DOL’S OVERTIME RULE
STRUCK DOWN BY FEDERAL COURT
BIG I EXEMPTS AGENTS FROM CORPORATE TRANSPARENCY ACT EXEMPTS BY JEFF ALBRIGHT BY NATHAN RIEDEL LESSONS FROM HELENE AND MILTON: INSURANCE AND PREPAREDNESS LESSONS BY CLAYTON MATTHEWS
Benjamin Albright
Chief Executive Officer, President balbright@iiabl.com (225) 236-1357
Jeff Albright
Consultant
jalbright@iiabl.com (225) 236-1366
Karen Kuylen
Director of Accounting & Finance kkuylen@iiabl.com (225) 236-1353
Jamie Newchurch
Director of Insurance Programs jnewchurch@iiabl.com (225) 236-1350
Kathleen O'Regan
Director of Communications & Events koregan@iiabl.com (225) 236-1360
Karson Roberts
Communications & Events Administrator kroberts@iiabl.com (225) 236-1351
Lyra Roberts
E&O Administrator lyra.roberts@iiaba.net (225) 236-1352
This article explains how the Big "I" secured an exemption for independent agents from costly and burdensome Beneficial Ownership Information reporting under the Corporate Transparency Act..
JEFFALRBIGHT
IIABL CONSULTANT
IIABL has received a number of inquiries from member agencies asking whether they need to report to the federal government under the Beneficial Ownership Information Reports.
We are pleased to report that the Big I successfully lobbied to exempt independent agents from this burdensome requirement.
The Corporate Transparency Act (CTA), which was passed as part of the National Defense Authorization Act in 2021, contains a provision that creates a new federal reporting requirement for most small businesses. The CTA went into effect on Jan. 1, 2024.
This new burdensome requirement was originally meant to cover nearly all small businesses, including insurance agents. However, the Big “I" was successful in securing an exemption for independent agents and brokers by showing that insurance producers already provide this beneficial ownership information to state regulators and that the additional burden of providing it to the federal government would be duplicative and unnecessary.
Data released by the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) and the National Federation of Independent Business (NFIB) estimate that complying with the CTA will cost a staggering $22.7 billion in its first year and an additional $5.6 billion per year moving forward, affecting 32.6 million small businesses in the first year and five to six million small businesses every year thereafter.
Also, according to FinCEN, the estimated total time for filing the Beneficial Ownership Information (BOI) reports can take up to 11 hours for a "complex structure" and about six hours for an “intermediate structure." With potential civil and criminal penalties for noncompliance, many small businesses will retain outside legal and accounting counsel, which FinCEN acknowledges will cost up to $2,615 per entity in the first year. Further, the penalties for failure to comply with these reporting requirements are severe, with civil penalties of up to $10,000 and criminal penalties of up to two years in prison.
The Big “I" was the only producer group that advocated on behalf of agents and brokers to exclude them from this new onerous requirement. Without this exemption, the beneficial ownership provision would have required agencies with fewer than 20 employees to file new reports on their beneficial ownership with FinCEN. Agencies would have had to comply with the new requirement annually starting within two years of the law's enactment for existing businesses or upon the incorporation of a new business.
You can view the actual § 1010.380 Reports of beneficial ownership information here.
Section (C)(2) lists exemptions from the beneficial ownership reporting requirements. Exemption (xiii) exempts insurance agents.
(2) Exemptions. Notwithstanding paragraph (c)(1) of this section, the term “reporting company” does not include:
(xiii)State-licensed insurance producer. Any entity that:
(A) Is an insurance producer that is authorized by a State and subject to supervision by the insurance commissioner or a similar official or agency of a State; and
(B) Has an operating presence at a physical office within the United States
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This article discusses a federal court's invalidation of the Department of Labor's 2024 overtime rule, restoring previous salary thresholds for overtime exemption.
