INSIDE Confusion: The New Federal Overtime Rule » 7 Self-Driving Vehicles: Insurance Implications & Driver Implications » 12 PIA & Other Industry Groups Fight Auto Insurance Affordability Plan » 18 ObamaCare & Insurers: Most Losing Money» 23
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July 2016 | Published Monthly
Insuring the Midlands Since 1891 Andy Kraus, CPCU Vice President of Agencies 800-742-7433 akraus@fmne.com
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.
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Top Stories Confusion: The New Federal Overtime Rule | 7 On December 1st of this year the new federal rules on overtime go into effect. That is unless Congress makes changes. It’s Official: The Justice Department to Block Health Insurer Mergers | 8 It’s now official but not unexpected. United States: Represented by 100 People | 9 Insurance is about people. Insuring them. Making them whole. Self-Driving Vehicles: Insurance Implications & Driver Implications | 12 It finally happened. On May 7th Joshua Brown was killed while “driving” a self-driving vehicle in Williston, Florida. Insurance Business: Rates & The First Quarter | 14 MarketScout said on average — and to no one’s surprise — rates dropped 1% in June compared to June of 2015. Update on Data Theft: Some Frightening Statistics | 16 Businesses and consumers worry about data theft from hackers. PIA & Other Industry Groups Fight Auto Insurance Affordability Plan | 18 PIA National has come out against a plan by the Federal Insurance Office (FIO) to institute guidelines to make auto insurance affordable to — as the FIO calls them — “affected persons.”
of 2007 and dragged the economy down through 2008 and beyond, we —the people of this nation — got a harsh lesson in money management. Millennials as Employees: Animals are Family | 21 It’s not easy getting millennials — those who became adults just before and just after the year 2000 — to buy into the idea of insurance as a career. ObamaCare: Millennials Still Find Health Insurance Too Expensive | 22 The Harris Poll says the Affordable Care Act — or ObamaCare as we now know it — hasn’t fixed the health insurance woes of the nation’s younger adults. ObamaCare & Insurers: Most Losing Money | 23 The Commonwealth Fund looked at the first year of the implementation of the Affordable Care Act.
PIA NE IA Events Upcoming Events Calendar 2016 | 26
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Americans & Money: The Great Recession Lesson | 20 When the Great Recession hit at the end July 2016| Main Street Industry News | www.pianeia.com | 4
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Top Stories
Confusion
The New Federal Overtime Rule On December 1st of this year the new federal rules on overtime go into effect. That is unless Congress makes changes. And few think that is likely. The new overtime rule — or rules actually — will likely impact your business if you’re an owner or manager. What it does is raise the salary threshold for salaried executive, administrative, professional, outside sales and computer employees that are exempt from overtime. This group’s weekly pay ranges from $455 a week to $913 or annually from $23,600 per year to $47,476 a year. The overtime and whether to pay it is kind of confusing. The Department of Labor puts it this way: “Unless covered by an exemption, employees covered by the FLSA [Fair Labor Standards Act] must receive overtime pay for all hours worked over 40 in a workweek at a rate not less than one and one-half times their regular rate of pay.” But the employee groups we just listed are covered by an exemption. Or at least they were at one time. So to find out if you — or your employees — are covered in the new rule and/or rules you have to look carefully. To begin with, the Department of Labor says exempt is actually better defined as exempt from overtime. And an employee is only exempt if they meet certain conditions like making $455 a week or less. So are you exempt? That’s where things get confusing and maze-like. For example federal law does not apply overtime rules to teachers, lawyers or doctors. But it might apply to a marketing professional or someone doing outside sales.
Whether you’re exempt also depends on how your job is classified. And that — too — is complicated. Those classifications are based on duties and not necessarily job title. It’s something a lot of employers don’t know and something an equal amount of employees don’t know. Here’s what we do know. If you’re working — or your employees are working — in a “white collar” job and the salary is under $913 a week then overtime will have to be paid starting December 1st. The four links below will help you define a white collar job. Learned professional or creative professional Administrative employee Computer employee Executive employee And as noted earlier, the minimum salary per week requirement for employees in these categories will change on December 1st from the current $455 a week to $913. This will be a challenge for employers who have some heavy decisions to make. • They can — to be exempt from paying overtime — bump up the salary of employees in this group to $913 a week. • An employee can be reclassified as an hourly employee and any hours over 40 will require overtime pay. • Or the employee can be kept as a salaried, exempt employee and if under $913 a week, can pay the employee overtime when hours exceed 40. By the way, the Department says 4.2 million workers will be impacted. • 55.6% will be women • 31.3% will be between the ages of 25 and 34 • 39.2% will hold a Bachelor’s degree Source: OregonLive.com
July 2016 | Main Street Industry News |www.pianeia.com| 7
Top Stories
It’s Official
The Justice Department to Block Health Insurer Mergers It’s now official but not unexpected. The Justice Department has reviewed the proposed $37 billion merger of Humana and Aetna and the $54 billion purchase of Cigna by Anthem and will file suit to stop them.
