October 2016 | Published Monthly
PIA & NAIC: DefendingU.S. State Insurance Regulation » 7
ObamaCare: Rate Hikes & Sticker Shock Continues » 13
Clinton or Trump as President:Both a Struggle for Insurance » 19
MetLife Dumps Snoopy » 25
INSIDE
Cover Image: Brian RobertsNebraska Corn Fields
PIA NE IA and The National Alliance held
Nebraska’s 27th Annual CIC & 7th CRM Conferment
Ceremony | 26
Insuring the Midlands Since 1891
Andy Kraus, CPCUVice President of Agencies
National Association of Professional Insurance Agents400 N. Washington St., Alexandria, VA 22314-2353www.pianet.com | [email protected] | (703) 836-9340
Did you know that PIA’s company council, The PIA Partnership, has conducted nationwide research about the insurance buying preferences of small business owners?
The research is encouraging because it found that small business owners strongly prefer independent insurance agents as they make choices in today’s online world.
However, the results also serve as a wake-up call that agents must take steps to continue to demonstrate their value and also be more engaged online.
PIA and the companies belonging to The PIA Partnership have created a public website that helps agents understand PIA’s findings.
PIA members also have access to a private website containing a series of strategies and tools to help them stay ahead of online competition in commercial lines.
To access the newest PIA Partnership project, Small Business Insurance & The Internet — The Voice of the Commercial Lines Customer, visit us at www.pianet.com/voiceoftheclcustomer.
If you are not a PIA member and want to access all of the tools available through this program, contact us for a membership application or visit us online at www.pianet.com/joinpia.
October 2016| Main Street Industry News | www.pianeia.com | 4
(ACOEM) is the Journal of Occupational and Environmental Medicine.
Clinton or Trump as President:Both a Struggle for Insurance | 19Depending on when you read this, a week from now the citizens of the United States will have elected a new president.
Cyber Attacks: Dyn, Small Business, Your Home & Insurance | 21October is Cybersecurity Awareness Month.
Proposal for Private Flood Insurance Profit Cap | 25New Jersey Congressman Rep. Frank Pallone — a Democrat — contends insurance companies turned profits from Superstorm Sandy while ignoring the financial obligations they had to homeowners and other victims.
MetLife Dumps Snoopy | 25To a person most of us think Charles Schultz’s Snoopy is about as cute as a cartoon character can be.
PIA & NAIC: DefendingU.S. State Insurance Regulation | 7Congress is now looking at international insurance regulations.
The Business of Business:Commercial Lines Looking Good | 8A.M. Best posted some interesting insurance growth facts last week and it’s good news for most of the members of the PIA NE IA.
GAO: Laws Broken in Implementation of ObamaCare | 9The Government Accountability Office (GAO) said the Obama administration broke the law in implementing the Transitional Reinsurance Program.
The Public Option: Pushing a Federal Health Insurance Company | 12With health insurers abandoning the ObamaCare exchanges or — at the very least — threatening to leave, and with those staying in some cases proposing double-digit rate hikes, President Obama has brought up the idea of a public option.
ObamaCare: Rate Hikes & Sticker Shock Continues | 13Premiums are rising.
Week 1:Maurice “Hank” Greenberg’s Trial | 16Maurice “Hank” Greenberg founded AIG and built it into the largest and one of the most successful insurance companies in the world.
Workers’ Compensation & Obesity | 18These days it’s a good news-bad news The official publication of the American College of Occupational and Environmental Medicine
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Professional Insurance Agents NE IA and The National Alliance held Nebraska’s 27th Annual CIC & 7th CRM Conferment Ceremony | 26
Upcoming Events Calendar 2016 | 28
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Contact us to place an ad.Cathy Klasi, Executive Director(402) 392-1611
You live for the opportunity to help businesses in your community. You have a passion for supporting your clients. Liberty Mutual Insurance has a passion for protecting them, with coverages like commercial auto, workers compensation, and business owner’s policy (BOP). With regional presence, industry expertise, and comprehensive coverages for businesses of all sizes, we have the local knowledge and national resources to help your clients thrive. Talk to your territory manager today about Liberty Mutual Insurance or go to libertymutualgroup.com/business.
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October 2016 | Main Street Industry News |www.pianeia.com| 7
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Congress is now looking at international insurance regulations. The U.S. House Financial Services insurance subcommittee recently held a hearing focused on U.S. engagement on insurance issues with the European Union (EU).
National Association of Insurance Commissioners (NAIC) Vice President and Tennessee Insurance Commissioner Julie Mix McPeak testified at the hearing and urged Congress to proceed with caution.
PIA supports a modernized state-based insurance system and opposes any federal regulation or — in this case — international standards that will destabilize or supplant state-based regulations. And that means making sure the Federal Insurance Office (FIO) and the Financial Stability Oversight Council (FSOC) do not encroach on state based insurance regulation or placing an undue burden on independent agents.
And when it comes to international standard setting developments, trade negotiations, and FIO efforts on certain international agreements, the PIA wants to ensure there is no negative impact on state insurance regulation from them.
The NAIC is of the same mind when it comes to international regulations being applied in this country. McPeak told the subcommittee, “After more than a decade of dialogue and information exchange, the EU has all the information it needs to recognize the U.S. insurance regulatory system and avoid future regulatory retaliation. Instead of negotiating a potentially preemptive agreement behind closed doors to solve a problem of the EU’s creation, we encourage our federal colleagues to push back on the EU
and urge them to reconsider their laws before agreeing to preempt ours.”
She was accompanied by NAIC President and Missouri Insurance Director John Huff. He acknowledged the leadership of Subcommittee chairman Republican Rep. Blaine Luetkemeyer of Missouri and of Ranking Member Democrat Rep. Emanuel Cleaver, also of Missouri. And then he said, “In an environment of ever-increasing regulatory demands, it is imperative we are careful not to add an additional layer of regulatory burden for insurers in the U.S. or in Europe, an unnecessary burden that will ultimately be borne by consumers.”