NATHANRIEDEL
BIG“I"SENIORVICE PRESIDENTOF FEDERALAFFAIRS
Last week, the U.S. District Court for the Eastern District of Texas, a federal court, invalidated the U.S. Department of Labor's 2024 overtime final rule. This decision has wide-reaching implications for both employers and employees across the country because it alters the criteria for determining overtime eligibility under the Fair Labor Standards Act (FLSA).
Among other things, the rule included a two-tiered increase to the minimum salary threshold and threshold for highly compensated employees (HCEs), the first of which went into effect on July 1 with another update scheduled to take effect on Jan. 1, 2025. As a result of the court's decision, the minimum salary threshold for exempt employees is now set back to the previous level of $35,568. For HCEs, the threshold has reverted to $107,432. These figures represent the salary requirements for employees to qualify for exemption from overtime pay under the FLSA's "white-collar" exemptions.
For employers, this ruling provides some relief from the impending increases in salary thresholds that would have required a reevaluation of employee classifications and possible salary adjustments. However, businesses will still need to be cautious in determining whether their employees meet the required duties tests for exemption. The ruling doesn't change the underlying duties test, which remains the primary criteria for overtime exemption.
In his decision, U.S. District Judge Sean D. Jordan acknowledged that, while the DOL has the authority to define and delimit the terms of the overtime exemption, this authority isn't unlimited. Specifically, the court found that the DOL's approach under the 2024 rule “effectively eliminates" the evaluation of an employee's job duties in favor of a salaryonly test.
Judge Jordan's ruling criticized the DOL for using a fixed salary threshold as a determinant for exemption eligibility, stating that it disregarded whether employees were actually performing executive, administrative or professional duties key components of the exemption under the FLSA This "salary-only test," the judge noted, effectively undermines the law's intent to focus on the nature of an employee's work
The ruling also addressed another contentious aspect of the 2024 rule: automatic updates to the minimum salary threshold every three years According to the court, this mechanism violates the notice-and-comment rulemaking requirements set forth by the Administrative Procedure Act (APA) This procedural oversight renders the automatic updates invalid, adding another layer of complexity to the DOL's approach
While the current DOL could appeal the ruling to the 5th Circuit, it is widely anticipated that it will not defend the 2024 rule under the incoming Trump administration
In the coming years, employers may see new rulemaking from the DOL that could propose updated salary thresholds or alternative methods for determining overtime eligibility. However, any such changes would likely involve a lengthier rulemaking process, which would include public input and a more thorough examination of the policy's impact on businesses and workers alike.
This article explores how insurance agents' roles have evolved during disasters, emphasizing the importance of understanding storm damage coverage, including windstorm, flood policies, and potential coverage gaps
CLAYTONMATTHEWS
OAKBRIDGEINSURANCE
DIRECTOROFCLAIMS
The role of insurance brokers and agents has changed significantly in the last decade. In times of hurricanes and floods, agents have moved from risk-reduction professionals to life-changing providers of resources that help and reassure clients. Hurricanes Helene and Milton made it clear that hurricanes, storms and floods can happen anywhere and anytime and are not limited to the coast. So, what can we do to be better prepared for and respond to these events?
Typically, there are two forms of personal lines insurance related to hurricanes or severe storms: a standard homeowners property & casualty policy that includes storm and windstorm coverage and a separate policy for flood or stormwater coverage. Notably, most standard homeowners policies include wind coverage. However, depending on the location, risk and carrier, the policy may also feature a “named storm endorsement" that decreases wind coverage and increases deductibles, inspiring some homeowners to add a second policy to cover any gaps. It's important to check clients' policies for named storm endorsements because some carriers will exclude wind.
Flood or stormwater coverage may or may not be included in routine homeowners policies. For example, water that is meant to stay outside the property such as water from nearby bodies of water or storm surge is typically not covered. Water that is supposed to stay inside the property like water from a burst pipe will usually be covered.
If homeowners want flood coverage, they must purchase a flood policy through a private insurer or through the National Flood Insurance Program (NFIP) sponsored by the Federal Emergency Management Association (FEMA).
