link.

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


Tech Trends
Broaden Your Agency’s Online Reach
Using Search Engine Optimization and other online tools can help customers find your agency on the Web.

A quality Web site is a necessary first step to online success, since it is the agency’s Internet “hub” that Web users should eventually reach whether they get there from an Internet yellow pages listing, a search engine, a carrier site or a social media site like Facebook. But, it’s equally important that agencies constantly work to attract people to their sites.

When someone types in a business name or a city name and the search term “insurance” into Google or Yahoo, some of the top listings that show up are “local listings.” Local listings are like Internet phone books that show a company’s phone number, address (sometimes including a visible map of the area), background information and Web site. These listings are free, but businesses have to claim them and check them for accuracy and consistency. Progressive has run agent surveys indicating that fewer than one in five independent agencies have claimed free online local listings. Don’t miss this high-impact opportunity.

To start, claim free local listings at Google, Yahoo! and Bing. To get started on Google, for example, type “Google local listing” into the Google search engine and select the Google Local Business Center. Make sure all agency information is consistent and accurate and that each listing links back to the agency’s Web site. Also, be sure to choose appropriate business categories and keywords. Take note of how the highest-ranking local competitors are listed and mirror that format. The agency also should claim free listings at localeze.com, infousa.com, yellowpages.com and superpages.com – the more listings, the better.

Next, help people find the agency’s Web site when they perform searches on sites like Google and Yahoo for common insurance terms. That’s called “Search Engine Optimization” and it’s driven by two main factors: a Web site’s content and the other sites that link to it. Web users can control both.

Use Google Analytics and Google Keywords to better understand the words people use to search for insurance in your local area. For example, an agency in Boca Raton, Fla., might discover that people search for “Boca Raton insurance” the most. Therefore, those three words need to be integrated into the agency’s home page copy.

To boost SEO, create separate pages for each product line. Also, remember to write for humans. Tell people exactly what the agency offers and why it’s the best. Integrate search terms, but don’t repeat them. - Work with a local Web development partner that can improve the agency’s SEO. Behind-the-scenes metatags, link-building strategies, keyword optimization and other tactics can improve search engine rankings. Ask for local references of any partners being considered.

Next, link to carrier sites and ask carriers to link to the agency’s site. For example, all of Progressive’s agents can be linked to and from the company’s agent locator site. Finally, start a Facebook “fan” page and be sure to have a listing on LinkedIn. These social networking sites also feed search engines.

The most successful agents on the Internet are those who invest ongoing time and money in their online presence. These agents respond quickly to online inquiries. They designate team members to keep content fresh and regularly check online listings for consistency. And, most of all, they measure their results with online analytics and by the business generated through Internet activities.

Matthew Marko (matthew_marko@progressive.com) is a Marketing Process Manager for Progressive Insurance.  He works to provide local marketing strategies, tools and co-branded collateral to help independent agencies grow their businesses.

Click here to read last week’s article in this series about getting started building an effective agency Web site.