At issue is the marketplace dynamics in the United States and the European Union as Europe transitions to Solvency II. Negotiations at this point involve reinsurance collateral.
“We urge Treasury and USTR to take preemption of state insurance consumer protections and any expansion of the federal government’s role in insurance regulation off the table. State legislatures and Congress should decide the specifics of U.S. insurance regulatory power and who shall exercise it — not federal bureaucrats, and certainly not the EU,” she said.
PIA & NAIC Defending U.S. State Insurance Regulation
October 2016| Main Street Industry News | www.pianeia.com | 8
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A.M. Best posted some interesting insurance growth facts last week and it’s good news for most of the members of the PIA NE IA. The report is called Mutual / Property / Casualty Insurers Managing Market Challenges. It appears that small commercial markets are growing faster than personal lines.
The reason? Carriers are working overtime to remain competitive. Here are some statistics from the report:
Net written premiums for mutual insurer • commercial lines are up 28% since 2011.
Personal lines are up 15% over the same • time frame.
Personal lines accounted for 66% of total • net premiums written as of 2015.
Personal lines is still the most insurance • written but it’s down from 68% in 2011.
Rapid growth in commercial lines is the • reason.
In its comment on the statistics, A.M. Best said, “Gradual shifting away from personal lines goes hand in hand with the product line
The Business of BusinessCommercial Lines Looking Good
diversification that has been demonstrated by the rated mutual companies.”
And A.M. Best said mutual company diversification has produced excellent results that led to a combined ratio of 103.5 in 2015 and a loss ratio of 58.6. From 2014 through 2015 it’s a much better operating performance than what was seen from 2011 to 2014.
One troubling fact from the data is the expense of underwriting is up and that led to companies compressing underwriting. However, loss ratios that are steady and positives in net investment income offset that and boosted profits. And — even better — the diversification in lines of insurance has reduced what A.M. Best calls the concentration of risk.
The report also said the P&C mutual insurance sector grew 3.1% in 2015 and the compound average rate has grown 3.4% since 2010.
Lastly, that the 10 largest mutual companies are doing 70% of the net written premiums in 2015 has stabilized things. State Farm is the top insurer at 41% of the market and Nationwide has 13%.
Source: Carrier Management
October 2016 | Main Street Industry News |www.pianeia.com| 9
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The Government Accountability Office (GAO) said the Obama administration broke the law in implementing the Transitional Reinsurance Program. It’s the program — that — for the first three years of the program helped insurers with losses suffered in the exchanges.
The goal of the reinsurance program is to stabilize rates, keep them down and keep insurers in the game. As Congress wrote the Affordable Care Act, in 2014 the Department of Health and Human Services (HHS) was to collect $10 billion from insurers. HHS was then told to figure out a system to distribute the money back to insurers to help them with losses. It was also instructed to collect another $2 billion to send to the U.S. Treasury.
In 2015 the figure for insurers was supposed to be $6 billion and another $2 billion for the Treasury. In 2016 the formula is $4 billion and $1 billion.
The share given to the HHS was to be for insurers and the money for the Treasury was to be a guarantee for the taxpayers. It didn’t happen that way. Not even close. Republicans discovered the discrepancy and asked the GAO to investigate.
GAO found the HHS wasn’t able to collect enough money and that HHS violated the law by keeping the money without congressional approval or a specific appropriation from Congress because the money “shall be deposited into the general fund of the Treasury of the United States and may not be used for the program established under this section”
It’s a $5 billion loss for the taxpayers. “When total collections for benefit year 2014 — $9.7 billion — fell short of the target amount for reinsurance payments, HHS did not allocate any collections to the Treasury or to administrative expenses,” the GAO said.
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It went on to say, “The agency received $7.9 billion in reinsurance claims and paid these in full, leaving approximately $1.7 billion in collections, which it carried over for reinsurance payments in subsequent benefit years. As a result, HHS did not deposit any amounts collected from issuers into the Treasury.”
At the very least, the leftover cash — which was close to the $2 billion — should have gone into the Treasury.
When the GAO pushed HHS for an explanation, it said the shortfall meant it was exempted from the law’s language. The GAO disagreed and said the administration broke the law — period. “This prioritization of collections for payments to issuers over payments to the Treasury is not authorized. The fact that HHS’s collections ultimately fell short of the projected amounts does not alter the meaning of the statute,” the GAO concluded.
Instead, the GAO felt the payments should have
been made in the proportions the law intended. But as noted, HHS disagrees. Spokesman Matt Inzeo said, “CMS [Centers for Medicare & Medicaid Services] has implemented the Transitional Reinsurance Program lawfully and in a transparent manner, and strongly disagrees with today’s GAO opinion. This critical program, which expires this year, helps to reduce premiums for consumers.”
Many would disagree with Inzeo’s conclusion about the success of the reinsurance program. It has been a total failure and insurers are either leaving ObamaCare or are threatening to do so. A suit has been filed by insurers wondering where the other $2.5 billion promised in 2014 has gone.
As for the seven Republicans who found the discrepancy? They said, “The Administration needs to put an end to the Great Obamacare Heist immediately.”
Source: MSN Money, The Hill
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October 2016| Main Street Industry News | www.pianeia.com | 12
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With health insurers abandoning the ObamaCare exchanges or — at the very least — threatening to leave, and with those staying in some cases proposing double-digit rate hikes, President Obama has brought up the idea of a public option. So have other prominent Democrats including presidential hopeful Hilary Clinton.
The public option is a government health insurance company that those supporting the idea say can provide health insurance to people for far less than insurance companies because the profit motive is eliminated.