While the NFIP may seem like a lifesaver, the truth is that agents and brokers must now act like financial planners and review the overall financial budget required to weather a storm.
For example, FEMA's flood program and policies do not include additional living expenses if a client needs to relocate during post-storm repairs. It's one thing to ask a client to decide between an expensive flood policy that provides additional living expenses versus a FEMA flood policy that does not. But explaining the real costs of renting a three-bedroom home at $3,000 or more per month while still paying their original mortgage is a scenario that should be explained.
Agents should help clients form a disaster plan. Having a disaster plan in place may seem trivial or an afterthought for your insureds, but it's something they should prioritize. Agents also need to take preparedness seriously and follow through for the sake of your clients, their loved ones and your business.
When a storm is approaching, people will run to the grocery store for bread and milk. But this is also the time to make sure you have other resources in place. Who is their plumber? Electrician? Tree guy? They should have this information at hand.
What about mortgage forbearance and pricegouging post-storm? Monitoring the National Weather Service, Mike's Weather Page and the National Hurricane Center for storm updates can help manage the anxiety of information overload and manage expectations.
Ben Albright December 2023
After a storm hits, the first thing to do is check on you and yours. Make sure you're okay before helping others. Beyond that, you need to quickly assess the damage. Injuries and property damage should be triaged and the worst cases will be handled first.
It's also critical to remind insureds to document the damages after a storm. Encourage them to take pictures with their phones, especially of emergency purchases—adjusters will need that documentation. Clients should also take photos and videos of their personal assets as part of their disaster plan and save the images in the cloud. Also, disaster plans are living documents. As needs change, your clients' coverage should also be reviewed regularly and evolve with their circumstances.
Whenitcametimeforjudging,thepanel faced the tough challenge of selecting the best dish among so many mouthwatering options. In the end, 1st Insurance took home the Grand Prize with their unforgettable seafood bisque seriously, we’re still dreaming about it! Meanwhile, the Young Agents Committee wowed the crowd with their incredibledeereggrolls,earningthemthe People’sChoiceAwardfortheday.
This event was a resounding success, filled with camaraderie, fun, and of course, amazing food. We’re already looking forward to next year’s Insure & Sizzle Cook-Off stay tuned for more detailsaboutthe2025event!
Wewanttoextendourheartfeltgratitude to our incredible sponsors who made this event possible Thank you to Stonetrust Workers Compensation, Gulf State Insurance, and Imperial PFS for your generous support. We are truly thankful foryourpartnershipandcontributions!
OnNovember7th,theIIABLhosteditsinauguralInsure&Sizzle Cook-OffattheWestlineEventCenterinScott,LA,andwhata fantastic day it was! With 12 teams showcasing their culinary skills,theeventwaspackedwithexcitement,deliciousfood,and plenty of friendly competition. The day kicked off with all teams enthusiastically preparing their dishes, turning up the heat in morewaysthanone!Thevarietyofdisheswasnothingshortof impressive, including gumbo, fried fish, deer eggrolls, seafood bisque, steak chimichurri, taco soup, jambalaya, quesadillas, and somuchmore.
This article highlights five ways ChatGPT is transforming the insurance industry, including improving marketing, meeting preparation, performance reviews, creativity, and emphasizing cautious, informed usage
Vertafore has compiled an e-book with interesting ways ChatGPT is being used in insurance. Here are five key highlights from the ChatGPT e-book:
1. Enhanced Efficiency in Marketing and Customer Support: ChatGPT enables insurance agents to streamline tasks like creating marketing emails, answering complex client inquiries, and generating personalized responses, saving time and improving client engagement.
2. Creative Campaign Development: Agents leverage ChatGPT, alongside tools like DALLE, to create unique marketing campaigns and assets, such as post-COVID return-to-work programs. One agent even used these tools to design a children’s book for client engagement.
3. Preparation for Critical Meetings: Agents use ChatGPT to simulate conversations before client meetings, helping them anticipate questions and prepare responses, which boosts confidence and preparedness for high-stakes discussions.