Nine states — including insurance powerhouses California, New York and Connecticut — oppose the merger and the sale. California Insurance Commissioner Dave Jones said he’s pleased with the decision.
U.S. Attorney General Loretta Lynch said the merger and the sale violate antitrust laws and will eliminate competition. In her comments, Lynch said they will cause harm to consumers and “leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies. Competition would be substantially reduced for hundreds of thousands of families and individuals who buy insurance on the public exchanges established under the Affordable Care Act.”
“During the public hearings I convened, I questioned executives from Anthem, Cigna, Aetna and Humana. None of the companies were able to adequately substantiate their claims of savings associated with the mergers. Not one company executive was willing to commit to pass along alleged cost savings to consumers through lower premiums. Bigger is not better when it comes to health insurance mergers. History has shown that health insurance mergers result in higher prices, fewer choices, and lower quality of care,” Jones said.
The Humana and Aetna say they’ll challenge the ruling — and will do so “vigorously.” Cigna and Anthem say they are weighing options and nothing will likely come of the purchase discussions until 2017 anyway.
Source: Insurance Business America, Insurance Journal, The Hill
July 2016| Main Street Industry News | www.pianeia.com | 8
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United States: Represented by 100 People
Insurance is about people. Insuring them. Making them whole. And insurance touches all kinds of people from all walks of life. This country — while some might claim otherwise — is quite diverse and the following information shows you just how diverse. It comes from a number of sources like the U.S. Census Bureau, Pew Research, the American Veterinary Medical Association and the Stanford Center on Poverty & Inequality. Their information was boiled down into percentages and is explained as if the United States has a population of just 100 people. To begin with 51 of the 100 are women and 49 are men. Of the 100, a whopping 63 are between the ages of 18 and 65. The two smallest age groups are under at 18 and those over 65. Over 18 is 23 people and for 65 and up the number is 14.
We are also made up of many races: • • • • • •
62 of the 100 are white 17 Latino or Hispanic 13 are black 5 Asian 2 multi-racial 1 is a Native American
America — meaning the United States — is known as a melting pot. And these statistics prove that — while many people are here illegally — we are still a nation of immigrants: • 16 of the 100 in our survey are immigrants • 8 are the children of immigrants • 76 are at least third generation citizens of the U.S. You hear a lot of grumbling these days about how those coming to the U.S. ought to learn
July 2016 | Main Street Industry News |www.pianeia.com| 9
Top Stories English and some even go so far as to want English to be the nation’s “official” language. And since many of our 100 person microcosm are immigrants, that leads to the question of what language is spoken in the home. • Even though 62 of our 100 are white, 80 of 100 speak English • 13 speak Spanish • 1 speaks French • 1 speaks Chinese • 5 speak one of 300 other languages Are we a religious people? Pretty much according to the research: • • • • • • • •
71 are Christian 16 are nothing 4 are Agnostic 3 are atheist 2 are Jewish 1 is a Muslim 1 is a Hindu 1 is a Buddhist
And where do we live? Cities. Where else? • 80 of 100 are urban and suburban dwellers • 20 live in rural settings The United States has a very expensive education system and — while it does have its critics — the study says we are fairly well educated: • 86 have high school diplomas • 29 earned Bachelor degrees Assuming that all 100 of our microcosm work, there are annual income statistics. Surprisingly, four of the eight income groups are fairly close together in terms of percentages: • • • • •
13 of 100 earn under $15,000 a year 11 earn $15,000 to $25,000 10 make $25,000 to $35,000 17 of 100 earn $50,000 to $75,000 annually 11 make $75,000 to $100,000 a year
And 25 of the 100 make the most money: • 13 garner $100,000 to $150,000 annually • 6 of 100 will make $150,000 to $200,000 a year • 6 of the 100 earn over $200,000 a year When it comes to the distribution of wealth, that’s a whole other story and the statistics here are not that surprising: • 10 of the 100 control 77% of the wealth • 1 person controls 42% of household wealth We are also — interestingly enough — very close to equally divided between the Republicans and Democrats which will probably please both parties. What won’t please them is how many are independents: • 29 of 100 are Democrats • 26 of that number are Republicans • 42 say they are independent But do we vote? Turnout is rather anemic for a nation with so much freedom of personal expression: • 58 of 100 voted in the 2012 election — that’s over 50% • In the non-presidential election of 2014 just 36 voted And a couple of fun facts: • 92 of 100 have cell phones • 68 have smartphones • 34 have an iPhone Yes. We have pets: • 56 have pets • 31 have cats • 37 own dogs Sources: U.S. Census Bureau, Pew Research, American Veterinary Medical Association, Stanford Center on Poverty & Inequality
July 2016| Main Street Industry News | www.pianeia.com | 10
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Self-Driving Vehicles
