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January 6, 2010
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| In this Issue
• Producer Comp Disclosure, Coastal Markets Tops Among Issues in 2010 Position Paper
• Seeking Annual Award Nominations
• Insurance Dept. Announces 2010 Regulatory Agenda
• Reminder: Insurers Have Notice Obligations When They Terminate Agencies
• 'Ask Tim' Podcast Offers InVEST Students Chance to Test Host on Insurance Knowledge
• ACT Unwraps Social Media for Agencies in Latest Report
• Trusted Choice® Visibility is Raised in New Book on Cost Savings
• Reinsurance Report: Rates Decline at Jan. 1 Renewal
• Tips from Trusted Choice® : Don't Put Yourself at Risk of a Winter Fire
| Hot Links Local Events | Education Calendar | E&O Reports |Capitol Reports | The Situation Room | Technology
Word on the Street Podcast | Ask Tim Podcast
| Producer Comp Disclosure, Coastal Markets Tops Among Issues in 2010 Position Paper
In preparation for IIABNY’s 40th L Day or Legislative Day, scheduled Feb. 9 in Albany, the association this week released its 2010 legislative position paper. L Day is now part of IIABNY’s Capital Event, scheduled Feb. 8 and Feb. 9, featuring workshops from MarshBerry and Rick Morgan Consulting as well as evening entertainment and networking. Among the paper’s priorities for the coming legislative session is opposition to the state Insurance Department’s proposed compensation disclosure regulation and support for aggressive implementation of several initiatives enacted in 2008 aimed at encouraging expanded carrier participation in New York’s Coastal Market Assistance Program or C-MAP. IIABNY will host a free one-hour Webinar at 11 a.m. Jan. 29 reviewing in detail the issues outlined in the position paper. The association’s legislative representatives Michael Barrett and Jill Muratori will present the Webinar. In addition to providing background preparation for IIABNY members attending L Day, the Webinar will provide an extensive overview of the association’s legislative program for 2010. Register for the Capital Event and send in your Hotel Reservation form today – the hotel deadline is THIS Friday, Jan. 8. Any hotel reservations received after Jan. 8 will be handled on a space-availability basis only. | | Top of page | | Seeking Annual Award Nominations
Time is running out! Nominations are due Jan. 18 for IIABNY's Trusted Choice Agency of the Year, ACSR of the Year and Joel S. Pollack Young Agent of the Year awards to be presented Feb. 8 at the Capital Event in Albany. For more information, e-mail IIABNY Education Director Kathy Lawler. | | | Top of page | | | Insurance Dept. Announces 2010 Regulatory Agenda
Rule changes affecting advertising, producer premium accounts, auto photo inspections, personal lines cancellation notices and workers’ compensation highlight the New York Insurance Department’s January 2010 regulatory agenda. The agenda, published in today’s issue of the New York State Register, was posted on the department’s Web site on Jan. 4. The rule changes the department is working on include: An amendment "to permit the use of Internet and out-of-state banks for producer premium accounts." An amendment adding to the eligibility list for the Free Trade Zone certain risks that are on the excess line export list. A new regulation "to provide clarification and rules regarding inland and ocean marine insurance." Amendment providing notice and time frame requirements for handling of third party claims. An amendment "to include additional circumstances under which an insurer may voluntarily waive mandatory inspection of a motor vehicle for physical damage coverage, and to clarify that the use of digital photography and electronic access to inspection report data are permitted." The department proposed this change once before but did not adopt it before it expired. A new regulation to provide requirements for policies covering wrap-ups. A new regulation "to provide that cancellation notices subject to section 3425 of the Insurance Law should include the date and hour of cancellation, the date of the notice, and, for nonpayment of premium cancellations, a statement informing the consumer that cancellation will not take place if the consumer makes timely payment of the premium." A new regulation "to provide rules and guidelines to assure full disclosure of all relevant information within advertisements which describe or solicit the purchase of property and casualty insurance coverage that are published, issued or distributed through various advertising media."
Several amendments to workers’ compensation related amendments pertaining to premium credits for certain loss prevention programs, assessment allocation among insurers, reserve requirements and coverage for the Independent Livery Driver Benefit Fund. | | | Top of page | | | Reminder: Insurers Have Notice Obligations When They Terminate Agencies
We often hear from members about issues when an insurer they represent has decided to terminate their appointments. One came to our attention recently with regard to commercial lines business. While it appears that the carrier is properly complying with New York law, its notice to agents did not specify the statutory requirements. When an admitted insurer terminates an agency, it has the following obligations to insureds for commercial lines other than workers’ compensation and a few other lines of coverage: It must offer to continue policies written with the terminated agent for the remainder of the required policy period, which is one year from the date of issue or renewal. It must pay the terminated agent the contractually agreed-upon commission for all continued policies. It must mail or deliver a written non-renewal notice to the first-named insured, at the address shown on the policy, and the insured’s authorized agent, at least 60 but no more than 120 days prior to the policy’s expiration date (the law requires 30 to 120 days’ notice for excess liability policies.) The non-renewal notice must contain the specific reason for non-renewal. "Agent no longer represents the company" is a legally valid reason for non-renewal. The notice must advise the first-named insured and agent that loss information is available. Within 10 days of the first-named insured’s or authorized agent’s request, the insurer must provide loss information covering the period of time the insurer provided coverage. The insurer must provide information on open and closed claims, including date and description of occurrence, and any payments; and information on notice of any occurrences, including dates and descriptions. The law does not require insurers to provide reserve amounts on open claims.
