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March 3, 2010
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| In this Issue
• How You See It: Producer Compensation – You Can't Legislate Integrity
• NYSID Releases Draft Regulation that Allows Internet Banks for Premium Accounts
• NY Agencies Among Those Embracing Social Media
• Senate Extends Flood Insurance Program
• FEMA Changes Flood Maps for Broome County; 6,500 More Properties Now High-Hazard
• Certain Agencies May Need to Comply with Red Flags Rule Starting June 1
• Volunteer Opportunities with IIABNY are Available at Different Levels
• Four Reasons to Learn More about Newly Endorsed WC Program in Upcoming Webinar
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Word on the Street Podcast | Ask Tim Podcast
| How You See It
Editor's Note: Guest columnist Robert E. Mackoul, CLU, is president, CEO and founder of IIABNY member agency Mackoul Associates Inc. in Long Beach. Mackoul, who has more than 35 years experience in insurance and risk management, also serves as secretary on the board of directors of TriCounty IIAA. The following is printed here with his permission. Producer Compensation – You Can't Legislate Integrity
by Robert E. Mackoul, CLU  | | | Robert E. Mackoul | |
The more things change the more they stay the same. The New York State Insurance Department reached agreement with the three "Big Boys" of our industry, Marsh, Willis and AON, to permit each to once again receive contingency fees or profit-sharing. The state Insurance Department said in its press release that this was done "to help consumers by providing a level playing field for insurance intermediaries, on which they can easily be compared." Yes, and the next time I sit down with the any members of the Insurance Department, I am sure to invite their friends, Alice in Wonderland, Peter Pan and the Easter Bunny, to join the meeting. What world are the people in the state Insurance Department living in?? Level playing field? Let’s look at the playing field that these "brokers" play on. Aon from 2006 to 2009 had revenues grow from $6,700,000,000 to $7,600,000,000. Are you counting the zeros? Aon grew in revenue in the soft market by $900,000,000*. That’s not premium. That's $900,000,000 in revenue. Am I supposed to applaud them for "voluntarily" stopping contingent commissions" in 2004? Marsh received contingent commissions in 2003 and 2004 (when it stopped receiving contingents) that totaled more than $1,265,000,000. That is $1.2 billion in profit sharing or contingent commissions!!! Are you getting the picture? I wonder why the New York State Insurance Department doesn’t get it. What do any of us have in common with "brokers" that are public corporations, whose stock is listed on the New York Stock Exchange, who employ tens of thousands of employees worldwide and are larger companies with more clout than the insurance companies that they "broker" business to? We have all been duped. After the scandal in which these giants were convicted for immoral, unethical and illegal practices, they threw 60,000 hardworking insurance agents and brokers nationally "under the bus" in the name of transparency. They created the furor over broker compensation and disclosure and in the process painted every single hardworking insurance professional as a shyster. Now, years later, they and the Insurance Department have come to the realization that it is only fair that they not be treated any differently than the hardworking agents and brokers who they sabotaged in the first place!! Sad. Really sad, but true. The state Insurance Department has issued its final producer compensation regulation and it is going to be challenged in court by IIABNY. From a public relations point of view, it can’t be good for us agents and brokers because, naturally, we’ll once again be painted as an industry having something to hide. My feeling is completely different. I have never been asked how much money I would earn on any property casualty, life, health or benefits case I have ever written, by any prospect or client. I believe clients don’t care. They deal with agents and brokers because of confidence and trust, as well as the knowledge that their agent/broker is one who looks after their best interests. In its quest for transparency, the state Insurance Department has taken the actions of a very few and painted our entire industry with a brush that they should have reserved specifically for the "Big Boys." They have nothing in common with the hardworking insurance agents and brokers that serve the public the regulation is designed to protect and benefit. The state Insurance Department has yet to learn that it cannot legislate integrity. But the department should understand the difference between the "Big Boys" and their clients, and the insurance agents and brokers that actually serve the public so ably and professionally. There has been no clamor from the public for producer compensation disclosure. And, the words "transparency" and "level playing field" have been manufactured in the past few years to address an issue that doesn’t exist. * Source: Article posted online Feb. 17, 2010 on the Insurance Journal Web site Let us know how you see it. E-mail IIABNY Insider with your thoughts, opinions or reactions to "How You See It." If you would like your response to be considered for publication in "How You See It," please provide your name and phone number where you can be reached. | | | Top of page | | | NYSID Releases Draft Regulation that Allows Internet Banks for Premium Accounts
After a multi-year effort by IIABNY, New York insurance producers will be able to open premium accounts at Internet-based banks under a draft regulation recently released by the New York Insurance Department. The draft, which the department sent to IIABNY on Feb. 17, would amend N.Y. Insurance Regulation 29, regulating premium trust accounts. Under current rules, insurance producers can deposit premiums only in banks that have physical offices in New York. This stipulation has prevented producers from using institutions such as InsurBanc for premium accounts. IIABNY has worked with Insurance Department for the past several years to have the rules modernized. Turnover at the department following changes in the Superintendent of Insurance have hampered the effort. The draft introduces new definitions and permits the deposit of premium funds with an Internet bank, defined as "a bank that transacts its banking business with depositors solely by electronic means via the Internet." The Internet bank must give the department written agreement that, with regard to New York premium accounts, it will subject itself to the jurisdiction of New York courts and federal courts in New York. The draft requires producers who have premium accounts with an Internet bank that chooses to withdraw from New York’s jurisdiction to move their accounts to another bank. The Internet bank must also collaborate with a bank physically located in New York to receive deposits on its behalf. Finally, producers will be able to keep premium account balances that exceed Federal Deposit Insurance Corporation limits only with the principal’s consent. The department has circulated the draft for comment only and has not yet published it in the New York State Register. | | | Top of page | | | NY Agencies Among Those Embracing Social Media