Insurance Implications & Driver Implications It finally happened. On May 7th Joshua Brown was killed while “driving� a self-driving vehicle in Williston, Florida. So much for the sales pitch that a computer can operate a vehicle more safely than a human. At least for now. July 2016| Main Street Industry News | www.pianeia.com | 12
Top Stories Apparently a tractor-trailer semi making a left turn hit the car that was in self-driving mode. The vehicle failed to apply the brakes. Tesla said it has a reason for the crash and released this statement: “Neither autopilot nor the driver noticed the white side of the tractor-trailer against a brightly lit sky, so the brake was not applied.” Brown owned a technology company and was really proud of his 2015 Model S Tesla and made videos of himself while driving the vehicle. The “accident” happened as federal regulators — and other regulators — struggle with rules for how they operate and how people operate them. And it has prompted the National Highway Safety Traffic Commission to investigate. So how do we really feel about self-driven vehicles? AlixPartners asked 1,517 people what they thought: • 73% said they want driverless vehicles to take over their driving needs • 80% said they’d pay extra to have a robot at the wheel • 90% say they’d be okay with a driverless vehicle handling their needs if they could drive occasionally
The University of Michigan got totally different results in its survey: • 16% prefer riding in a driverless vehicle • 46 don’t want anything to do with them • 39% are okay with one that partly drives itself AlixPartners’ Mark Wakefield said the surveys like that of the University of Michigan have biased people against the vehicles. He said interest will grow as we get closer to the target mass production date of around 2020. “It’s worth remembering that commuting sucks and it has gotten worse every decade. Autonomous driving increases the economic utility of the commuter and it makes their life better. When you describe what it can do, they like that,” he said. Right now driverless vehicles are a real problem for insurers. Most are in the process of figuring out how to insure them — or even if to insure them. Pricing and coverage are the focus. Here’s what Deloitte thinks the market will look like as it evolves. And it needs to be noted the report was issued before the fatality and Deloitte said there has only been one accident in all the tests performed and it happened when both vehicles were traveling at less than 2mph.
First of all, Deloitte says the shift to driverless vehicles will be very gradual. So insurance will have time to prepare. But eventually how much people use their driverless vehicles will determine the cost of insurance. Vehicles used for local transportation like deliveries will see rates lower than consumers. How the vehicle is constructed will also play a part in the insurance rate. The better it is built and more complex the computer that runs it, the lower the cost of insurance. And rates — like normal insurance — will be determined by the usuals. Another thought. It could become likely that fewer people own their own autos in the driverless vehicle society. Companies like Uber could end up providing all the transportation. Source: New York Times, two from PropertyCasualty360.com — link 1 and link 2, Insurance Networking News, Insurance Journal
July 2016 | Main Street Industry News |www.pianeia.com| 13
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Insurance Business Rates & The First Quarter willing to maintain the rate reductions of the past few years and not cut rates even further,” Kerr said. Meanwhile, A.M. Best said the first quarter of 2016 saw mixed and disappointing results when compared to the first quarter of last year. • Net income fell 24% to $13.7 billion. • Underwriting gained $2.1 billion, down from $3.9 billion in 2015’s first quarter. • Net written premiums rose 3.4% but it’s below the 4.2% last year. • Total losses saw a 5.8% increase and was $72.5 billion. MarketScout said on average — and to no one’s surprise — rates dropped 1% in June compared to June of 2015. The firm’s CEO Richard Kerr said most lines either fell or remained flat. A few saw increases: • Commercial auto rose 2% • Employment practices went up 1% • The biggest decreases were in commercial property and professional liability, which saw rates fall 2%. • Large accounts fell 3% on average and small accounts dropped a point. “Insurers are getting tired of cutting rates. There are still pockets of competitive business; however, it is beginning to look like insurers are
• The combined ratio remained under 100 at 97.4 but that’s up from 95.8 in 2015’s first quarter. And the report says catastrophe losses hitting $5.1 billion is the highest dollar amount loss since 2011’s figure of $6.4 billion. “Among key events driving losses in the quarter were a series of severe storms that impacted nearly all sections of the country in March, a significant winter storm in mid-February that was followed later in the month by systems that brought both winter and spring storm conditions across the central and eastern sections of the country, and flooding and severe weather in California in January,” A.M. Best noted. Sources: PropertyCasualty360.com, Insurance Journal, Business Insurance
July 2016| Main Street Industry News | www.pianeia.com | 14
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Top Stories
Update on Data Theft Some Frightening Statistics Businesses and consumers worry about data theft from hackers. Not a week goes by that we don’t hear of this business or that being hacked. And while most of us think the threat is overseas or from the outside, a threat closer to home is employees.
