T H U R S D A Y ,   J U L Y   1 4 ,   2 0 0 5

Wasting Away the Work Day... |  Hurricane Dennis Not So Much a Menace |
  Congress Mulls Over Terrorism Backstop, NFIP |  Just Ask the Experts |
  Junk Fax Prevention Act Signed | Big "I" National News

A G E N C Y   M A N A G E M E N T
Wasting Away the Work Day...
Internet Abuse Rampant; Employee Usage Policies Needed

Do you know how your agency employees are spending their work days? According to a recent survey by America Online and Salary.com, the insurance industry ranked No. 1 in employees wasting time during work hours—a whopping 2.5 hours a day. The top time-wasting activity? More than 44% of survey respondents said "surfing the Internet for personal use" was their primary way to whittle away the hours.

The 2.5 hour figure represents unproductive time above and beyond an employee’s lunch hour—and employers aren’t accounting for it. "A certain amount of slacking off is already built into the salary structure," says Bill Coleman, senior vice president at Salary.com. "Our survey results show that workers on average are wasting a little more than twice what their employers expect. That's a startling figure."

Survey sponsors noted the survey results reflect the integral role the Internet plays in modern life. "It goes to show how integrated it has become to the daily functions of our personal and professional lives," Samara Jaffe, director of careers/AOL Find a Job, America Online. "Today, there are so many useful Web sites that have enabled people to become more efficient with accomplishing multiple tasks in a shorter amount of time."

To control employee Internet use (and abuse), you need a formal policy. According Virtual University Expert Jack Fries, as the Internet becomes an increasingly essential to day-to-day agency and company operations, it is critical that every organization—large or small—have a corporate Internet policy. In addition to being a drain on resources, Internet abuse opens up your agency to liability claims because of copyright violations, slander and invasion of privacy. Other potential offenses include first-party damages due to the downloading of viruses, internal (or external) distribution of offensive materials, and the release of proprietary information, passwords, etc.

Agencies should require every employee to sign an Internet usage policy, according to Fries. The policy should include a general statement which outlines the parameters of work Internet use. Fries suggests:

"The use of Internet is restricted to "official agency business." Personal use of or time spent for personal gain is strictly prohibited. Authorization for Internet access must be obtained through your immediate supervisor. Once authorization is approved you are responsible for the security of your account password and you will be held responsible for all use or misuse of your account. You must maintain secure passwords and never use an account assigned to another user."

In addition, Internet usage policies should include guidance on e-mail etiquette and use, online agency information confidentiality, file transfer protocol and Internet user groups.

To download Fries’ complete sample employee Internet usage policy, click here.

Katie Butler (katie.butler@iiaba.net) is editor in chief of IA.

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P & C   T R E N D S
Hurricane Dennis Not So Much a Menace

Hurricane Dennis had the makings of a major disaster as it carved its path across the Caribbean toward the Florida Panhandle. But just before touching down on Florida soil, its speeds diminished slightly from 145 mph to 120 mph winds, sparing the region the same colossal damage 2004’s Hurricane Ivan caused. Although Dennis was not as severe as expected, it’s still too soon for a complete sigh of relief due to worsening forecasts for the rest of hurricane season.

Dennis packed a powerful, intense punch as it roared through the Florida Panhandle and Alabama coast Sunday, following a trajectory similar to Ivan. But the Category 3 hurricane’s smaller size and faster pace inflicted less damage. According to catastrophe modeler AIR Worldwide Corp., losses should fall between $1 billion and $2.5 billion. Ivan caused $10 billion in insured losses.

Although the region was spared the brunt of Dennis’ fury, the news isn’t all positive. The hurricane hit the United States atypically early in the season. In fact, it was "the first major hurricane to hit the United States in July in 150 years of recorded history and only the seventh Category 3 or stronger hurricane to form in that period," according to The Washington Post.

That may forebode another busy hurricane season reminiscent of 2004. Tropical Storm Risk, a consortium of insurance, risk management and seasonal climate forecasting experts, recently upped its expectations of hurricane activity this season by 20%.

According to the group, the updated forecast "predicts Atlantic basin and U.S. landfalling hurricane activity to be about 200% of average in 2005. This is the highest July forecast for activity in any year since 1950."

TSR says there is a 97% probability of an above-normal hurricane season. Among the group’s predictions: Five tropical storms will hit the U.S., including two hurricanes.

With the threat of another busy hurricane season looming large, the insurance industry is feeling the pressure. "Florida Insurers Seek Safe Haven in Hurricane Season," an article Standard & Poor’s Rating Service published Tuesday, says that "squeezed on one side by regulators that have made it difficult to boost homeowner premiums and on the other by forecasts of stormier-than-normal hurricane seasons that could last decades, the industry is taking every measure it can to protect its interests short of abandoning the state itself."

Among the measures singled out in the article: dropping coverage, shifting policies to lower-rates or unrated smaller companies and operating through separate subsidiaries in Florida.

And areas such as the Florida Panhandle’s coastal towns that have now been hit by two hurricanes in two years can expect to see a negative affect on insurance pricing.

"Pricing will continue to stiffen as will reinsurance costs," says Robert Hartwig, senior vice president and chief economist of the Insurance Information Institute. "More policies in this area may wind up in Citizens if insurers are not allowed to charge adequate rates."

Jennifer Sikorski (jennifer.sikorski@iiaba.net) is IA’s associate editor.

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O N   T H E   H I L L
Congress Mulls Over Terrorism Backstop, NFIP

It was a busy week on Capitol Hill as Congress held hearings on renewing the federal backstop for terrorism insurance as well as reform of the federal flood-insurance program.

