Bull1311 by Insurors of Tennessee

bulletin YOUR ASSOCIATION NEWSLETTER

volume 13-11

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friday

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june 7, 2013

Insurors is in Planning for 2013 ACA Seminars

Continued Weather Losses Affect Industry Pricing With Tropical Storm Amanda heading up the coast, and cleanup from the May tornados still going on across Oklahoma and the Midwest, insured losses in the U.S. are expected to top $5 billion for the Spring alone. At least 76 tornados touched down in the prolonged severe weather event that ravaged parts of Oklahoma. An EF-5 tornado with 295 mph (475 kph) winds and a U.S.-record 2.6mile (4.2-kilometer) path width struck the town of El Reno. A large hailstorm also struck in Texas, causing over $400 million in insured losses in Amarillo.

“Regardless of the value of your home, most insureds had premium increases for renewals in May,” MarketScout CEO Richard Kerr says in the monthly report. “Perhaps the numerous tornados or the pending hurricane season had an impact on pricing. We feel the increases are driven more by underwriter’s sentiment than actuarial projections.”

The National Oceanographic and Atmospheric Administration (NOAA) has reported that this year’s hurricane season could be extremely active, with 13 to 20 tropical storms.

Overall, Property & Casualty personal lines pricing rose 4% on average in May, compared to May 2012 rates, according to MarketScout. Auto was up 4% and personal articles pricing was up 3%. Meanwhile, commercial lines pricing increased an average of 5% over May 2012 rates, marking the third consecutive month that the composite commercial P&C rate rose 5%.

So, what do all these severe weather losses mean for the insurance industry as a whole? Marketscout, an insurance distribution and underwriting company based in Dallas, is reporting that Homeowners rates rose 4% in May over 2012’s pricing.

Although pricing increases are expected to continue, insurance companies are currently well-capitalized to deal with storm losses. Aon Risk Solutions has reported that insurers currently sit on an all-time high surplus of $600 billion.

Insurors of Tennessee Web: www.insurors.org Ph: 615.385.1898 or 800.264.1898 Fx: 615.385.9303 E-mail: info@insurors.org

Many agents are anxious over the inevitable implementation of the Affordable Care Act in January of 2014. In addition to the outstanding questions regarding agent involvement, are more basic question such as, “How will it work?” and, “What about my small business customers?” Information has been slow to be released regarding the SHOP exchange and what options small businesses will have should they want to continue to offer coverage for their employees. Recently, the Centers for Medicare and Medicaid Services (CMS), which will be handling the majority of the transition, presented an Agent/Broker webcast in order to answer some outstanding questions. The slides are available at http://www. insurors.org/Content/NavigationMenu/ PDF12/CMSACA-slides.pdf The presentation offered a first look at the SHOP exchange which will begin in 2014. There will be plans available for review beginning October 1, 2013. This will apply to employers who have fewer than 50 full-time equivalent employees. Those who choose the SHOP option must offer the coverage to all full-time employees (30+ hours per week). It is expected that for 2014, employers will choose one plan for their employees. In subsequent years, it is anticipated that employees will have options under the continued on page 2

ONLINE WEBCASTS

AGENTS & BROKERS EDUCATION NETWORK FULL SCHEDULE INSIDE Register online today! insurors.aben.tv

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Bulletin Vol. 13-11

Insurors is in Planning for 2013 ACA Seminars continued from page 1

employer selected SHOP. Below are some websites where agents can obtain additional information as it becomes available: http://www.uschamber.com/health-reform/ http://www.cms.gov/cciio/index.html http://www.healthcare.gov/ www.regtap.info (will require registration as an Agent/Broker) Insurors is working with IIABA to bring you the most up-to-date information on the ACA and the SHOP exchange. It is anticipated that this seminar will be scheduled in late July or early August. In addition, we are working on a breakout session on October 21st at the Insurors 120th Annual Convention to take a look at what has been released on October 1st. Get updates on the convention session at http://www.insurors.org/AM/Template. cfm?Section=Convention_Info

TN Grants License to Community Health All. The Tennessee Department of Commerce and Insurance has granted a license to Knoxville-based Co-Op Health Insurer Community Health Alliance. The Co-Op will begin offering plans to individuals, families and small businesses in the State in October. Community Health received a federal loan of more than $73 million to begin offering plans through the ACA created marketplaces. Co-Ops are consumerrun plans that will be accountable to members, instead of investors, and are based on similar consumer cooperatives operating in Minneapolis and Seattle. In addition to its Knoxville location, Community Health is working on offices to serve Nashville and Chattanooga.