• The highest rates of both are Asia-Pacific region businesses — 80% • Media and technology firms came in second at 77%
Accenture Plc and HfS Research said it looked at 208 organizations and asked them about data theft:
Accenture’s Omar Abbosh said, “Everyone’s always known that part of designing security starts with thinking that your employees could be a risk but I don’t think anyone could have said it was quite that high.”
• 69% say they’ve had employees steal data or attempt to do so in the last year • 57% say they’ve had outsiders try the same thing
Businesses spend a pot load of money each year to defend against the theft of data. Accenture estimates the cost to be close to $84 billion. Actual thefts run about $2 trillion
July 2016| Main Street Industry News | www.pianeia.com | 16
Top Stories and if things don’t slow down, it could rise to $90 trillion by 2030. Abbosh recommends businesses change how they fight cyber crime by sharing data with each other and work on joint strategies. “There’s a huge business rationale to share and collaborate. If one bank is fundamentally breached in a way that collapses its trust with its customer base, I could be happy and say they’re all going to come to me, but that’s a false comfort.” A bigger problem is — even with the trillions lost in cyber attacks and employee theft — businesses still don’t see cyber security as a top priority. • 70% say they do not have adequate funding for technology training or the personnel needed to maintain company cyber security • 36% say management considers cyber security an “unnecessary cost” A study by Mimecast bears out the Accenture conclusion. Just 35% of businesses carry cyber insurance. And only 10% — which is worse — think their insurance covers the newest threat — social engineering attacks. Mimecast’s Steve Malone said social engineering — if you’re not familiar — is someone posing as someone who can be given access to privileged information or have access to funds. He calls is insidious. “An attacker pretends to be someone from the victim company, the CEO, CFO, etc., and will trick someone in the organization into giving them something. These attacks used to be strictly financial, ‘hi, this is the CEO; I’m out of the office. Bob (in finance), can you make this wire transfer for me?’ and Bob is ‘oh, the CEO wants me to do this. I should do it,” he said. That was the early wave of attacks. Today social engineering schemes are evolving. They’ll ask for employee information and other
valuable data. “So, no money changes hands, but if you think about what is in your W2, if I can get 200 of these, I can sell 200 identities on the dark web, but most cyber coverage does not mention data. Most policies are based on financial loss. There is nothing in the insurance policy that says data like W2s are covered, and even if they pay out, what is a W2 worth?” Malone said. Mimecast’s report said we’ll see more of these in the future ranging from secret business plans to intellectual property. These are things that a cyber criminal can sell and that you can’t put a value upon. So there’s no mention of them in insurance policies. And Malone wonders out loud how insurance is going to keep up with this and other forms of cyber attacks. Sources: Insurance Networking News, Insurance Business America
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Top Stories
PIA & Other Industry Groups Fight Auto Insurance Affordability Plan PIA National has come out against a plan by the Federal Insurance Office (FIO) to institute guidelines to make auto insurance affordable to — as the FIO calls them — “affected persons.” In opposing the idea, the PIA joins several industry groups who also think the idea has no merit. FIO Director Michael McRaith said affected will be defined as traditionally underserved communities and consumers, minorities, and low- and moderate-income persons. So if the average auto liability premium is more than 2% of the median income in those neighborhoods, the insurance will be deemed unaffordable. “Access to affordable auto insurance is crucial for consumers who commute to work, drive kids to school, and meet the needs of their families. This new methodology reflects important feedback FIO has received from a number of key stakeholders, and it is a meaningful step toward better understanding the affordability of auto insurance for consumers and underserved communities all across the country,” he said. Consumer groups like McRaith’s point of view and support the guidelines. The insurance industry — for the most part — does not. PIA National Senior Vice President for Industry Affairs Pat Borowski says the organization appreciates that the FIO let the industry chime in before making its
decision. “We appreciate the engaged process that FIO extended to the industry and the subsequent follow-ups for additional information and asking additional questions. We further appreciate the FIO’s efforts to balance the many comments, and make a number of changes that have improved the outcome, as compared to the original proposal,” she noted. But in the end the FIO’s designation of unaffordable is unacceptable. “We still do not see if or how FIO will account for several other critical factors, such as the differences — most of them significant — that exist among all drivers as to their individual or collective household driving records. Assessing auto insurance affordability is much more complex than determining the affordability of housing costs under HUD methods,” she said. Borowski said the PIA’s analysis of the problem shows the FIO does not give enough weight to a number of variables including the non-insurance related factors that impact the price of insurance and regional variables. Jimi Grande of the National Association of Mutual Insurance Companies (NAMIC) said the FIO is stepping outside of its authority. “By law, the FIO monitors the markets and will report to Congress, which can act on those reports or not. What’s troubling is that even though the FIO itself recognizes that ‘affordability for any individual consumer can be assessed accurately only within the context of that consumer’s