Social media is here to stay: Two-thirds of the world’s Internet users visit social networking or blogging pages and 10 percent of time spent online is spent on social media sites, according to a recent report from The Nielsen Company. However, many independent agencies are at a loss for how to use social media effectively and where to begin. Marketing experts and agents who are already using social media to drive business agree that it’s all about starting small, being consistent and remembering that networking is the name of the game. Among the IIABNY member agencies that have forged ahead in using social media to engage their customers are the Allan M. Block Agency in Tarrytown and Rey Insurance Agency in Sleepy Hollow. Visitors to the Rey Web site Home Page can find links to the agency’s page on Facebook, producer Linda Rey’s Linkedin site and the Rey Twitter page. Likewise, visitors to the Block agency Web site can become a "fan" of the agency on its Facebook page. Insurance tips as well as news of the agency’s community and civic activities are posted on its Facebook page. Susan Bonner, Big "I" director of agent development and marketing, says the first step is to create an agency "landing page" to measure traffic from social media efforts. While some agencies incorporate videos or blog content into their landing pages using free blogging platforms like wordpress.com, linking to the agency’s Web site works just as well. Coming up with content to post can be a challenge and many agencies may fear the time involved. However, Bonner points to several existing resources available through the Big "I" that agencies can use, such as Trusted Choice® consumer articles, Virtual University materials, press releases and consumer research. She also encourages agencies to look to their communities for relevant resources. "Look to your local chamber of commerce to start building networks," Bonner advises agents. "It’s all about networking and building relationships. To provide people with useful information, you have to go to the source." For more information about social media and its use in independent agencies, read the upcoming March issue of IA magazine. The preceding is partially excerpted from a Feb. 25 IIABA Insurance News & Views article authored by Big "I" writer/editor Veronica DeVore. | | | Top of page | | | Senate Extends Flood Insurance Program
Insurance producers participating in the National Flood Insurance Program will soon be able to sign up clients for coverage after the Senate passed legislation last night that included extending NFIP authorization. The $10 billion bill that also extends unemployment and COBRA benefits passed 78 to 19 and was signed into law by Pres. Barack Obama late yesterday. The flood program’s ability to provide coverage was interrupted after the Senate failed to act when the NFIP’s authorization expired Sunday night. Sen. Jim Bunning (R-Ky.), who had held up the legislation, ended his objections yesterday and allowed the vote to take place. During the lapse, the NFIP could not issue new or renew expiring policies. | | | Top of page | | | FEMA Changes Flood Maps for Broome County; 6,500 More Properties Now High-Hazard
Lenders will require approximately 6,500 additional properties in Broome County to carry flood insurance with the adoption of new flood maps by the Federal Emergency Management Agency. The maps, which FEMA released in January, show 11,000 properties as vulnerable to floods from the Susquehanna River. FEMA spent three years studying the county as part of its nationwide flood-remapping project. The agency cited levees that fail to meet current standards for flood protection as a reason for the reclassification of the properties. Holders of mortgages on buildings in the affected areas will require the property owners to purchase flood insurance. (NOTE: The Big I Flood Program is available to all IIABNY members who wish to sell flood insurance.) FEMA does not expect to finalize the new flood maps until next year. | | | Top of page | | | Certain Agencies May Need to Comply with Red Flags Rule Starting June 1
Recently, there have been questions about how the identity theft Red Flags Rule may affect certain independent agencies and related claims by some vendors about what agents need to do to comply with the rule. An article prepared by the IIABA Office of the General Counsel gives Big "I" members an overview of the issue and how to approach it. E-mail Scott Kneeland with any questions. | | | Top of page | | | Volunteer Opportunities with IIABNY are Available at Different Levels
IIABNY is inviting members to respond to its annual Call for Volunteers. New York's oldest and proudest insurance producer trade organization needs the skills, passion and perspectives of its members to build a vibrant, inclusive and multicultural corps of volunteer leaders throughout its board of directors, committees and task forces. Volunteer opportunities with IIABNY and its subsidiary corporation, IAAC, exist within many different areas of interest and on varying levels of commitment: from participation with short-term projects to the association's highest level of commitment as an active member of the board of directors. Review IIABNY's Volunteer Opportunities Web page to learn about the board, committees, organizational activities and other projects to which you can volunteer your time. Complete the online nomination form, and please be sure to share with us information on your interest, experience and relevant expertise. In short, tell us why you are a good fit with the volunteer group in which you're interested. The deadline to respond to the Call for Volunteers for 2010-11 committees and task forces is April 9. Appointments will be made by mid- to late-June. IIABNY members can apply at any time throughout the year for future consideration for board positions. | | | Top of page | | | Four Reasons to Learn More about Newly Endorsed WC Program in Upcoming Webinar
Want to learn more about the newly endorsed PMC Insurance Group? Register now for a free Webinar, scheduled at 11 a.m. March 16, to learn detailed information regarding: PMC’s broad class underwriting appetite National carriers PMC represents Submissions process and workflow How the PMC PayGo product works and how you can sell to your clients
PMC representatives will also be available to answer all questions during the Webinar. To learn more about the company’s services, e-mail Jamie Deapo or call him at (800) 962-7950, ext. 232. You can also e-mail PMC, call the company at 877.PMC.Comp (877-762-2667) or visit the PMC Web site. | | | Top of page | | |
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