June 7, 2013

BlueCross Met all its MLR Mandates for 2012

Ullico Casualty Order of Liquidation is Filed

BlueCross BlueShield of Tennessee (BlueCross) met the federal minimum medical loss ratio (MLR) requirements of the Affordable Care Act (ACA) for all lines of business during 2012. MLR is calculated by totaling the amount spent on medical claims and quality improvement, and then dividing by the amount of premiums paid after subtracting allowable taxes and fees.

An order of liquidation was entered May 30th against Ullico Casualty Company by the Insurance Department of the State of Delaware. Delaware Insurance Commissioner Karen Weldin Stewart will serve ad the Receiver for the company per the injunction order.

The minimum MLR is 80 percent for the individual and the small group market segments (average of 100 or fewer employees) and 85 percent for the large group market segment (average of 101 or more employees). BlueCross’ MLR for the 2012 reporting year was 83.1 percent for individuals, 80.2 percent for small group and 89.1 percent for large group. As a result, BlueCross will not be required to issue rebates to members this year. The portion of the premium not required by ACA for health care services and activities to improve health quality goes toward operational expenses such as provider contracting, fraud prevention, broker commissions, and paying claims and systems that support business operations, as well as profit and reserves.

New VU Webinar on Personal Lines July 17 On July 17, 2013 personal lines experts Bill Wilson and David Thompson will present “Personal Lines Hot Topics, Emerging Issues, Infuriating Claim Denials, and Catastrophic Coverage Gaps No One Ever Told You About.” The webinar will cover Homeowners exclusions, claim denials, lost coverages, damage waivers, voluntary parting, coverage gaps and more. Register online now at http://www.independentagent.com/Education/Webinars/Pages/live-webinars/live-webinars. aspx

The order stated that Ullico Casualty remains “impaired, insolvent and in unsound condition.” The company had been placed into rehabilitation on March 11, 2013. All policies issued by the company will remain in force until the expiration date or cancellation of the policy occurs. In 2012 the company had Tennessee workers’ compensation written premiums of $1,575,800 and $19,445 for surety. The Tennessee P&C Guaranty Fund will pay the full amount of a workers’ compensation claims and refund unearned premium for amounts greater than $250 and less than $10,000. Unearned premium refunds most likely will be delayed for years. The Guaranty Fund does not provide any future coverage as all policies that or in force on the date of the liquidation order will be cancelled thirty (30) days after the liquidation order is effective. If you voluntarily chose to advance return premium for an insured whose policy is canceled by the liquidation order you should file a premium assignment form with the liquidator. Any form will work, but we have a form that has been deemed acceptable by the Tennessee Guaranty Fund that you may print and use at http://www.insurors.org/Content/ NavigationMenu/PDF9/premiumassignment.pdf Get more information on the Guaranty Fund by visiting http://www.tiga.net or contacing the Fund’s administrator, Ivi Neimann at 615.242.6839 or by e-mailing iniemann@tiga.net Page 2 of 4

Bulletin Vol. 13-11

June 7, 2013

The Agents & Brokers Education Network (ABEN) is a joint project of state insurance and brokers associations who want to provide high quality continuing education for independent insurance agents, brought to you online via live streaming video. UPCOMING COURSES Ethics and Business

TUESDAY 6/11 1 pm EST

3 CE

$60.00

E&O Risk Management: Meeting the Challenge of Change presents E&O Considerations WEDNESDAY 6/12 1 pm EST of Agency Operations

2 CE

$30.00

E&O Risk Management: Meeting the Challenge of Change presents E&O Considerations WEDNESDAY 6/12 1 pm EST of Agency Operations

2 CE

$30.00

National Flood Insurance Program: Basic Course

WEDNESDAY 6/19 10am EST

3 CE

$72.00

E&O Risk Management-An E&O Claim - 360 View -TN

THURSDAY 6/20 2 pm EST

2 CE

$30.00

Hot Topics in Personal Lines

TUESDAY 6/25 2 pm EST

2 CE

$48.00

E&O Risk Management: Meeting the Challenge of Change presents Agency/Carrier Relationships-Law of Agency

WEDNESDAY 7/9 9 am EST

2 CE

$48.00

E&O Risk Management: Meeting the Challenge of Change presents Understanding Agent Duties

THURSDAY 7/10 9 am EST

2 CE

$48.00

Professional Ethics in the Insurance Industry

THURSDAY 7/11 2 pm EST

3 CE

$60.00

Data Privacy Insurance

MONDAY 7/15 2:30 pm EST

2 CE

$48.00

Business Income - Beyond the Basics

THURSDAY 7/16 1 pm EST

3 CE

$72.00

National Flood Insurance Program: Basic Course

WEDNESDAY 7/17 10am EST

3 CE

$72.00

Those Kids and Their Cars!