July 2016| Main Street Industry News | www.pianeia.com | 18
Top Stories
circumstances,’ the conclusions others draw from the office’s reports based on aggregated data will not take this fundamental fact into account, or ignore it outright to further an agenda,” he said. Borowski and the PIA worry that the problem fix will lead to a government subsidy similar to what happens with ObamaCare. The Insurance Research Council agrees with PIA that the figure of 2% is arbitrary. No standards — the IRC contends — exist to support McRaith’s figure. It does agree an affordability index that compares coverage to income is appropriate over time but it is not a good method of deciding whether insurance is affordable or not affordable. Grande said that’s the biggest problem with the FIO stance. “The methodology ignores all existing government data on auto insurance expenditures and even the fundamental principle that insurance should be priced according to risk, which means the same standard would be considered for a driver with a perfect driving record and one with multiple accidents. There is great danger in arbitrarily establishing a threshold for which our government will deem a product affordable. What’s next – whether the car itself is considered affordable? The gasoline fueling it? Is there a need for the government to determine if auto repairs are affordable?” Like PIA National’s Borowski, Grande appreciated the FIO listening to the industry but its solution and “the end result remains a troubling standard that may not provide an accurate picture of the highly competitive auto insurance marketplace.”
Robert Gordon — a senior vice president for the Property Casualty Insurers Association of America (PCI) — agrees. He said, “Individual finances, wealth and discretionary income may vary greatly from family to family. For most consumers, the cost of buying a car and maintaining and fueling it far exceed any insurance costs, making the regulatory fixation with insurance affordability somewhat misdirected. In particular, rapidly escalating distracted driving, traffic congestion and alcohol and drug use have been negatively impacting auto accident frequency and loss costs, which are the primary determinants of insurance rates and affordability,” Gordon said. American Insurance Association senior council Lisa Brown said the FIO’s definitions are all wrong. “Factors such as state-based tort reform laws, consumer choice in levels of coverage, and state minimum insurance requirement laws do not appear to have been taken into account while FIO devised this methodology. It is essential that we have an effective and efficient system of insurance supervision that fosters the growth of vibrant private, competitive insurance markets. We believe that government regulation should be employed in ways that support the growth of the auto insurance market and look forward to working with FIO to address these concerns,” she said. The IRC gets the last word and it’s an important one. “The affordability of auto insurance is ultimately a function of how state auto insurance systems are defined and administered by the states. Efforts to improve affordability should address the primary cost drivers.” Sources: PIA National, Insurance Journal
July 2016 | Main Street Industry News |www.pianeia.com| 19
Top Stories
Americans & Money The Great Recession Lesson When the Great Recession hit at the end of 2007 and dragged the economy down through 2008 and beyond, we —the people of this nation — got a harsh lesson in money management. Included in that lesson is more information than we have ever seen before on the dangers of Wall Street and bad banking practices. Films like The Wolf of Wall Street, The Big Short and others punctuated the problem. The conclusion — says the Finra Investor Education Foundation — is that we finally understand the danger of too much debt. Or do we? The foundation polled 25,000 people and found — while some of us are getting our acts together — a huge percentage of Americans are as confused as ever. • Half of us say we now pay our credit cards off every month - just half • We’re overdrawing our checking accounts less often • We’re actually putting money down when we buy a house
money and not having enough to retire • 37% with student loans admit they’ve been late with those payments Last. Finra says every time they do this survey they ask about what people know about: • • • • •
Interest rates Inflation Bond prices Mortgages Investments
And — heavy sigh — Finra says we’re not really getting better at knowing what these are and we don’t know that we don’t know: • This year 76% gave themselves high marks on financial knowledge • That answer was 73% in 2012 • It was 67% in 2009 Source: PropertyCasualty360.com
Yet the confusion continues: • Wages have not gone up since the recession ended • If it actually ended. The debate on that continues • With wages more or less the same, more of us are living within our means but no better • While more of are living there, 40% of us say we have too much debt • 56% worry about running out of July 2016| Main Street Industry News | www.pianeia.com | 20
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Millennials as Employees
Animals are Family It’s not easy getting millennials — those who became adults just before and just after the year 2000 — to buy into the idea of insurance as a career. This in spite of the fact that insurance — for the most part — is about making people whole and millennials love that sort of thing. So catching a millennial as an employee is often tough. There is hope. Millennials like perks. The more benefits you have, the easier it is to catch and retain them once they’re on the payroll. Here’s a new — and quite positive — perk to entice them.
