THURSDAY, SEPTEMBER 2, 2010  

                                                Big “I” Association News





P-C Trends
Hurricane Earl Threatens East Coast
Offer your clients tips on disaster preparedness via social media.

Severe weather from Hurricane Earl has already started pounding the East Coast while other storms develop in the Atlantic Ocean. Dangerous weather leaves behind paths of destruction and experts say harsh conditions from these storms are likely from the Carolinas to New England. Are your customers ready?

A recent national survey by Trusted Choice® and the Big “I” found that most Americans are not fully prepared in the event of a natural disaster. Of all survey respondents, less than 22% said they felt they are fully prepared in case of a disaster. More than half of respondents (51%) admitted they are only somewhat prepared and more than one-fifth of households (22.7%) reported that they were not prepared at all.

Share these tips from Trusted Choice® with your clients by posting them on your agency websites, Facebook page and other social media outlets.

• Have a disaster evacuation plan in place. Find out how you and your neighbors would be informed about an imminent disaster. Ask if evacuation routes have been established. Contact your city or town planning and emergency assistance organizations. Make sure everyone in your household knows what to do and where to go in a disaster.
• Assemble a disaster supplies kit and heed weather warnings. This kit should include first-aid supplies, non-perishable food, battery-powered flashlights and radio, bottled water and blankets.
• Inventory your belongings. Keep a list and/or videotaped inventory of your valuables in a safe place, along with insurance policies and other important documents.
• Make a utilities checklist. Be sure adults in the household know how to turn off gas, water and other utilities if necessary.
• Review your homeowners insurance coverage. Check annually to make sure you are fully protected in a weather-related disaster.
• Survey the area around your home. Remove dead branches from trees in or near your yard. Bring pets inside, move cars into garages and secure windows, awnings, and lawn furniture. Driving wind or hail can cause severe damage to these items.
• Watch for flash floods. Never walk or drive through fast moving water. Flash floods can develop so fast and move so swiftly that they can sweep cars away.
• After a severe storm, report downed utility wires and stay out of damaged buildings and areas.

The Big “I” continues to work with FEMA on how best to address the issue of agents being allowed back into a disaster area after an event has occurred.  As a first step, get involved in emergency planning in your local community if for no other reason than going on record that your service to your clients will aid in the recovery process and needs to start as soon as the area is declared safe to enter.  Without having the insurance claims process in motion, recovery will take longer.

For additional survey results and tips on hurricanes, flooding and disaster preparedness planning, click here. Visit www.TrustedChoice.com for more consumer information and tips. Also visit www.ready.gov, which provides an overview of an emergency plan, tips on how to stay in business, what to say to your employees and how to protect business investments.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs. To find out more about the Big “I” Flood program – in, above and outside of the NFIP! Visit:  www.iiaba.net/flood or contact Linda Mackey (linda.mackey@iiaba.net), Big “I” flood program manager.






L-H Leads
Do You Really Like Me?
New research finds one-quarter of U.S. households with children want to consult an agent on life insurance.

Over the past 30 years, dating services have received a lot of publicity. Before the Internet era, singles people sometimes took out classified ads that highlighted their positive attributes and outlined the qualities they sought in another person. Imagine now if as an independent insurance agent, you saw the following ad: Middle-income family needing life insurance seeks agent to listen to needs and provide recommendations. Sound too good to be true?

Actually, it’s not, according to the life insurance research group LIMRA.  According to the group’s latest research, the Trends in Life Insurance Ownership study, conducted every six years, 24% of households with children under age 18 want to speak with a financial professional about their life insurance needs. A quarter of all households plan to buy life insurance in the next year. That statistic is worth repeating: One out of four households plans to buy life insurance in the next 12 months. Also, one out of four middle-market households admit they don’t know how to obtain or reach their financial goals, including buying life insurance.   

Why aren’t consumers comfortable purchasing insurance? According to LIMRA’s study, one of the biggest obstacles is lack of information. Almost eight in 10 U.S. households currently do not have a personal life insurance agent or broker to turn to and most of them say they never have. The study also indicates that life insurance is the No. 1 source of financial assets or income that Americans expect to use to help pay bills and to maintain their lifestyle in the event of the primary wage-earner’s death. Only 44% of U.S. households have individual life insurance, and 30% (35 million) have no life insurance coverage. Among households with children under age 18, 11 million have no coverage. Of primary importance to independent insurance agents is that most individual life insurance policies are sold by insurance agents, and the survey indicates many Americans want to keep buying in this manner.  Sixty percent of Baby Boomer households prefer to buy life insurance face-to-face. Younger generations say they are also interested in gathering information about life insurance online and at their place of work. This opens up the opportunity for independent insurance agents to get involved in worksite marketing and cross-sell their commercial lines customers by partnering with a worksite insurance carrier to assist with enrollments.

Independent agents should pay attention to this research. With the continued soft market in property-casualty insurance, agencies need to develop a strategy to generate financial services revenues. If an agency has 1,000 families as personal lines customers, the LIMRA research indicates that 250 of those customers intend to buy life insurance. Is your agency asking for the sale?

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





On the Hill
Big “I” Opposes SEC’s Proposed Universal Fiduciary Standard of Care
Proposal would hurt agents, brokers and middle-class Americans.