The latest proponent is California Insurance Commissioner Dave Jones. He said he’d like California to be a testing ground to see if a public option works. “I think we should strongly consider a public option in California. It will require a lot of careful thought and work, but I think it’s something that ought to be on the table because we continue to see this consolidation in an already consolidated health insurance market.”
The consolidation he refers to has to do with health insurers Aetna-Humana and Cigna-Anthem proposed mergers. If allowed — and it doesn’t look like it’s going to happen at this point — it would reduce the number of insurers and options available to consumers.
Jones has ideas of how he’d like to see the public option done but he’s open to what others might want. “I don’t want to begin to prejudge it. I don’t know whether you would
The Public OPTiOnPushing a Federal Health Insurance Company
start in certain areas of the state and expand from there. I think there would be significant reservations about the state running it. There would be a wide variety of governance models you could come up with.”
Obama, Clinton, Jones and other Democrats aren’t alone in supporting the idea. Health groups are lining up. Health Access California’s Anthony Wright put their stance in perspective, “This is something we advocated for in its most ambitious form during the debate over health reform and there are elements of the proposal that could be adapted for California.”
But within the health insurance community there are concerns. Katherine Hempstead directs the Robert Wood Johnson Foundation health initiatives and she said, “I don’t know what would compel other insurers to stay in the market, so the public option could quickly become the only option. I think that is only a clear win when the alternative is nothing.”
Some think this was the ultimate goal of supporters of the Affordable Care Act to begin with. It was debated during the law’s formation but abandoned. Now it is back up for discussion. Also interesting to note is much of the discussion has been for a national public option rather than a state system. However, some think — based on a quote — that Clinton might favor that idea and said she would “pursue efforts to give Americans in every state in the country the choice of a public-option insurance plan.”
Source: Insurance Business America
October 2016 | Main Street Industry News |www.pianeia.com| 13
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Premiums are rising. In some cases, and in some states over 100%. Insurers are either leaving or threatening to leave the exchanges also known as marketplaces. Republicans complained from the outset and have never stopped. Democrats are worried and President Obama is stressed and stumping to save his signature legislation, the Affordable Care Act.
It hasn’t turned out to be so affordable and is unaffordable at this point. But to who? Good question. Before we get to that question we must first look at the current situation.
Insurers want a fix and soon or they’re not going to stay says Blue Cross Blue Shield lobbyist Alissa Fox. “In less than six months we have to turn around and prepare strategies for
ObamacareRate Hikes & Sticker Shock Continues
2018. The sooner we get these changes which we’ve been urging all year long the sooner we’ll get on a better track for the future,” she said.
What do insurers want?
Tighter criteria on who can or cannot signup • up outside the open enrollment period
An exclusion for those signing up for health • insurance just because of sudden illness
Limiting the numbers that can enroll • in private insurance to maximize reimbursement of costly procedures
Former Oregon Insurance Administrator Joel Ario is a former Obama administration ObamaCare exchange head. He says insurers
October 2016| Main Street Industry News | www.pianeia.com | 14
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also want an extension of the three-year reinsurance program that helps them offset losses due to too many sick people signing up.
That is a key ingredient. Republicans hampered the ability of the administration to support insurers in the last federal budget deal by restricting how money collected to reinsure the insurers could be spent.
And insurers definitely don’t want the now being kicked about public option as outlined in a bill introduced in the senate by Oregon Sen. Jeff Merkley (D) and his 33 cosponsors. Both President Obama and Democratic presidential nominee Hilary Clinton are calling for one.
Joining insurers in opposing the idea of a public option are hospitals and pharmaceutical companies. American Hospital Association President Rick Pollack said, “We think we need to make these [marketplaces] viable before we give any consideration of going to a public option.”
Marilyn Tavenner is the former administrator of the Centers for Medicare and Medicaid Services (CMS) and now heads America’s Health Insurance Plans (AHIP). She — considering her former ObamaCare position — ironically agrees with Pollack and calls the concept a huge mistake. “I just think we need to solve the problems that we have, rather than chasing yet another government program,” she said.
And that leads back to the question of just how bad are the price increases and for whom?
In 2017 the average premium for plans sold on HealthCare.gov will rise 25%. The benchmark price — says the Department of Health and Human Services (HHS) — will leap from $242 to $302. As an FYI, the benchmark plan is the silver plan — the most popular of all the plans — and it is based on information gathered in 43 states on an average 27-year old.
The spin being tossed out by the Obama
administration and by Democrats is that it hurts consumers and is bad for the poor. In reality, the bad news really isn’t for the them, it’s for the taxpayers subsidizing about 85% of those enrolled through HealthCare.gov and the state exchanges.
Avalere Health spokesman Dan Mendelson put it in perspective and said, “Relatively few people will feel the premium increases, but everyone will hear about them. That will have an effect on the perception of the program.”
And adding to the taxpayer expense is an expected jump of 260,000 more in the subsidized program as 22% currently not subsidized become eligible. Remember, for an individual, subsidies are available for anyone making under $47,000 a year.
The bottom-line: premiums for people on the subsidized plans will still be less than $75 per month. Where those subsidized by ObamaCare are impacted is the shrinking number of purchase options. It drops from 298 this year to 228 next year and with five states having only one option.
But they’ll still be able to find something and their payments will still be low.
For the rest of us, premium hikes will directly hit the 16% of those on ObamaCare that don’t have subsidies. That’s 1.6 million not receiving financial help and 7 million getting individual coverage outside the exchanges.
The increases in 2017 in some states are huge and in other states not so huge. And they have put ObamaCare front and center in the political spotlight. Democrats — like President Obama and Hilary Clinton and along with wanting the public option — are pushing for an increase in subsidies and tax breaks to make health insurance even more affordable.
As you know, Donald Trump and the Republicans want it dumped.