4. Performance Review Improvements: ChatGPT assists with developing tools like service performance scorecards, making it easier to set clear expectations and conduct fair, transparent annual reviews.
5. Risk Awareness and Cautionary Usage: The e-book stresses the importance of understanding potential risks associated with ChatGPT, such as data privacy, intellectual property issues, and model biases, encouraging agents to exercise caution when integrating the tool into their operations.
Download the e-book here.
This article discusses the evolving role of AI in insurance, emphasizing its long-term societal impacts and encouraging agents to explore AI tools and stay informed
CHRISCLINE EXECUTIVEDIRECTOR BIGIACT
While most of us are just getting a taste of artificial intelligence (AI) in insurance, the hype around it seems to be stabilizing. In my work with the Big “I" Agents Council for Technology, I'm hearing more people in the insurance industry talking about how AI is being used today and what agencies should consider when adopting AI.
AI has the potential to impact our society in ways that are both exciting and scary. But it's important to remember the adage that we often overstate how quickly a change will impact us and understate how much change will ultimately occur over time.
With that backdrop, it's safe to assume that AI will have material impacts on all of society over time, but that the immediate impacts may be less than the early hype might assert. Even so, there are things we in the insurance industry can and should be doing today to keep learning, enhance our capabilities and minimize our risk when it comes to AI.
Here are some best practices and considerations agents should lean into as they explore AI.
1) Keep an open mind. Like it or not, artificial intelligence is changing the insurance industry. I recommend that everyone act with intention in learning what they can about AI. That can come from listening to podcasts, reading blogs, watching webinars, getting involved with industry associations, talking to your peers and having open conversations with your carriers and technology partners.
2) Try it for yourself. One of the best ways to learn about AI is by trying out an AI tool for yourself. There are several very good free AI tools available. Sign up for one of them and begin experiencing how it works, what it can do for you, and what limitations you encounter.
3) Don't use private data in free, public AI tools. Exercise extreme discretion with what information/data you use to input with your prompts in any AI. While privately and purpose-built models can be safer, never enter any personally identifiable information into a free, public AI tool such as ChatGPT.
4) Understand what AI is and is not. While none of us know how AI will evolve, today, AI is “just" incredibly sophisticated statistical modeling and predictive algorithms. As impressive as AI can be, the output of an AI tool is highly dependent on the quality of data feeding the specific AI. AI tools focus on solving and executing specific things based on why the tool was built by humans.
At this time, AI is not able to experience emotion and largely cannot differentiate between right and wrong. AI tools can be prone to delivering factually inaccurate information, fully made-up examples, or even harmful bias.
5) Always review and validate AI output. Even the best AI is only as good as its data, the programming behind it and the quality of user prompts. It is critical to insert human oversight in reviewing any output from AI to assess whether it addresses your need, accuracy, tone, brand voice, etc.
In an industry driven by contracts and compliance, your agency is likely accountable for actions and content generated by your agency – whether by human or AI. As the technology continues to mature, it's a best practice to involve humans to review and validate the output AI is generating whether you're using it internally or externally.
Continued from page 21
6) Set expectations and provide guidance for your team. If you're an agency leader, it's important to talk about the risks of AI with your team, set expectations, and begin to offer formal guidance to your team in how you expect and allow them to use AI for work or while at work
If you're implementing an artificial intelligence tool as part of your insurance agency's processes, make sure to focus on your staff We all have different thoughts about AI, and you may have employees who fear AI will take their job Be clear that is not your goal, that AI can help them do their job more efficiently and remove mundane repetitive tasks so they can do more rewarding tasks.
Even if you personally aren't using AI or making it part of your agency's processes, your team may be using AI. They may even be using AI tools to support them in their job, such as using free generative AI tools for research, brainstorming, letter writing, sales or service replies, and perhaps even renewal or policy reviews.
AI tools may help your staff save time on routine tasks, but given the risks discussed above, it's essential to have a clear policy for your team about when using AI is permitted and for what activities.
