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October 28, 2009
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| In this Issue
• How We See It: Latest Producer Comp Disclosure Draft Reg is Better But Still Misses Mark
• Trick or Treat: Flood Insurance Program is Back on the Bubble
• Insurance Dept. Opinions: Commercial Lines Cancellation, Sharing Commissions
• Contribute to InsurPac and Help a Charity of Your Choice
• Keidel, Weldon to Present New E&O Webinar Series
• VU Can Help Prepare Your Agency for H1N1
• CD Offers Solutions to Five Reasons to Build a Disaster Recovery Plan Now
• The E&O Report, November 2009
"Uncertainty over Contract Certainty" (Member login required) |
Hot Links Local Events | Education Calendar | E&O Reports |Capitol Reports | The Situation Room | Technology
Word on the Street Podcast | Ask Tim Podcast
| How We See It: Latest Producer Comp Disclosure Draft Reg is Better But Still Misses Mark
The fourth version of the proposed regulation that would require producers to disclose their compensation to customers was made public last week by the New York State Insurance Department. While this latest draft incorporated some of IIABNY’s recent recommendations and is an improvement in a couple of areas from the prior version, the association still has considerable concerns with other provisions of the proposal. Of particular concern is a section on role disclosure that would put independent agents at a disadvantage over other distribution channels. This has been a long 10-month process of negotiations, with its roots back to the initial investigations into the illegal activities of several mega-brokers by the state Attorney General’s office in 2004. At that time, the IIABNY board of directors went on record opposing mandatory disclosure and has consistently supported voluntary disclosure when the customer requests it. While we still feel that mandatory disclosure is unnecessary, we also recognized that some form of disclosure requirement was inevitable. So, IIABNY has worked tirelessly on this number one member advocacy issue alongside other industry groups. Throughout the process, IIABNY has advocated the following key principles: IIABNY opposes any additional burdensome requirements that will add cost to the insurance transaction. IIABNY will fight to protect the rights of agents and brokers and minimize burdensome requirements. Any requirements that are proposed should be applied consistently to all distribution channels. Compensation disclosure should occur at the point of sale — not during the quoting process. New York should not single itself out by creating any requirements that are unique to New York. IIABNY has consistently supported voluntary disclosure of compensation when requested by the client.
As IIABNY aggressively continues its negotiations with the Insurance Department and the Governor’s Office, we are also researching our options in the event the final regulation is not acceptable. IIABNY’s senior officers and staff are meeting today with state Superintendent of Insurance James Wrynn to discuss this and other issues crucial to the interests of our members. Let us know how you see it. E-mail IIABNY Insider with your thoughts, opinions or reactions to "How We See It." If you would like your response to be considered for publication in "How We See It," please provide your name and phone number where you can be reached. You can also continue the conversation on the IIABNY page on Facebook, among the association's LinkedIn Group members or on Twitter. | | | Top of page | | | Trick or Treat: Flood Insurance Program is Back on the Bubble
In the words of that great American philosopher Yogi Berra, it’s déjà vu all over again. Under current law, the National Flood Insurance Program’s authority to operate will expire at midnight, Oct. 31. Congress and the president must enact new legislation to keep the NFIP operating. If it seems like just last month that we went through this, it’s because it was last month. At the Sept. 30 deadline, Congress extended the NFIP for one month. Should it fail to act this week, the NFIP will be unable to issue or renew policies. IIABNY will report any developments on The Situation Room page on the association’s Web site. | | Top of page | | | Insurance Dept. Opinions: Commercial Lines Cancellation, Sharing Commissions
The New York Insurance Department’s Office of General Counsel issued another handful of advisory legal opinions last week, including six from September and a straggler from February. A licensed insurance broker may not share commissions with an unlicensed LLC that he owns or with the unlicensed member of the LLC. However, the non-licensee member may share in the overall profits and losses of the LLC, provided the LLC is licensed as an insurance broker engaged in a bona fide insurance business and not created merely as a mechanism for sharing commissions with non-licensees.