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And the new rate hike crisis has brought the nation’s election cycle and the Senate battleground states into focus. These are the rate changes in those states:
Illinois — 43%Wisconsin — 16%Florida — 14%Indiana — a drop of -3%Missouri — 18%New Hampshire — 2%North Carolina — 40%Pennsylvania — 53%Ohio — 2%
And the state of Arizona — a whopping 116%
That leads us to the cause of the whole rate hike crisis. Insurers can’t afford ObamaCare because of the millions signing up, most are unhealthy. The young people that are healthy, and that are needed to make it all affordable are paying the fines and ignoring it all.
What are they doing?
Aetna’s CEO Mark Bertolini said, “As the rates rise, the healthier people pull out because the out-of-pocket costs aren’t worth it. Young people can do the math. Gas for the car, beer on Fridays and Saturdays, health insurance.”
Yes. Beer. The car. Weekend and day off fun. Those items are far more important to young people than health insurance even when it’s priced at less than $100 a month.
Here’s more irony. When young people don’t sign up because prices are rising then prices rise even higher. “What happens is the population gets sicker and sicker and sicker and sicker. The rates keep rising to try and catch it. It’s a fruitless chase, and ultimately you end up with a very bad pool of risk,” Bertolini said.
Sources: Insurance Business America, The Hill, Insurance Journal
October 2016| Main Street Industry News | www.pianeia.com | 16
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Maurice “Hank” Greenberg founded AIG and built it into the largest and one of the most successful insurance companies in the world. In 2008 Greenberg was forced out of the chairmanship of the company and soon after was sued by former New York Attorney General Eliot Spitzer for fraud.
Spitzer’s charges were nine. Today they are two and basically are for cooking the books to make AIG’s bottom line look better for investors.
It took 18 years from the time the charges were filed for the 91-year old Greenberg and his former CFO Howard Smith to be tried in Supreme Court Justice Charles Ramos’ Manhattan courtroom.
Things began last week with Greenberg taking the stand. It focused on the first of the two charges, the alleged coverup of $200 million in auto-warranty underwriting losses. Greenberg said he was aware of problems in the auto-warranty business as early as 1998 and he took steps to correct them and to punish those responsible.
Greenberg said the problem was not a big deal. New York Assitant Attorney General David Nachman disagreed. Greenberg was a hand’s on CEO — he said — who promised reinsurer CAPCO investors if it would accept the auto-warranty losses.
Week 1Maurice “Hank” Greenberg’s Trial
Maurice “Hank” Greenberg
“This was a small part of our business. It was insignificant. I was trying to teach a lesson to some managers who were involved with it. This was a nonevent at AIG. There are other things that are far more important than this,” Greenberg said in his defending salvo.
Nachman countered with, “It wasn’t so insignificant that you tried to insert yourself personally into these matters?”
As he peppered Greenberg with questions, Nachman entered several memos from senior AIG deputies to Greenberg in 1999 and 2000. The memos — Nachman said — show Greenberg and Smith were told the losses in the auto-warranty business would be hundreds of millions of dollars.
Greenberg said the losses added up to just a half a point in the firm’s combined ratio and wasn’t a big concern. Then why get so deeply involved, Nachman countered and pointed to a deposition that Smith gave in 1999 in which he, Greenberg and others looked at finding a reinsurance vehicle to reclassify losses.
October 2016 | Main Street Industry News |www.pianeia.com| 17
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Not perturbed by the accusation, Greenberg said the whole conversation was hypothetical and “there may be a method of converting underwriting losses to investment losses, that was what I was interested in. The concept of converting underwriting losses to investment losses was intriguing to me.”
And then he added attorneys would have to approve it, “It had to pass muster. Until that happened, I was not interested.”
In the second day Greenberg got admonished by Judge Ramos for not fully answering questions. A heated back and forth between Greenberg and Nachman had Greenberg constantly saying he doesn’t remember details. “If you don’t want this trial to last a year we will need direct answers,” Ramos told Greenberg.
Day two focused on Greenberg and Smith’s relationship with Joseph Umansky. He is a former AIG senior vice president. Umansky cooperated with the state in the investigation and said he sent a memo to Greenberg that said, “The CAPCO structure needs to be revamped in order to put us farther from criticism in today’s environment.”
At that point, Umansky added, Greenberg then sent him to Switzerland to find investors for CAPCO.
Greenberg says that’s not true. Umansky didn’t report to him — he said — and worked on the investment side of AIG. On the Switzerland suggestion, Greenberg said he was just trying to help. “I had just come back from Switzerland and I said, ‘Why don’t you get in touch with some Swiss banks?’ That was the extent of me helping him.”
On day three Judge Ramos jumped into the questioning. The judge said he’s losing sleep
trying to figure out why Greenberg would allow a deal like CAPCO to go on, “I look at this auto-warranty business. It did not go well at all. But that’s history. That’s what you see in this rear-view mirror. The future is in the windshield. It wasn’t going to bring back the losses. It wasn’t going to correct the mistakes that were made in the auto-warranty business. Why would AIG go through the CAPCO transaction in the first place? What was the motivation?”
Greenberg said the deal was done to address the concerns of managers who thought they’d be held accountable for the program’s losses. He said he made a lot of changes to alleviate those concerns. “That was the only reason. They wanted this off their back,” Greenberg said.
Nachman said the real reason he was involved is because Greenberg’s son Evan headed up the auto-warranty program.
The bottom-line — in an answer directed at the judge — Greenberg said he trusted Umansky and other senior managers to make sure any proposed transaction was legal and in line with acceptable accounting practices. And he said the idea of involving CAPCO to convert losses was only proposed by one employee.
This week the court is looking at the second allegedly illegal transaction. It was a reinsurance deal between AIG and General Reinsurance to beef up AIG’s reserves by $500 million.
What it — allegedly — did is make AIG look stronger to investors and to Wall Street and made it look like the company could handle bigger losses than it actually could.