For a copy of New York Insurance Law Sect. 3426, which contains these requirements, visit the Cancellations & Nonrenewals page in the Research section of the IIABNY Web site. | | | Top of page | | | 'Ask Tim' Podcast Offers InVEST Students Chance to Test Host on Insurance Knowledge
Forty-two students participating in the InVEST programs at Dryden, McGraw, Groton and Trumansburg high schools got quite an earful in December when they visited IIABNY's office in DeWitt. They heard a presentation on insurance credit scoring and some shadowed several members of the association's management during the day. While touring the office with four InVEST teachers, the students got a chance to pose a variety of questions to IIABNY employees. Six of the students were willing to go on camera and direct questions at Tim Dodge, the association's director of research and external communications. As the host of "Ask Tim" discovered, their queries merited thorough explanations, enough so to divide the latest episode into Part 1 and Part 2. After viewing Dodge's conversation with the students, check out the "Ask Tim" blog for other issues not covered by the podcast. If you are a member with a technical or research question that you think should be featured in a future "Ask Tim" episode, you can submit your ideas by giving Dodge a phone call at (800) 962-7950, ext. 229, send an e-mail message to him or complete an online form. Your question might be featured on "Ask Tim." And, if you are already using a news reader or aggregator, subscribe to "Ask Tim" by clicking on the "Subscribe to my Podcast" link in the left column of the Weblog. If you want to subscribe and aren't already using a news reader or aggregator, here are links to a couple among the many software applications available: Bloglines and News Gator. | | | Top of page | | | ACT Unwraps Social Media for Agencies in Latest Report
In preparing a policy to adopt social media tools for your agency, one of the key questions that should be addressed is identifying those employees with an appropriate business use for this form of personal interaction. That’s the advice featured in a new 12-page report, "Creating a Social Web Policy for Your Independent Agency," issued by the Agents Council for Technology. The report contains a checklist of key steps to take in developing and implementing such a policy, samples of the policies being employed by some prominent companies, examples of possible provisions to include, and suggestions for a social Web code of conduct for your employees. ACT has also included social media policies in use today by two independent agencies as an additional resource for agencies to use in customizing the policies appropriate for their firms. More information about the report and related material is posted at www.iiaba.net/act through the "Websites & Social Media" link. | | | Top of page | | | Trusted Choice® Visibility is Raised in New Book on Cost Savings
The national Trusted Choice® branding program is featured in the new book by "Good Morning America" consumer correspondent Elisabeth Leamy. "Save Big: Cut Your Top 5 Costs and Save Thousands," which identifies areas where people spend the most money and shows them how they can save more by tackling large expenses, mentions Trusted Choice in several passages and specifically directs consumers to TrustedChoice.com. Further reinforcing the brand’s visibility is the continuation of the 12-month, national cable television advertising in 2010 with the following schedule: Versions of the Trusted Choice television, print, radio and billboard ads, which can be tagged with an agency’s name and other information, can be previewed and ordered online by participating agencies after logging in at the Trusted Choice Web site by selecting the "Agents/Brokers" section, clicking on "Advertising" and then selecting your choice from a submenu. More than 700 IIABNY member agency locations participate in Trusted Choice. If your agency has not yet joined Trusted Choice, you can do so by going to the Trusted Choice Web site, selecting the "Agents/Brokers" section and providing your agency’s ZIP code in the blank field in the middle of the page. | | | Top of page | | | Reinsurance Report: Rates Decline at Jan. 1 Renewal
Reinsurance rates across most lines of property catastrophe business declined at the Jan. 1, 2010 renewal, according to a briefing released this week by Guy Carpenter & Company, LLC. The report, Rates Retreat as Capital Rebounds: Global Reinsurance Renewals at January 1, 2010 shows Guy Carpenter’s World Catastrophe Rate on Line Index declining by six percent at the Jan. 1 renewal, as the reinsurance market recovered and swiftly recapitalized in the wake of the global financial crisis and large reduction in catastrophe losses. The report covers regional developments as well as key influences and trends, such as catastrophe bonds and mergers and acquisitions activity. Both the report and downloadable charts are available online. U.S. Property Catastrophe Risk-adjusted catastrophe prices in the U.S. decreased by an average of six percent, though the picture is somewhat complicated by recent adjustments to catastrophe models that have decreased predicted losses for earthquake and wind perils. Factoring in modeling adjustments, rates declined by as much as 11 percent on average. The significant exception to the general downward trend in pricing is programs with significant tornado/hail exposure in the middle of the U.S. Many of these programs sustained losses in 2009, and as margins traditionally have been very competitive, pricing has adjusted upward in response to the loss activity.