Pet insurance. And here’s why. Millennials are now the largest population in the country. They’ve passed baby boomers. So they’re the largest population — AND — since they’re waiting until “later” to have children, they’re adopting the most pets of any age group in the nation. Bob Vetere of the American Pet Products Association said millennials view their pets as children. “They are almost using pets as practice families, to get the feel for having some living object totally dependent on you.”
Paws Pet Insurance & Foundation. She says pet insurance is growing in popularity with businesses and with employees. “A lot of people didn’t know that pet insurance existed for a long time. It wasn’t necessarily the best plan for a long time. Now there are several players with excellent plans, so it is becoming more and more popular.” The reason for the growing popularity is the high cost of pet medical care. And that cost is staggering. Harris — the polling firm — found 65% of U.S. households with pets spent money on health care. That price tag hit $15 billion last year. Liz Watson of Hartville Pet Insurance Group said pet insurance is a great way for an employer to show how much they share the values of the millennial and understand that pets are more than pets. They are family. “As millennials adopt this ‘pets as a part of the family’ viewpoint and are trying to be more and more responsible, it will lead them to want to explore something like pet insurance,” she said. By the way, around 90% of those with pets do not have pet insurance. Source: Employee Benefit News
So many millennials — like those in Vetere’s office and maybe even yours — are wanting benefits for their pets since they don’t have children. Smart employers — including one in three Fortune 500 firms and 9% of all other companies — are starting to provide pet insurance as a benefit. Or so says the Society for Human Resources Management’s (SHRM) research. Cynthia Trumpy is one of the heads of Health July 2016 | Main Street Industry News |www.pianeia.com| 21
Top Stories
ObamaCare: Millennials Still Find Health Insurance Too Expensive The Harris Poll says the Affordable Care Act — or ObamaCare as we now know it — hasn’t fixed the health insurance woes of the nation’s younger adults. The survey of 1,171 millennials — or Generation Y — found 20% cannot afford health insurance premiums. So they remain uninsured and those 18 to 36 more or less define ObamaCare as the Unaffordable Care Act. They also — by 70% — say cost is very important when looking for health care.
Breaking it down: • 66% say monthly premiums of $200 is unaffordable • Others say premiums as low as $100 is unaffordable • So 16% of millennials — including 47% who are currently uninsured — won’t be purchasing health insurance in 2017 Another problem with getting millennials insured is how they often view themselves as invincible. Source link: Insurance Business America
July 2016| Main Street Industry News | www.pianeia.com | 22
Top Stories
ObamaCare & Insurers
Most Losing Money The Commonwealth Fund looked at the first year of the implementation of the Affordable Care Act. It found just a third of the 144 insurers participating in the state or federal government exchanges broke even or better. Ironically, they made twice the income from premiums but the payouts cut profits. Here are some details from the study: • Most underestimated total medical costs by at least 5.7% • 25% underestimated by a whopping 35%
• Losses were recouped in many cases from ObamaCare’s reinsurance program
• With the reinsurance insurers found payouts were just 2% higher than expected However, the bad news is the reinsurance program ends in 2017. And the researchers recommend — if the Affordable Care Act is to survive — that the reinsurance program needs to be extended until the ObamaCare marketplace has “matured.” The latest to exit at least part of ObamaCare is Humana. It only operates in a few states but lost close to $1 billion last year. Humana will leave 11 of its 19 marketplaces. With the decision Humana joins UnitedHealth and a couple of others. Health and Human Services Secretary Sylvia Mathews Burwell said the administration is getting the message. It’s one of the reasons the administration opposes the merger of Humana and Aetna and Anthem and Cigna. Competition makes rates fall and actually — she says — helps insurers. And since insurers are leaving the market, she — and President Obama — are pushing for the creation of a public option.
“When there is competition, that creates downward price pressure, and it also creates upward quality pressure. We’ve always thought and talked about why competition is an important part of the overall picture, and that’s not just in the marketplace but overall for the nation in terms of our health care,” she said. And what is a public option? It’s a health insurance program where people “buy” health insurance from the government. The premise is that it is not a subsidy and it supports itself. However, some “seed” money will be needed to get the program going. It was part of the original proposal for ObamaCare but was dropped when Sen. Joe Lieberman — an independent — threatened a filibuster. Sources: The Hill, Insurance Networking News, Insurance Journal
Help Keep Your Agency Active If You Should Become Disabled... Cover Overhead Expenses With The PIA Trust
Business Overhead Expense Insurance Plan BOE COVERAGE DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you have access to a high-quality, competitively priced BOE plan through the PIA Services Group Insurance Fund.