Sources: Carrier Management, Insurance Business America, PropertyCasualty360.com, Insurance Journal
October 2016| Main Street Industry News | www.pianeia.com | 18
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The official publication of the American College of Occupational and Environmental Medicine (ACOEM) is the Journal of Occupational and Environmental Medicine. The magazine just put out a report from Dr. Edward Bernacki of the University of Texas at Austin.
In the report Bernacki and his colleagues connect obesity and workers’ compensation.
They compared the work comp costs and outcomes of 2,300 injured workers in Louisiana over a three-year period. Some were considered obese and others had normal body weight. Obese — by the way — is defined as a body mass index (BMI) of 30 or higher. Overweight had a BMI between 25 and 30.
Major injuries like fractures and tendon tears were still open in 11% of the cases and those workers had not returned to work. Obesity and overweight conditions were not associated with that delay.
However, for workers with major injuries, a high BMI was associated with the cost of treatment:
The BMI obese group costs averaged • $470,000
The BMI overweight group • compensation costs hit $270,000
Normal weight worker costs were • $180,000
The conclusion is that obese and overweight workers with a major injury
Workers’ Compensation & Obesity
are twice as likely to have costs of $100,000 or more. On the other side of the issue, body mass index — however — had no effect at all for less-severe injuries. Dr. Bernacki said other studies have come to the same conclusions as this study when it comes to obesity and being overweight and the length of time off work. Costs — however — were not understood. This study clarifies the compensation issue as more than 3/4 of the workers’ compensation claimants in the study were overweight or obese.
In the future Dr. Bernacki and his crew are going to look deeper into the issue and hope to prove that high BMI is more related medical costs than the cost of lost work time.
Source: Insurance Journal
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Depending on when you read this, a week from now the citizens of the United States will have elected a new president. While most of us have serious questions about how each candidate will govern the nation, insurance organizations are focused on whether or not they’ll be friendly to insurance.
Nat Wienecke of the Property Casualty Insurers Association of America (PCI) told Insurance Business America that neither candidate will be all that easy on the industry. “Regardless of the outcome, there are very serious issues with both candidates. It’s no secret that with regard to the importation of international capital standards, a President Clinton would continue policies put in place by Obama, while Donald Trump’s proposed changes to the McCarran-Ferguson Act seem to confuse the property/casualty and health spaces.”
Clinton — he said — will put the industry under a microscope and has said she doesn’t approve of the proposed mergers of some companies and the acquisition of others. “Too often, the companies end up pocketing profits rather than passing savings to consumers,” Clinton has stated.
So, she’s promising to tighten the antitrust enforcement ability of the U.S. Department of Justice and the Federal Trade Commission. That means the appointment of aggressive
CLINTON OR TRUMP AS PRESIDENTBoth a Struggle for Insurance
regulators — she said — to look deeper into merger and acquisitions.
On the other hand, Trump is talking about repealing McCarran-Ferguson to help promote the sale of insurance across state lines. Wienecke suspects Trump knows very little about the law and how repeal will expose insurers to antitrust laws it has been exempt from for decades — and exempt from for very good reasons. The sharing of data that violates those laws is critical in keeping insurance costs down for everyone.
That said, Wieneckie said the PCI believes it can work with whichever candidate wins. “We’ve begun a dialogue with representatives of both campaigns and see new opportunities with either candidate. The challenges will just be different.” Source: Insurance Business America
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Your customers like working with a local agent to handle their insurance. We think you deserve the same kind of attention. That’s why EMC has a fully staffed branch office in your area — to respond quicker and with a greater understanding of your area’s needs. It’s just one of the many reasons you and your policyholders Count on EMC ®.
JENNIFER BAKER, CPCU, AIC-M, AINS, AIS Senior Claims AdjusterEMC Omaha Branch
OMAHA BRANCH OFFICEPhone: 800-338-9735 | Home Office: Des Moines, IA ©Copyright Employers Mutual Casualty Company 2015. All rights reserved.
www.emcins.com
LOCAL SERVICE FOR YOUAND YOUR CLIENTS.
Main Street News_7.5x9.75_Local Service_Jennifer Baker.indd 1 12/22/2015 10:03:18 AM
October 2016 | Main Street Industry News |www.pianeia.com| 21
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Cyber AttACksDyn, smAll business, your Home & insurAnCe
October is Cybersecurity Awareness Month. Since we’re moving into the last week of October, this story grows in importance. Over the weekend cyber hackers attacked DNS service provider Dyn. The attack type is known as a Distributed Denial of Service (DDoS). In other words, it kept domain names like Twitter, Amazon, Reddit, Netflix and others in some parts of the country from being accessed by the general public.
This one — and at the time this story is written no one really knows from where — brought to light that most of us are woefully unprepared for a massive cyber attack. From mega corporations to the smallest business to individuals like you and me, our businesses and homes are pretty much easy targets.
When it comes to insurance, most of us have small business customers. Small businesses — and as you’ll see later, homeowners — are horribly unprepared for an attack. Or so says a new survey from Nationwide called the Small Business Owner Study. It said:
22% say they have a cyber-attack • response plan in place
23% say they have a dedicated crisis- • communication plan
43% do have a plan in place to protect • customer data
40% have a plan in place to protect • employee data
32% have a disaster recovery plan•
Nationwide says age plays a part in business cyber-attack preparation.
Of Millennials who own businesses 42% • are prepared.
17% of Generation X business owners • — those born from the early 1960s to mid-1970s — are prepared
12% of baby boomer owners are prepared•
Even more disconcerting:
41% of small business owners think cyber • attacks only happen to large businesses
46% think they happen to large and small • businesses equally
That’s up from 38% from 2015’s survey•
The survey’s bottom line is that 53% of small business owners don’t think an attack against them is likely. Another 34% did agree it might happen. Yet, a survey contradiction says 54% say they’ve been victims of a cyber-attack. And of those who’ve experienced one, 60% say it took more than a month to get back up and running.