This week, the Big “I” sent a letter to the U.S. Securities and Exchange Commission expressing opposition to the proposed establishment of a fiduciary duty of care for broker-dealers and registered representatives. Many Big “I” members offer investment and securities-related insurance products in addition to core insurance services and would be adversely affected by the creation of a universal fiduciary standard.

“Creating a universal fiduciary standard—which is vague and ambiguous by its very nature—merely adds unnecessary uncertainty to securities transactions and increases the likelihood of second-guessing and litigation when a particular transaction is retrospectively scrutinized years after the initial recommendation is made,” said the Big ‘I” in its letter.

The association also said the “government-imposed weakening of industry competition will ultimately harm consumers” and outlined how middle-class Americans may be the hardest hit should proposed changes be implemented.

The detailed letter also points out that, “Such a significant revision to the current regulatory structure is unwarranted, and the increased burdens on financial providers and adverse consequences for consumers certainly outweigh any measurable accompanying benefits. This seemingly innocuous and unremarkable change will have seismic repercussions that have not been fully examined by policymakers or regulators, and the indiscriminate and wholesale application of this standard has not been adequately defended and justified by its proponents.”

Click here to read the entire letter.

Wes Bissett (wes.bissett@iiaba.net) is Big “I” senior counsel, government affairs.


On the Hill
Big “I” Weighs in Against FTC Insurance Regulation Bill
Pryor/Rockefeller bill would create an additional layer of federal insurance regulation.

Recently, U.S. Senators Mark Pryor (D-Ark.) and Jay Rockefeller (D-W.V.) introduced legislation that would allow the Federal Trade Commission (FTC) to investigate insurance companies’ practices. S. 3685, the “Insurance Competition and Transparency Act of 2010,” would repeal longstanding law that has been in place for more than 30 years that prohibits the FTC from investigating insurance companies because they are already effectively regulated by the states. This bill appears to be aimed at reining in health insurers; however, it would apply to the entire insurance industry.

In response to this legislation, the Big “I” sent a letter to the two sponsors, outlining its strong opposition to the bill. The association noted that this added layer of regulation would impose burdens on independent insurance agents and consumers. While it is unlikely that the bill will advance before the 111th Congress adjourns, the Big “I” will continue to advocate against any type of federal oversight of the insurance industry.

To read a copy of this letter, please click here.

Lauren Cialone (lauren.cialone@iiaba.net) is Big “I” senior director of federal government affairs.


Forms & Substance
Educate Renters on Subrogation Claims
Most leases make the tenant responsible for most any damage to the building.

An agent recently asked the Virtual University: “How does a tenant protect himself against the building owner (or the owner's carrier) who is seeking to recoup the cost of reconstruction to the building in excess of the Fire Damage Legal limit, assuming the tenant was legally liable for damage caused by fire? Do I interpret correctly that an umbrella will exclude excess coverage under the property CCC exclusion? Is the only alternative to increase the Fire Damage Legal under the primary policy to a limit equal to the replacement cost of the building? Or is the exclusion commonly deleted from an umbrella?"

The bottom line is that CGL FDLL coverage just doesn't cut it anymore with regard to lease provisions. There was a time when most leases made, at worst, the tenant responsible only for fire damage to a rented building, just as rental car companies used to make renters responsible only for collision damage to a rented vehicle.

Times have changed. Today, most leases make the tenant responsible for most any damage to the building, just as rental car contracts make renters responsible for most any loss to the vehicle. And, just as more rental car companies now sell Loss Damage Waivers rather than Collision Damage Waivers, agents should look to sell coverages other than FDLL to address the exposures of tenants responsible for building damage.

In addition, tenants (and landlords) should seek to include mutual waivers of subrogation in the lease agreement. According to the VU faculty, here are the steps to insure a leased property, starting with the most proper technique:

1. The landlord should insure the building and pass the expense along to the tenant. Building owners should now entrust an insurance or risk management program to the tenant.
2. The tenant should procure direct property insurance and include the interest of the landlord. The superiority of this method compared to the next one is that it doesn't require that the tenant be legally liable (many, if not most, leases no longer require this either).
3. The tenant should use the Legal Liability Coverage Form CP 00 40 to insured the property. This form includes not only Fire Legal Liability, but also driving a tenant's vehicle through a wall, water damage, etc. Limits need to be adequate to address leased property values, loss of rents, etc.
4. The tenant may rely on the CGL's Fire Damage Legal Liability coverage, including the appropriate increased limit. Realize that this is essentially a single-peril coverage for a peril that is increasingly the cause of a minority of claims.
   

Another VU faculty member suggests:

1. Require that the landlord maintain insurance on the property.
2. Require mutual waivers of subrogation.
3. Require mutual release for all damages for which insurance is maintained or is required to be maintained, including any self-insured portion (deductibles, SIRs, coinsurance penalties, inadequacy of insurance, etc.).
4. Carve out the exposure within any indemnification.

Bill Wilson (bill.wilson@iiaba.net)is the director of the Big “I” Virtual University, an online learning center for agents and brokers. To read the entire article, including a link to another article which discusses waivers of subrogation for each major line of commercial insurance, click here. If you do not know your Big "I" website user name and password, e-mail logon@iiaba.net to request your login.