Office expenses don’t stop because you become disabled. Bills keep coming in whether or not you’re in the office. Those overhead expenses could become a real problem if your agency’s revenues are dependent on you. With the PIA Trust Business Overhead Expense plan, you can help maintain your agency until you are able to resume your duties.
For more information about the PIA Trust Business Overhead Expense Insurance Plan, contact your local PIA Affiliate or call the Plan Administrator at 1-800-336-4759. Additional information is also available on-line at www.piatrust.com.
PIA SERVICES GROUP INSURANCE FUND
*PIA National membership, when required, must be current at all times. The policy or its provisions may vary or be unavailable in some states. The policy has exclusions or limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Association Administrative Address, P.O. Box 17828, Portland, ME. 04112-8828, under Policy Form ADI-4001-A (UIC). Insurance Program Administered by Lockton Affinity, LLC.
July 2016 | Main Street Industry News |www.pianeia.com| 23
Utica’s Agents’ Errors & Omissions Program is all about…
RELATIONSHIPS
PIA of Nebraska & Iowa (402) 392-1611 www.pianeia.com
Concerned about E&O claims? Keep reading... Controlling the frequency and severity of Errors & Omissions claims is critical to protecting your agency’s assets. E&O claims can jeopardize the financial success you’ve worked so hard for. On top of the solid coverage Utica provides, we help you safeguard your agency through an exclusive Agents’ E&O resource: our Errors & Omissions Risk Management website! What you get Accessible through www.uticacustomercare.com, the site gives you the risk management information you need to help you mitigate E&O claims. You get access to: • Risk Management Academy – Online Risk Management tutorials covering E&O hotspots you need to know about. • Loss Control Articles – Addressing topics crucial to your agency’s operation. • E&O Tips – Suggestions on what you should – and shouldn’t – be doing from an E&O standpoint. • Lessons Learned – Helping you benefit from real-life claims examples, with insights into what was and wasn’t done properly … and the valuable lessons that resulted. • Frequently Asked Questions (FAQs) – Covering everything from what an E&O policy covers and top causes of claims, to recording the proper voicemail message, how and when to report a claim, and much more! • Ask the Expert – Have a question or two? Take advantage of our E&O know-how by asking questions not covered in the FAQs. • E&O Claims Frequency Data – See how often certain claims happen. Then use what you learned from the “Lessions Learned” section to help keep them from happening at your agency. • Cybersurance – Learn more about Utica’s new Cybersurance™ endorsement, which goes to work for you before, during and after a cyber breach – covering preparedness, to compliance, to resolution. Our partner, Identity Theft 911 (IDT911), offers online cyber training to help you learn more about what your agency has at stake and how to help protect your customers from identity theft. Utica’s Risk Management website includes a direct link to IDT911’s training.
Not yet registered for the site? It’s easy! 1. Visit www.uticacustomercare.com and click the Login/Register link. 2. Complete registration. You’ll need your account or policy number, plus your ZIP code. You’ll then be asked to enter some basic information and create a secure User ID and Password to use for future visits. 3. Validate your account. We’ll send you an e-mail notification of your registration, and then you just follow some simple instructions to validate your new online account. Questions? Contact your State Agents’ Association, or your Underwriter at 800-274-1914.
9-A-2231 Ed. 3-12
PIA NE IA Events
Upcoming Events Calendar 2016 For information and to register Click Here or call (402) 392-1611. Date
Class/Webinar
Where
When
July 6, 2016
Regarding Ethics
NE/IA
Webinar: 1:00PM - 4:00PM
July 6 - 8, 2016
CIC: Agency Management Institute
Omaha
Hilton Double Tree Omaha SouthWest
July 18, 2016
Life Insurance Concepts for the Property & Casualty Agent
NE/IA
Webinar: 12:00PM - 3:00PM
July 19, 2016
Contractors: Insuring the Property Exposures (NE)
NE/IA
Webinar: 12:00PM - 3:00PM
July 20, 2016
Managing E&O in a 24/7 World
NE/IA
Webinar: 12:00PM - 3:00PM
July 20 - 22, 2016
CIC: Life & Health Institute
West Des Moines
Holiday Inn Hotel & Suites
July 21, 2016
CISR: Personal Lines Miscellaneous
Des Moines
Hilton Garden Inn Des Moines/Urbandale
July 25, 2016
Lawncare to Lipstick
NE/IA
Webinar: 1:00PM - 3:00PM
July 26, 2016
What We Learned: Claim and Coverage Issues from Catastrophes
NE/IA
Webinar: 12:00PM - 3:00PM
July 27, 2016
CPIA 2: Implement for Success
Omaha
Hilton Garden InnOmaha
July 28, 2016
CPIA 2: Implement for Success
Des Moines
Hilton Garden Inn Des Moines/Urbandale
July 28, 2016
Social Networking: OMG or E&O?