October 2016| Main Street Industry News | www.pianeia.com | 22
This is why Mark Berven who is Nationwide’s president of Property & Casualty said small business needs to start paying closer attention to what’s going on. “Cyber criminals are getting more sophisticated and realizing that small businesses are easy targets.”
These are the common attacks:
Computer virus — 37% • Phishing — 20%• Trojan programs — 15%• Hacking — 11%• Unauthorized access to customer •
information — 7% Unauthorized access to company •
information — 7%
Homeowners have some of the same problems as small businesses. Hacking happens to everyone else and they — too — are woefully unprepared. What’s odd is some insurers — USAA, American Family and State Farm among them — are offering discounts on insurance if a home is wired with Internet-connected devices like a thermostat.
The odd thing is doing this considering how much a data breach ends up costing the insurer and this goes for individuals as well as small businesses and large corporations.
Jon-Michael Kowall at USAA says it’s a good idea and he calls it a “check-engine light for the home.” As an example, an Internet connected device will know a pipe is going to burst and will call a plumber before that happens.
Insurers also like the idea because it’s a data mine. Kowall said the new data will help with claims handling, rate setting and is a way to develop more and deeper relationships with customers. “In the near future, you’ll give us a mailing address and we will send a box of technology to you. What’s in the box will prevent claims and also offer a better service to policy holders.”
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He also contends the savings realized from this kind of a plan will prevent expensive home disasters and will actually pay for the technology required to make that happen.
All this is a good thing — maybe.
John Cusano of Accenture thinks it’s a very large maybe. In fact, he contends it will turn homes into data spigots for insurers and a minefield for hackers and other n’er-do-well criminal types. And he gives the example of data from smart home devices telling a burglar who has hacked into your system when you’re home and when you’re not.
So the The Internet of Things (IoT) which has given us smart refrigerators, smart washing machines and dryers and many other common household appliances in addition to cable or satellite service, phones and so on could be as dangerous as it is beneficial.
The just listed items and others — as many are starting to find out — are easy for hackers to access and control. So some precautions need to be taken to protect yourself.
PAtCH eArly, PAtCH often
Keep your router’s firmware updated • Keep operating system updates current• If you can’t remember to do them, have •
your system do them automaticallyIn other words, if a hole can be patched it •
should be patched
turn off remote ACCess to tHe internet of tHings
Shut off remote access to cameras and • printers
Outsiders can often log into them by • default
October 2016 | Main Street Industry News |www.pianeia.com| 23
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If these devices let you restrict access to • your local network only, do it
Remote TV access could also cause you • trouble
PAssworDs
Change all default passwords so they are • your own
It’s easier to have the default login and • password of a device compromised than if you tailor it to you
A default password is as bad as no • password at all
new DeviCes
If you buy a new TV or other device, do • your research before you make it live
If security patches are available apply • them first
Even if your new device is a gift, do not be • pressured into making it live before you’ve done your research
leArn to sCAn your own network
Yes, it’s legal• Tools like Nmap and others can help you •
find holes before hackers and malware senders do
inDustriAl strengtH Home firewAll
You’ll need to consult a cyber security • expert for info on how to make your home safe
Sources: Carrier Management, Insurance Business America, Naked Security, MIT Technology Review
PIA of Nebraska & Iowa(402) 392-1611www.pianeia.com
Utica’s Agents’ Errors & Omissions Program is all about…
RELATIONSHIPS
October 2016 | Main Street Industry News |www.pianeia.com| 25
New Jersey Congressman Rep. Frank Pallone — a Democrat — contends insurance companies turned profits from Superstorm Sandy while ignoring the financial obligations they had to homeowners and other victims.
He’s not alone.
So Pallone is proposing a 10% limit to the profits insurers can realize from sales through the National Flood Insurance Program (NFIP). “These companies were making like 30, 40 percent profits. Meanwhile, anything that they have to pay out over and above the premiums were paid for by the federal government. So what kind of a sweetheart deal is that?” he said.
George Kasimos — who founded Stop FEMA Now wants reforms but says Pallone is talking about a problem that isn’t close to the biggest concerns Superstorm Sandy victims have.
“It’s not even the top-five issue we have with FEMA. We’re waiting four years for flood insurance that we paid that is governed by the federal government and FEMA and they’ve been fraudulent for four years. People have not been able to rebuild their homes,” he said.
Businesses still haven’t seen dollars from flood claims placed four years ago. Others say a more important reform is flood zone map reform.
Undeterred Pallone says he’s going to continue to push FEMA to do a better job in the future by getting more information to residents at disaster centers on what they need to do to file claims and get reimbursed and FEMA also needs to do a better job training the engineers who are preparing claims reports.
Source: NewsWorks
Proposal for Private Flood Insurance Profit Cap
TOp STOrieSUtica’s Agents’ Errors & Omissions Program is all about…
RELATIONSHIPS To a person most of us think Charles Schultz’s Snoopy is about as cute as a cartoon character can be. MetLife thought so 30-years ago when it cut a deal with the late cartoonist to use the famed dog as its mascot and to use Snoopy and other Peanuts characters in its advertising.
Last week the unthinkable happened. MetLife has a new slogan — MetLife. Navigating Life Together — and Schultz’s pet pooch doesn’t fit the new marketing mindset. So the company has replaced Snoopy with a big green and blue letter M.
MetLife CEO Steve Kandarian said this has been in the works a long time. Focus in the marketing future will be group benefits like dental and disability. And in that focus, MetLife has spun off its retail business. It’s now called Brighthouse Financial.
The retail operation is where Snoopy dwelt but no longer Kandarian said. “We brought in Snoopy over 30 years ago to make our company more friendly and approachable during a time when insurance companies were seen as cold and distant. As we focus on our future, it’s important that we associate our brand directly with the work we do and the partnership we have with our customers.”