7) Be transparent with your customers. If your agency is using AI to generate any content or interaction with your customers, experts recommend that you notify them. If you use AI for customer service interactions, offer customers a means to interact with one of your staff.
8) Be aware of potential issues with errors & omissions and licensing. E&O and licensing are ripe for impact from AI. We've discussed the possibilities of inaccurate output from AI, and it goes without saying that inaccurate information and customer advice can lead to E&O issues. In fact, some are speculating that carriers, especially E&O, may begin requiring some form of AI disclosure or an auditable AI policy or procedure document.
It's also likely that AI will develop to the point it could be deployed with more direct customer interface. It seems that will lead to interesting questions about licensing, especially if the AI tools are construed to service, negotiate or solicit insurance.
9) Decide if you're an AI builder or consumer. When exploring AI solutions, it's important to be honest about the capabilities and desires of your agency There are certainly agencies capable and interested that will invest in experimentation and building their own custom AI solutions This holds true with any new technological advancement over the years The industry and society need these people and companies
But the reality is that most agencies and people won't have the desire or capability to build AI solutions from scratch Rather, most will be educated consumers of products built to solve established use cases or enable new capabilities And that's OK! After all, how many agencies build their own comparative raters, CRM, or management system? Some clearly do, and we are grateful for the paths they help us forge But most are consumers of products built and tested to solve what we each need
10) Clean up your data. Since AI models are driven by data, having clean and consistent data, and lots of it, makes AI more accurate and usable. Even if a custom AI is still aways off for you, there are other business benefits from clean data and consistent processes.
With AI evolving so quickly and the promise of business impact being very real, it's important to pay attention, learn as much as you can, and be intentional about how you implement artificial intelligence in your insurance agency. We at the Agents Council for Technology encourage an open and inquisitive mind, that you stay plugged in to AI developments, but also be aware of these cautions and considerations.
This article explains the key differences between cyber warranties and cyber insurance, emphasizing that cyber insurance provides comprehensive risk transfer, unlike the limited coverage of warranties.
JOHNROBERTS GENERALMANAGER COALITION
In the modern era rife with cyber risk, organizations are increasingly electing to transfer their digital risk through cyber insurance, while some are choosing to purchase noninsurance products or cybersecurity services that offer a warranty.
Although cyber warranties and cyber insurance have similarities both can help organizations recoup losses after a cyberattack or technology malfunction they are not the same and agents should warn businesses not to mistake the two
Here are the differences between cyber warranties and cyber insurance, some of the issues with cyber warranties, and why cyber insurance is the only comprehensive risk transfer solution for businesses that really works
A cyber warranty is a promise or guarantee made by a cybersecurity company about the condition, performance or quality of a cyber product or service. Some vendors that provide cyber warranties also offer to pay customers' limited costs, provided certain criteria are met.
The first noteworthy cyber warranty was announced at Black Hat 2014, when Jeremiah Grossman, founder and CEO of WhiteHat Security, said his company would refund the money a customer paid for his services and reimburse it for the first $250,000 of any breach-related costs if a customer was hacked. According to Grossman, information security vendors offering warranties would satisfy the demand for cyber risk transfer solutions and eliminate the need for cyber insurance.
Grossman's promise never actually materialized. Cyber warranties aren't a risk transfer mechanism; they merely intend to instill confidence that if a product or service fails somehow, they will pay the repercussions.
On the other hand, cyber insurance is a true, comprehensive risk transfer mechanism that covers the entire business instead of just a specific technology and can mitigate a business's financial losses in the event of a digital disruption whether caused by a non-functioning product or criminal breach.
The longevity of a cyber warranty is important for businesses to consider, as they need confidence that they'll be covered for losses that occur long after the cybersecurity services are complete.
Cyber warranties attached to software-as-a-service (SaaS) solutions, for example, are typically only valid for the duration of the subscription and can be removed at renewal. This means a business can become trapped by a SaaS product, because the minute they stop using the services, they may not be able to make a claim for costs incurred during an attack.