The Terrorism Risk Insurance Act (TRIA) is set to expire Dec. 31, and Congress is now determining how or whether to extend or replace it in the wake of a June 30 Treasury Department. The Senate Banking Committee held a hearing on the matter today, and the House Financial Services Committee held a similar hearing Wednesday.

"We applaud the Senate Banking Committee for moving forward so expeditiously on the question of terrorism insurance and the appropriate role the federal government should play," says Charles E. Symington Jr., Big "I" senior vice president of government affairs and federal relations. "We are very pleased that both the appropriate committees in the Senate and the House are taking this issue up quickly and with obvious seriousness."

The Big "I" has consistently supported the continuation of the current terrorism insurance backstop or a modified one, and it has noted in testimony before Congress that action is needed as soon as possible since businesses and insurers are starting to make decisions that affect operations beyond the expiration of TRIA.

"The Big ‘I’ and our 300,000 insurance agents and brokers hope that both the House and the Senate can move forward quickly on a program that will serve consumers well and protect our economic security," says Brendan Reilly, Big "I" director of federal government affairs. "The fact that the Senate Banking Committee and the House Financial Services Committee both have moved forward so quickly is a very encouraging sign, and we commend the legislators on both committees for their work."

Additionally, on Tuesday, the House Subcommittee on Housing and Community Opportunity held a hearing on the future of the National Flood Insurance Program (NFIP).

The Big "I" supported the Flood Insurance Reform Act (FIRA) of 2004 but has expressed concerns that certain areas of reform were not addressed in the law, which reauthorized the NFIP for five years.

First, the Big "I" respectfully suggests that Congress should address a requirement for mandatory disclosures by the Federal Emergency Management Agency (FEMA) of flood information prior to any property purchase by creating an accessible electronic database of flood losses.

Second, the Big "I" believes there is a need to strengthen NFIP building regulations. Stronger regulations would require communities to ensure that new construction in flood plains includes safeguards against flood damage and to make substantial improvements to existing buildings within flood plains.

"Buying a home is perhaps the most important investment an individual or family will ever make," Symington says. "Our association and its 300,000 members strongly believe FEMA must ensure that property-buyers are given the right tools to protect themselves, prior to purchase, against any unexpected consequences."

Additionally, the Big "I" suggests a proposed FEMA rule designating independent p-c agents as "agents of insureds" rather than allowing the private sector to make this determination, which could be detrimental to some agents, brokers and consumers.

"This change would shield private insurers from liability for their own errors, which could leave agents and brokers culpable for errors that are not their fault," says Patrick O’Brien, Big "I" director of federal government affairs. "This inevitably would increase their liability exposure and cost of doing business by making it more difficult to secure errors & omissions coverage or increasing premiums for their businesses. These increased costs have to be accounted for someplace in the system, and it is the consumer ultimately who is left holding the bag."

Cliston Brown (cliston.brown@iiaba.net) is Big "I" director of public affairs/media relations. 

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L & H   T R E N D S
Just Ask the Experts

The media is full of experts on virtually every topic imaginable. You can’t flip through the channels with out programs featuring "talking heads" interpreting the political scene. There also are a number of financial "experts" who give their takes on financial planning.

To be fair, there are some thoughtful financial pundits who stipulate that their recommendations are based on rules of thumb and that each situation is different. However, many financial gurus are absolutists who spout misinformation, and it can be maddening to listen to them.

For example, a number of people jumped on the anti-long term care (LTC) insurance bandwagon, saying that the premiums are expensive, carriers burn consumers with large rates increases, etc. Are these experts going to write the check to pay for LTC expenses when the viewers need assistance? Wouldn’t it be more appropriate to tell people to seek out an agent with LTC experience who represents more than one company?

All kinds of financial experts love the do-it-yourself approach. Their favorite advice is to tell consumers to buy insurance online. Perhaps the first real "expert" advice was "buy term and invest the difference." While there is nothing wrong with buying term life insurance if that meets the person’s objectives, who is going to discuss beneficiary designations (and the difference between per stirpes and per capita contingent beneficiaries) and what to do if there is a problem during the underwriting process? In fact, an agent could actually help clients set up an insurance and savings program and periodically review their savings progress to see if they are actually saving the difference.

In this complex world, every client’s situation is somewhat unique. While it’s helpful to have some baseline information, averages can be deceiving. I don’t know anyone who has 2.3 kids. Family situations, personal goals, medical histories and other factors make cookie cutter answers dangerous.

Independent agents are good listeners because they know the difference between financial advice and financial security is implementing the plan. If everyone listened to outside advice, we would lose the extra weight, stop smoking and eat leafy foods instead of burgers. But it’s human nature to need personalized assistance like the medical doctor that scolds you at your annual checkup. Agents provide that valuable handholding.

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

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L E G A L   A D V O C A C Y
Junk Fax Prevention Act Signed

President Bush signed the Junk Fax Prevention Act of 2005 on July 9.

In brief, the act allows businesses to send unsolicited commercial faxes to: 1) Anyone with whom the sender has an established business relationship, unless the recipient has requested not to receive such faxes from the sender; 2) Anyone the sender has a fax number for prior to July 9, 2005, unless the recipient has opted not to receive such faxes; and 3) Anyone whose fax number is obtained either directly from the fax recipient or from a public source to which the recipient gave the fax number for publication (e.g., Web site or published directory).

For more information on the act and its impact on insurance agents and brokers, see the June 30 IN&V article "How the Junk Fax Prevention Act Will Affect You."

The Office of the General Counsel will be updating its Frequently Asked Questions on Do Not Fax during the next week and the revised FAQ will be posted in the Legal Advocacy section of www.independentagent.com.

For more information on the Act, contact Amy Hendricks at amy.hendricks@iiaba.net or Kathleen Graber at kathleen.graber@iiaba.net; 800-221-7917.

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