NE/IA
Webinar: 12:00PM - 3:00PM
August 10, 2016
CISR: Insuring Commercial Property
Marion
Kirkwood Training Center
August 23, 2016
CISR: Insuring Personal Auto Exposures
Davenport
Saint Ambrose University
August 24 - 26, 2016
CIC: Commercial Property Institute
Lincoln
Marriott Courtyard
August 31, 2016
CPSR: Personal Auto
Omaha
Hilton Garden Inn Omaha
September 7, 2016
Words Mean Things & Insurance is a Foreign Language (NE)
NE/IA
Webinar: 12:00PM - 3:00PM
September 8, 2016
Food Borne Illness & Insurance Coverage
NE/IA
Webinar: 12:00PM - 3:00PM
PIA NE IA Events
September 13, 2016
2016 Annual Scholarship Golf Outing - Dinner ONLY Registration
Ashland
Iron Horse Golf Club
September 13, 2016
2016 Annual Scholarship Golf Outing - Golf & Dinner Registration
Ashland
Iron Horse Golf Club
September 15, 2016
CISR: Insuring Personal Residential Property
West Des Moines
LaMair - Mulock Condon Insurance (LMC)
September 20, 2016
Ethics: Taking it to the Streets
NE/IA
Webinar: 1:00PM - 4:00PM
September 20, 2016
Farm Seminar: Unmanned Aircraft, Autonomous Vehicles, and Other Things
York
Holthus Convention Center
September 27, 2016
CISR: Commercial Casualty 2
Marion
Kirkwood Training Center
September 28 - 30, 2016
CIC: Agency Management Institute
Cedar Rapids
Cedar Rapids Marriott
September 28, 2016
Social Networking: OMG or E&O?
NE/IA
Webinar: 12:00PM - 3:00PM
October 4, 2016
**NEW** Regarding Ethics
NE/IA
Webinar: 1:00PM - 4:00PM
October 6, 2016
**NEW** 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 11, 2016
CISR: Insuring Commercial Property
Des Moines
Hilton Garden Inn Des Moines/Urbandale
October 12 - 14, 2016
CIC: Personal Lines Institute
Omaha
Double Tree
October 12, 2016
CPIA 3: Sustain Success
Des Moines
Hilton Garden Inn Des Moines/Urbandale
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 - 19, 2016
Ruble: Graduate Seminar (IA)
West Des Moines
Holiday Inn Hotel & Suites
October 18, 2016
**NEW** How to be the Agent Advocate at Claim Time
NE/IA
Webinar: 12:00PM - 3:00PM
October 20, 2016
Get in the Ring: A Look at Property Claims, Fights & Decisions
NE/IA
Webinar: 12:00PM - 3:00PM
October 24, 2016
**NEW** Leases & Contracts Vs. The Insurance Policy
NE/IA
Webinar: 12:00PM 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
July 2016 | Main Street Industry News |www.pianeia.com| 27
PIA NE IA Events
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, 2016
**NEW** Managing E&O in a 24/7 World
NE/IA
Webinar: 12:00PM - 3:00PM
November 16 - 18, 2016
CIC: Commercial Property Institute
West Des Moines
Holiday Inn Hotel & Suites
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
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
July 2016| Main Street Industry News | www.pianeia.com | 28
July 2016 | Main Street Industry News |www.pianeia.com| 29
You Can’t Always Prevent An Accident... But You Can Prepare For One With The PIA Trust
Accidental Death and Dismemberment Insurance Plan AD&D COVERAGE DESIGNED WITH LOCAL AGENTS IN MIND As a PIA Member* serving Main Street America, you and your employees** have access to a high-quality, competitively priced AD&D plan through the PIA Services Group Insurance Fund.
Accidents can occur anytime, anywhere. With the PIA Trust Accidental Death & Dismemberment Insurance Plan, you and your qualified dependents can be covered in case of an accident 24 hours a day, anywhere in the world -- at home, at work, or on vacation. For more information about the PIA Trust Accidental Death & Dismemberment Insurance Plan, please contact your local PIA Affiliate or call the Plan Administrator at (800) 336-4759. PIA SERVICES GROUP INSURANCE FUND
Additional information is also available on-line at www.piatrust.com. * PIA National membership, when required, must be current at all times ** No minimum participation required
The policy or its provisions may vary or be unavailable in some states. The policy has exclusions and limitations which may affect any benefits payable. Underwritten by Unimerica Insurance Company, Association Administrative Address, P.O. Box 17828, Portland, ME 04112-8828, under Policy Form ADD-6001-A (UIC). Insurance Program Administered by Lockton Affinity, LLC.