Several cyber warranties introduced before 2020 are no longer available. For example, WhiteHat Security's warranty disappeared after its acquisition by Byju in 2020.
Warranty longevity is critical because of how often businesses experience cyber events. In 2023, 6.6% of large businesses experienced a cyber insurance claim, according to Coalition's “2024 Cyber Claims Report." The average large business should expect to file a claim roughly every 15 years, and smaller businesses even less often.
Extrapolating from this trend, if these businesses relied upon cybersecurity services to mitigate risk and given the fact that most of these warranty buyers didn't make a claim in the first five years they, in effect, paid extra for a premium feature that disappeared before they truly needed it.
Even if a cyber warranty still exists when a customer makes a claim, whether the claim will be paid or not is the real question. Cyber warranties are not designed to prevent or reimburse a customer for all issues and costs arising from a cyber incident.
For example, in 2022, CrowdStrike CEO George Kurtz announced that the company hadn't paid out a single claim in the four years since announcing its endpoint security breach prevention warranty. While that sounds like a testament to CrowdStrike's security product, the warranty is narrow in scope and not designed to prevent social engineering This means it likely doesn't provide coverage for social engineering, which is the cause of the majority of events that drive losses behind cyber insurance claims, such as business email compromises and funds transfer fraud.
The terms and conditions of cyber warranties can also vary. For example, a warranty attached to a backup solution will differ from one attached to cybersecurity training because the products promise different functionality. This lack of standardization makes it difficult for risk managers to evaluate coverage. Furthermore, cyber warranties often require customers to follow extensive cybersecurity procedures. Rubrik's ransomware warranty requires customers to grant the company access to perform monthly “health checks," in addition to maintaining hardening guidelines that span encryption, user access, backups and more.
For small and midsize businesses with limited resources, upholding these stringent security standards outlined by vendors can be next to impossible.
IIABL 2024-2025
CHAIRMAN, BRET HUGHES
CHAIRMAN-ELECT, ROSS HENRY
SECRETARY-TREASURER, JOE KING MONTGOMERY
NATIONAL DIRECTOR, JOHNNY BECKMANN, III
PAST CHAIRMAN, ARMOND K. SCHWING
YOUNG AGENT REP, MAGGIE LANDRY
Hughes Insurance Services, Inc - Gonzales
Henry Insurance Service, Inc. - Baton Rouge
Community Financial Insurance Center, LLC - Monroe
Assured Partners - Metairie
Schwing Insurance Agency, Inc. - New Iberia
Perkins-McKenzie Insurance Agency - Baton Rouge
ANN BODKIN-SMITH
MATTHEW DEBLANC
CHRISTY DESOTO
DOMINIQUE DICARLO CROUCH
ROB W. EPPERS
MATT GRAHAM
CHRISTOPHER S. HAIK
STUART HARRIS
BEAU HEAROD
CHARLES H. LEBLANC
CRAIG MARTEL
LYDIA MCMORRIS
A. EUGENE MONTGOMERY, III
HARTWIG "ROBBY" MOSS, IV
SETH OSTENDORFF
ROBERT LOUIS PALMER, JR.
RANDY PERISE
ROBERT STONE
Thomson Smith & Leach Insurance Group - Lafayette
Continental Insurance Services - Marrero
1st Insurance of Marksville - Marksville
Riverlands Insurance Agency - LaPlace
Risk Services of Louisiana - Alexandria
Lincoln Agency - Ruston
Higginbotham Insurance - Lafayette
McClure, Bomar & Harris, LLC - Shreveport
Jeff Davis Insurance - Jennings
Bourg Insurance Agency, Inc. - Donaldsonville
Insurance Unlimited of LA, LLC - Lake Charles
Alliant Insurance Services - Baton Rouge
Community Financial Insurance Center, LLC - Monroe
Hartwig Moss Insurance - New Orleans
Dethloff & Associates - Shreveport
Insurance Underwriters, Ltd. - Metairie
Blumberg and Associates - Ponchatoula
Stone Insurance, Inc. - Metairie