MetLifeDUMPS SNOOPy
October 2016| Main Street Industry News | www.pianeia.com | 26
piA NewS
Professional Insurance Agents NE IA and The National Alliance held Nebraska’s 27th Annual CIC & 7th CRM Conferment Ceremony
27th Annual NebraskaCIC Conferment CeremonyMr. David W. Allen, CICChurch Mutual Insurance Company Panama, NE
Ms. Laraine F. Anderson, CIC, CISR, AAIHarry A. Koch Insurance Company Omaha, NE
Ms. Kristin Ann Bettger, CICNofthPointe Insurance, Inc. Geneva. NE
Ms. Kendra L. Buss, CICAgri-City Insurance LLC Norfolk,NE
Mr. Dustin M. Courey, CICJoe Morten & Son, Inc.South Sioux City. NE
Mr. Shane Michael Ehvood, CIC, CISRInspro Insurance Lincoln, NE
Mr. Mathew L. Greenway, CIC, AAIHarry A. Koch Insurance Company Omaha, NE
Ms. Katherine Ann Havlat, CIC, AINSKeilerLeopold Insurance Garden City, KS
Ms. Sandra J. Krzycki, CICOlson Insurance Papillion, NE
Ms. Tracy L. Pritchard, CIC, AFISEllerbrock-Norris Insurance Kearney, NE
Mr. Benjamin Vetter, CICInspro Insurance LaVista, NE
Mr. Jared Allen Wills, CICInspro Insurance Lavista, NE
National CIC StatisticsTotal Participants: 67,040Total Designated: 30,369
Nebraska CIC StatisticsTotal Participants: 737Total Designated: 289CICs Conferred Today: 12
7th Annual NebraskaCRM Conferment CeremonyMr. Miles deMayo, CRM, CISRWarren DistributionOmaha, NE
Mr. Mark A. Frantz, CIC, CRM, ARMHarry A. Koch Insurance Company Omaha, NE
National CRM StatisticsTotal Participants: 21,189Total Designated: 3,954
Nebraska CRM StatisticsTotal Participants: 89Total Designated: 12CRMs Conferred Today: 2
October 2016 | Main Street Industry News |www.pianeia.com| 27
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For information and to registerClick Here or call (402) 392-1611.
Upcoming Events Calendar 2016
piA Ne iA eveNTS
Date Class/Webinar Where WhenOctober 4, 2016 Regarding Ethics NE/IA Webinar:
1:00PM - 4:00PM
October 4, 2016 **NEW** Regarding Ethics NE/IA Webinar:1:00PM - 4:00PM
October 6, 2016 Managing E&O in A 24/7 World NE/IA Webinar:12:00PM - 3:00PM
October 6, 2016 CISR: Insuring Commercial Property Davenport Saint Ambrose University
October 6, 2016 **NEW** Managing E&O in a 24/7 World NE/IA Webinar:12:00PM - 3:00PM
October 11, 2016 CISR: Insuring Commercial Property Des Moines Hilton Garden Inn Des Moines/Urbandale
October 12, 2016 CPIA 3: Sustain Success Des Moines Hilton Garden Inn Des Moines/Urbandale
October 12, 2016 CPIA 3: Sustain Success Des Moines Hilton Garden Inn Des Moines/Urbandale
October 12 - 14, 2016 CIC: Personal Lines Institute Omaha Double Tree
October 13, 2016 Top 12 Coverage Countdown NE/IA Webinar:12:00PM - 3:00PM
October 13, 2016 CPIA 3: Sustain Success Omaha Hilton Garden Inn Omaha
October 13, 2016 **NEW** Top 12 Coverage Countdown NE/IA Webinar:12:00PM - 3:00PM
October 18, 2016 How to be the Agent Advocate at Claim Time NE/IA Webinar: 12:00PM - 3:00PM
October 18, 2016 **NEW** How to be the Agent Advocate at Claim Time NE/IA Webinar:
12:00PM - 3:00PM
October 18 - 19, 2016 Ruble: Graduate Seminar (IA) West Des Moines Holiday Inn Hotel & Suites
October 20, 2016 Get in the Ring: A look at Property Claims, Fights, & Decisions NE/IA Webinar:
1:00PM - 4:00PM
October 20, 2016 Get in the Ring: A Look at Property Claims, Fights & Decisions NE/IA Webinar:
12:00PM - 3:00PM
October 24, 2016 Leases & Contracts Vs. The Insurance Policy NE/IA Webinar:12:00PM - 3:00PM
October 2016 | Main Street Industry News |www.pianeia.com| 29
piA Ne iA eveNTS
October 24, 2016 **NEW** Leases & Contracts Vs. The Insurance Policy NE/IA Webinar:
12:00PM - 3:00PM
October 26, 2016 Lawncare to Lipstick NE/IA Webinar:1:00PM - 3:00PM
October 26, 2016 CPSR: Residential Property Kearney Holiday Inn Express - Kearney
October 26, 2016 Lawncare to Lipstick NE/IA Webinar:1:00PM - 3:00PM
November 2, 2016 Ethics: Taking it to the Streets NE/IA Webinar:1:00PM - 4:00PM
November 3, 2016 **NEW** And the CHAOS Continues NE/IA Webinar:12:00PM - 3:00PM
November 4, 2016 **NEW** Man Vs. Machine NE/IA Webinar:8:00AM - 11:00AM
November 8, 2016 **NEW** Executive & Management Liability NE/IA Webinar:12:00PM - 3:00PM
November 10, 2016 Social Networking: OMG or E&O? (NE) NE Webinar:12:00PM - 3:00PM
November 10, 2016 CISR: Personal Lines Miscellaneous Cedar Rapids Kirkwood CE Center
November 10, 2016 Social Networking: OMG or E&O? Iowa Webinar:12:00PM - 3:00PM
November 15, 2016 What We Learned: Claim and Coverage Issues from Catastrophes NE/IA Webinar:
12:00PM - 3:00PM
November 15, 2016 CISR: Dynamics of Service Des Moines Hilton Garden Inn Des Moines/Urbandale
November 16 - 18, 2016 CIC: Commercial Property Institute West Des Moines Holiday Inn Hotel & Suites
November 16, 2016 **NEW** Managing E&O in a 24/7 World NE/IA Webinar:12:00PM - 3:00PM
November 17, 2016 Personal Lines Complications: Because Simple is just too darn Easy NE/IA Webinar:
1:00PM - 4:00PM
December 1, 2016 **NEW** Regarding Ethics (NE) NE/IA Webinar:1:00PM - 4:00PM
December 6, 2016 **NEW** Top 12 Coverage Countdown NE/IA Webinar:12:00PM - 3:00PM
December 7, 2016 **NEW** How to be the Agent Advocate at Claim Time NE/IA Webinar:
1:00PM - 4:00PM
December 8, 2016 Words Mean Things & Insurance is a Foreign Language NE/IA Webinar:
12:00PM - 3:00PM
December 12, 2016 Food Borne Illness & Insurance Coverage NE/IA Webinar:12:00PM - 3:00PM
December 13, 2016 Get in the Ring: A Look at Property Claims, Fights & Decisions NE/IA Webinar:
8:00AM - 11:00AM
December 20, 2016 **NEW** Leases & Contracts Vs. The Insurance Policy NE/IA Webinar:
8:00AM - 11:00AM
COMPARE Y
OUR
E&O —
IF Y
OU DARE!