Casualty Rates for U.S. casualty lines were flat to down 10 percent over the past two renewal cycles. Some pockets of resistance existed, with rates for financial institutions professional indemnity showing single digit increases. Underlying concerns about increases in loss cost projections, due principally to medical care inflation, have been offset by the wide availability of excess reinsurance capacity. Underlying insurance rates for product liability are largely unchanged, but the effect of the recession has reduced turnover in most sectors except pharmaceuticals and medical devices, which in turn impacted reinsurance revenues on the main commercial/industrial liability placements.
Other Key Trends and Influences Eighteen new catastrophe bond issues came to market in 2009, easily exceeding the ten issues reported in 2008. The cat bond market will continue to provide an increasingly attractive and worthwhile supplement to sponsors’ risk transfer programs in 2010. Mergers and acquisition activity – tactical and strategic – regained some momentum in 2009, as insurers turned to the capital markets to address a wide range of strategic and tactical needs. Macroeconomic trends exerted a substantial effect on reinsurance capital and pricing, with asset-side movements and investment returns the greatest drivers of sector profitability and capital adequacy in 2009. Since 2005, most carriers’ earnings have been enhanced by reserve releases particularly in accident years. This trend is not expected to continue, however, and a number of indicators point to a declining benefit from reserve releases in the future. Inflation could become an issue over the longer term, particularly for longer-tail writers whose premiums written today may be less able to cover inflated claims in the future.
| Top of page | | | Tips from Trusted Choice®: Don't Put Yourself at Risk of a Winter Fire
Editor’s Note: IIABA issued the following press release last week. These are good tips to share with your homeowners insurance clients. Winter brings with it the opportunity to decorate in creative ways using candles, electric lights and the chance to finally start cozy fires in unused fireplaces. The unfortunate consequence is that winter is also a prime time for fire-related injuries, property damage and even deaths. Trusted Choice® agents and spokespeople can help families prepare for fire risks and hazards that may come during the winter months. "Winter brings many risks for winter fires," says Madelyn Flannagan, Big "I" vice president of agent development, education and research. "Taking some time to make sure your home is protected against a fire hazard can prevent thousands of dollars in damage, unnecessary headaches and potentially save lives." According to the U.S. Fire Administration, more than 3,000 people died in 2008 from fires and more than 16,000 were injured. To help families and businesses have a good time and protect themselves against winter fire risks, Trusted Choice agents and the Big "I" offer the following tips to ensure a fire-safe home this winter: Avoid using lit candles. If you do use them, make sure they are in stable holders and place them where they cannot be easily knocked down, out of the reach of children. Never leave a home or room with candles burning. Install a smoke alarm on every level of your home. Test the batteries every month and change them at least once a year. Have your chimney, chimney vent and flue cleaned and inspected annually. Never burn trash, painted or pressure-treated wood inside the home. Never use gasoline or other alternative fuels in a kerosene heater. Cooking is the leading cause of home fires. Never leave food cooking unattended and keep a fire extinguisher in your kitchen at all times. Is your Christmas tree still up? A dry tree in the house is kindling for a fire. A tree should never be placed close to a heat source, including a fireplace or a heat vent. The heat will dry out the tree, causing it to be more easily ignited by heat, flame or sparks. Keep fresh trees watered. When a Christmas tree becomes dry, promptly discard it. The best way to dispose of your tree is by taking it to a recycling center or having it picked up by a community pick-up service. Inspect decorative lights each year for frayed wires, bare spots, gaps in the insulation, broken or cracked sockets, and excessive kinking or wear before putting them up. Inspect them again when you take them down. Do not leave lit decorative lights unattended and only use UL approved lighting. Do not overload outlets. Connect strings of lights to an extension cord before plugging the cord into the outlet. Never put tree branches or needles in a fireplace or wood-burning stove. Check on older adults and help them inspect their homes. Older people are at higher risk of injury from fires and are also more likely to die in fires than those in other age groups of fire-related injuries.
There are more ways to keep warm than just using the fireplace. Here are a few suggestions: Set the thermostat at 65 degrees or higher. Never leave fireplaces, woodstoves or space heaters unattended. Always use extreme caution with auxiliary heat sources. Speak with a trusted contractor about doing a winter survey on your home. You may want to install plastic coating over your windows and doors, a sump pump in your basement, storm windows or consider purchasing special padding or foam to prevent drafts around cracks where air can escape. If a complete storm window upgrade is out of your price range, consider replacing old storm windows on just the northern exposure of your home where it is vulnerable to the cold. Add extra insulation to attics, basements and crawl spaces. Ideally, the attic should be five to ten degrees warmer than the outside air. Have the heating system serviced. Furnaces, boilers and chimneys should be serviced at least once a year to prevent fire and smoke damage.
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