TUESDAY 7/23 1 pm EST

2 CE

$48.00

William T. Hold - Small Commercial Accounts

TUESDAY 7/23 2 pm EST

4 CE

$74.00

William T. Hold - Insuring In-House Business

WEDNESDAY 7/24 9 am EST

4 CE

$74.00

Ethics and Business

TUESDAY 7/25 1 pm EST

3 CE

$60.00

E&O Risk Management: Meeting the Challenge of Change presents Agency/Carrier Relationships-Law of Agency

MONDAY 7/29 2 pm EST

2 CE

$48.00

E&O Risk Management: Meeting the Challenge of Change presents Understanding Agent Duties

WEDNESDAY 7/31 9 am EST

2 CE

$48.00

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Bulletin Vol. 13-11

June 7, 2013

Develop Benchmarks for Your Agency Size

Big “I” Praises Senate Banking NARAB Action

Best Upgrades Harford Mutual to an ‘A’ Rating

Over the years, agents using the Best Practices program have found the key to improving their businesses is to concentrate on two or three Best Practices principles at a time. In many cases, the principles are integrated into agents’ strategic planning processes so the quest for continued excellence becomes an integral part of all agency activities.

The Big “I” recently evoked praise for the U.S. Senate Committee on Banking, Housing, & Urban Affairs for reporting the bipartisan insurance agent licensing reform bill, S. 534, the “National Association of Registered Agents and Brokers Reform Act of 2013” (NARAB II), to the full Senate for consideration.

A.M. Best has announced a rating upgrade for Bel Air, MD-based Harford Mutual Insurance Companies. Best has upgraded the financial strength rating to A (Excellent) from A- (Excellent). The upgrade includes The Harford Mutual Insurance Company and its property/ casualty subsidiary, Firstline National Insurance Company.

The independent agency system has the opportunity to use Best Practices to strengthen its position in the marketplace, and the program’s series of resources provide tools for agencies of all sizes to make real improvements. By learning what has and has not worked for comparable agencies, agents can adjust the course of their own businesses. To learn more about the Best Practices resources, including ordering the most recent study update, visit http://www.independentagent.com/Resources/AgencyManagement/BestPractices/Pages/ Home.aspx

Insurance Regulations for Marijuana Growers After the law changes in Washington and Colorado, it was only a matter of time before legal marijuana growth became subject to insurance regulation. The Washington State Liquor Control Board released a draft set of regulations for marijuana licensing recently. The rules require marijuana licensees to have a CGL policy in place to cover claims “as may be caused by any act, omission, or negligence of the licensee or its officers, agents, representatives, assigns, or servants.” Commercial umbrella insurance may also be required for bodily injury and property damage arising out of licensed activities. It will be interesting to see how this industry continues to change with further regulation.

NARAB II would build upon regulatory experience at the state level, promote consistency in agent and agency licensing and improve marketplace responsiveness. The legislation would provide for streamlined non-resident insurance agent and broker licensing while preserving state insurance regulation and consumer protections. This pragmatic bill would achieve much needed reciprocity in producer licensing and help policyholders by permitting greater competition among agents and brokers. NARAB II has previously passed the full House in two previous Congresses by voice vote. It also received strong bipartisan and bicameral support in the 112th Congress. The House companion bill, H.R. 1155 by Rep. Randy Neugebauer (R-Texas) and Rep. David Scott (D-Ga.), was also introduced in March and currently has the support of 79 cosponsors.

Knoxville Local Board Outing Thursday 6/13 Many of our local boards have recently completed their annual golf tournaments and spring functions, but one still remains! Don’t miss out on your opportunity to network in East Tennessee. This coming Thursday, June 13th, the Insurors of Knoxville are bringing back their Fun Day golf tournament and picnic at Willow Creek Country Club. Please contact David Humphreys at dhumphreys@shaferinsurance.com for more information or to register.

Best stated that the upgrade, “reflects Harford’s excellent level of risk-adjusted capital, which is supported by a generally improved underwriting and operating performance since 2003, consistently favorable development of prior years’ loss and loss adjustment expense reserves, low underwriting leverage relative to its peers and strong liquidity.” Harford Mutual Ins. Cos. had $6,479,245 in premium for Tennessee in 2012.

Non-Standard HO Thru Big “I” Markets Online When you have a client who doesn’t fit into the standard homeowners market, where do you turn? In January Big “I” Markets announced the return of nonstandard homeowners to the program. Since then many of you have taken advantage of this market to write a variety of non-standard accounts. The Big “I” Markets company partner is writing protection class 1-8 for new business. Here are a few guidelines to keep in mind: • • • •

Protection class 9 & 10 are not eligible. Coverage A minimum is increased to $250,000 in non-coastal areas. No HO4/HO6 business You must fill out the form on Big “I” Markets.

Visit http://www.bigimarkets.com for more info or to get started. Page 4 of 4