� � Operations Covered include Property and Casualty, Life, Accident and Health products as well asLoss Control Services, Notary Services and Property Appraisals for insureds
� � Full prior acts coverage for the named insured at no extra charge*
� � Broad definition of Insured includes former insureds and independent contractors
� � Defense Cost in addition to limits of liability
� � First dollar defense coverage. (Optional loss and litigation deductible*)
� � Aggregate Deductible caps your annual deductible exposure
� � Consent to Settle clause prevents claims settlement without your approval
� � Contractual Liability covered
� � Insolvency Coverage provided for Insurance Carriers, HMO’s, PPO’s(coverage available for Self Insurance Programs subject to financial review)
� � Dishonesty coverage provided subject to exclusion of participating insureds
� � Punitive and Exemplary Damages covered under definition of loss (where permitted by law)
� � Advertising and Personal Injury coverage for professional activities
� � Optional Extended Reporting Period reinstates aggregate and offers options up to 10 years
� � Worldwide coverage. (Suit may be brought anywhere in the world)
Several additional optional coverages are available for:* � � CybersuranceTM (Breach Coverage)
� � Contingent Catastrophic Extra Expense
� � Employment Related Practices Liability
� � Financial Products
� � Mutual Funds and Variable Annuities
� � Real Estate Agents Errors and Omissions
� � Professional Employer Organization Marketing Services
� � Loan Origination
� � Third Party Administrators E&O (Claims loss adjusting)
� � Policy limits available up to $20 million per loss, $21 million aggregate*
� � A menu of Loss Control credits available. Now, more agencies can qualify (“Get the credit you deserve!”)
� � Payment options available with plans requiring as little as 25% down and up to 9 payments
� � Direct access to underwriting and claims specialists who are devoted exclusively to your E&O programas a Utica Mutual insured
� � Also covered are reasonable expenses incurred by you at our request to assist in claim or suit defense or investigation (up to $250 a day loss of earnings).
* Subject to underwriting approval. Availability varies by state. (Review actual policy forms for full details of coverage.)
Utica Mutual rated “A-” or “Excellent” by A.M. Best • Dedicated Agents & Brokers E&O carrier since 1966Phone: 315-734-2000 / Toll-free: 1-800-274-1914 • Fax: 315-734-2986
Utica National Insurance Group
Utica Mutual YourE&O E&O
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Compare your current Agents and Brokers E&O Coverage to Utica Mutual’s superior program.
9-A-911 Ed. 12-11
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9A911 12-11 E&O Checklist:checklist 12/15/11 12:23 PM Page 1
October 2016 | Main Street Industry News |www.pianeia.com| 31
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ProAg® is an equal opportunity provider. A subsidiary of HCC Insurance Holdings, Inc.
Safe. Secure. Strong.
Come experience the ProAg difference today.Experienced crop insurance professionals and adjusters.Multiple products available for customizing a farm safety net.Financial strength and security of an A+ A.M. Best ranked insurer.
Policies or provisions may vary or be unavailable in some states. Policies have exclusions and limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Association Administrative Address, P.O. Box 17828, Portland, Maine 04112-8828, under Policy Form ALI-3001-A (UIC).
Insurance Program Administered by Lockton Affinity, LLC.
Mortgage payments, education, healthcare and daily living expenses continue for your family if something happens to you or another family member. That’s why it makes sense to seek financial protection with PIA Trust’s Term Life insurance plans. Term Life coverage available through the plans includes:
Help Protect Your Family’s Financial Security With The PIA Trust
Basic, Voluntary & Dependent Term Life Plans
As a PIA Member* serving Main Street
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TERM LIFE COVERAGE DESIGNED WITH LOCAL AGENTS IN MIND
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For more information about PIA Trust Term Life insurance plans, please contact your local PIA Affiliate or call
the Plan Administrator at (800) 336-4759. Additional information is also available on-line at www.piatrust.com.
* PIA National membership, when required, must be current at all times.
Basic Term Life - no medical underwriting necessary up to guaranteed issue limits (only available with 100% group participation & employer paid premiums)
Voluntary Term Life - flexible face amounts of up to $300,000 for you and your employeesDependent Term Life - coverage amounts up to $100,00 for spouses and $10,000 for children