The other opinions pertained to a proposed manufacturer’s warranty program, arbitration involving a self-insured entity, investment limitations on insurers, a proposed discount dental service plan and regulation of insurers’ investment trusts. IIABNY still awaits the OGC’s opinion on referral fees from online accident prevention course providers to producers. However, the OGC attorney handling the inquiry told IIABNY last week that the opinion should be ready shortly. All opinions issued since 2000 are available on the department’s Web site. | | | Top of page | | | Contribute to InsurPac and Help a Charity of Your Choice
As the calendar year comes to a close, many people contribute to their favorite charities. Did you know that IIABNY has a matching funds program for members who contribute to InsurPac? InsurPac is the non-partisan political action committee of the Independent Insurance Agents of America. It is a vital part of IIABA’s government affairs activities on Capitol Hill. As 2009 draws to an end and you are considering other charitable contributions, consider making those contributions through IIABNY’s InsurPac matching funds program. Any amount that is an increase over your previous InsurPac contribution, even if you have already given this year, will be matched in your name up to $500 to the charity of your choice. This is a unique opportunity to support two worthy organizations with one contribution. You can find more information and the matching funds request form on the IIABNY Web site. | | | Top of page | | | Keidel, Weldon to Present New E&O Webinar Series
Attorneys Jim Keidel and Chris Weldon of Keidel, Weldon & Cunningham LLP, IIABNY’s errors and omissions legal counsel, will present a new E&O Webinar series devoted to topics that directly affect agents and brokers. Their first Webinar, scheduled Nov. 17, will cover E&O Tips for Employee Benefits Agents and Brokers. Keidel and Weldon will devote the entire Webinar to a discussion of how and where E&O claims related to the sale and servicing of life, health and disability insurance can be avoided. They will use real-life examples of actual E&O situations they handled that illustrate the problems that can occur and the steps agents and brokers can take to help avoid a potential claim or lawsuit related to life, health and disability insurance coverage. On Dec. 15, Keidel and Weldon will present E&O Tips for How to Handle Carrier Downgrades. They will discuss the actions an insurance agency or brokerage should and should not take when it learns of the downgrade of a carrier it has placed insurance coverage. Those actions are important because a carrier rating downgrade can present E&O problems for an insurance agency or brokerage. A downgrade could also present an opportunity for an agency or brokerage to strengthen its relationship with its customers and implement steps to prevent potential E&O claims and lawsuits. You can register for one Webinar at a time. The purchase of each Webinar allows "conference style" viewing in your office. (Please note: Webinars are not approved for continuing education credit.) | Top of page | | | VU Can Help Prepare Your Agency for H1N1
It’s a hot topic on the news, in schools and in day care centers, but is your agency prepared for this year’s flu season? Can your agency operate in a highly-infectious environment? If such an event occurs and impacts your business clients, are they insured for what could be a catastrophic loss of income? The Big "I" Virtual University has gathered a wealth of resources on flu and pandemics, from business planning checklists to self-assessment tools. Also, it’s important to educate your team and help them stay healthy. Provide hand sanitizers and tissues, and ask sick staffers to stay home. The Center for Disease Control recommends that employees stay home until their fever breaks and until they have been off medication for at least 24 hours. Your agency may want to create or evaluate a telecommuting policy so staff members understand they have options when they are out of the office. Make sure your agency is prepared for the flu season and check out all the resources available from the Big "I" Virtual University. (A member login is required to access this section of the VU Web site.) | | | Top of page | | | CD Offers Solutions to Five Reasons to Build a Disaster Recovery Plan Now
What would your agency or clients do in the event of a flood, technology failure, berserk employee, boycott, negative media exposure, storm or terrorism? Do you have a plan in place? Here are five reasons to build a plan: - Under pressure, emotional decisions can be costly. Decisions based on a prepared plan have been shown to be more effective, timely and lower in terms of overall cost.
- A plan can reduce recovery time and the impact on customers.
- A plan will instill confidence in employees and customers that the organization is there for the long-term.
- Insurance settlements require "due diligence and dispatch" in recovering from interruption. A plan helps prove that the organization has acted accordingly.
- Inappropriate costs are avoided.
The Best Practices of Crisis Management CD can help prepare for these situations and minimize the impact on normal agency business. Agents can use a CD offered by Best Practices to customize a manual that will outline initial steps to determine if the plan needs to be executed, provide an external communication guide, assign and describe duties to each member of the resumption team and more. This information is valuable to an agency and to its clients. Go online to learn more and order the CD. You can also request additional information via e-mail. If you or your clients are looking for disaster planning assistance, Agility Recovery Solutions (an IIABNY Preferred Program) provides agencies access to disaster recovery and business continuity services that are simple, affordable and easy to use. Find full details on the Agility Recovery Solutions Web page of our Business Resource Directory. | | | Top of page | | |
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