THURSDAY, JULY 8, 2010  

                                                Big “I” Association News




L-H Trends
Changes in Employee Benefits Keep Coming
Agent groups continue to push for inclusion in new government health care portal; insurance receives carve-out in financial services reform.

When health care reform was signed into law, one of the biggest challenges was educating the public on the various phase-in dates of the provisions. This puts a burden on independent insurance agents to stay abreast of the corresponding rules to properly advise clients about the best long-term strategy for their individual or organization’s health insurance program. In order to assist consumers and plan sponsors in understanding the evolving regulations and phase-in dates, as reported in last week’s IN&V, the Obama Administration launched www.HealthCare.gov, a comprehensive website, on July 1. It is intended to be a central source of information on health care reform legislation and to provide a plethora of information and links to state resources. Agents should become familiar with the website, as it provides a window into the approach the federal government is taking in communicating with consumers. 

The website will be launched in phases, with the first iteration having been launched on July 1. The second phase will be launched in October 2010 and will provide much more detailed pricing and benefit information on different health care options available in each state. On May 10, 2010, the Big “I,” along with NAHU, CIAB and NAIFA, sent a letter to HHS Secretary Kathleen Sebelius on the creation of the consumer Web portal, emphasizing the importance of licensed agents and brokers in the health care delivery system.

The first iteration of the website offers a variety of research tools for consumers, including links to their respective states to request a health insurance quote. Despite the push by the Big “I” and other producer groups, the first launch of the website makes no overt mention of the role of insurance agents as a resource for consumers. While a number of state insurance departments have websites that enable consumers to find insurance companies, www.HealthCare.gov directs consumers and small businesses to insurance company websites. A random survey of the insurance company websites in a number of states showed carriers typically provide a quoting engine for the consumer to receive a direct quote. The website also segments consumer searches by whether the customer has a pre-existing condition, if they have financial difficulties or if they are an early retiree, among other scenarios.

The Big “I” will continue to advocate increased involvement for agents and brokers in the Web portal framework and elsewhere. As the Obama Administration shapes and implements the law, consumers need professional guidance now more than ever in the dramatically changing health care landscape.

In the retirement plan arena, the Senate is expected to act on the House-passed financial services reform legislation when members return from recess next week. The proposed legislation would create a Consumer Financial Protection Bureau (CFPB) within the Federal Reserve primarily intended to address consumer abuses of unregulated and under-regulated products and services, such as predatory subprime mortgage lending, which is believed to be a main cause of the financial crisis.

The Big “I” worked with other insurance groups to obtain a specific carve-out for insurance from CFPB’s jurisdiction. For independent insurance agents who provide retirement services to customers, the conference report also makes clear that the CFPB would not have jurisdiction over employee benefit and compensation plans that are already federally-regulated, except when specifically requested by the Department of Treasury and Department of Labor who currently oversee such plans. Alternatively, should the CFPB desire such authority, it would have to seek permission from Treasury and Labor. These agencies would then be required to jointly provide a response to grant or deny the CFPB’s request.

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





Tech Trends
Avoid Website E&O Errors
Agency E&O applications show trend of agency website content expanding beyond standard advertising information.

Having a good website, with robust functionality, has become a core tool for agencies with a modern marketing strategy. Agencies are moving to more complex websites to respond to consumers and clients who increasingly want to shop online and be able to handle basic service needs when convenient for them.

Virtually all agency websites provide basic advertising for the agency, showing the agency name, logo, phone number, address and e-mail link. Over the past 18 months, however, applications for E&O show a clear trend toward agency websites expanding beyond standard advertising information, as might be expected from expanding consumer online behavior and the services being offered by competitors and other industries.

Many of the exposures on these sites are the same that exist in the paper world. Advertising liability can arise out of the use or misuse of a trademark, or from the copyrighted material of others, and statements regarding the services available through the agency may be subject to regulatory requirements. At least one state, New York, makes this clear in Circular Letter No. 5 (2001), “Advertisements, Referrals and Solicitations on the Internet,” where it states that “Advertisements that appear on the Internet are subject to all applicable existing statutory and regulatory guidelines and restrictions applicable to advertisements in any other medium.”

E&O Tip: The same level of care in creating “paper” advertising is appropriate for the agency advertising contained on the website. If in doubt, a quick consultation with your qualified legal counsel is well worth the cost.

Websites commonly provide a button allowing a site visitor to contact the agency via e-mail. One could certainly expect questions about what services the agency provides, hours it is open for business or even driving directions. Keep in mind, however, that there is no way to control what a visitor might choose to include in the content of their e-mail. The visitor might decide to include confidential personal information (such as a name coupled with a social security, driver’s license or credit card number) in the unprotected e-mail, creating an exposure to breach of data privacy.

E&O Tip: To help mitigate the liability exposure from this common website feature, posting an appropriate disclaimer is a best practice.

Sabrena Sally (sabrena_sally@swissre.com), CPCU, is senior vice president of Westport Insurance Corporation, a Swiss Re company, and manages the Big “I” Agency Professional Liability Program. This article reflects the views of the author and should not be construed as an official statement by ACT or IIABA. This article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice. You should consult legal or other professionals with respect to any specific questions you may have. Further, the statements and/or opinions contained are those only of the author and do not constitute and should not be construed to constitute any statement, opinion or position of Swiss Re, IIABA or ACT.





Tech Trends
Is It All on the App—Online?
Collecting personal information online creates E&O exposure.

Agencies are increasingly adding interactive website features to improve the effectiveness and efficiency of the agency. When interactive features are included on an agency website, more unique E&O exposures can quickly develop. The most rapidly-growing E&O exposures carrier Swiss Re has seen is the number of agency websites that are accepting application information.

As part of the underwriting process on a recent renewal, we reviewed an agency website. The site opened to a professionally-designed home page. The site had clearly-written text, eye-pleasing graphics and was well-organized and quick-loading. At the bottom of the first page, a link to the agency privacy statement was prominently posted. Following the various tabs, one could easily find informative articles which clearly showed authorship and contained appropriate disclaimer language. So far, so good.

We then clicked on a button titled Personal Lines, on through the Auto Insurance button, to “Submit Application.” This led to a page where a full spectrum of personally-identifiable information could be submitted, including name, address, date of birth, social security number and driver’s license number—basically all the information one needs to carry out identity theft. There was no indication of security being enabled by an “https” displayed before the URL (evidence of creation of an SSL connection), and nothing contained within the webpage itself referred to secure transmission of this data.

An agency has the duty to protect personally-identifiable information, and a myriad of both state and federal laws apply. Violations of these laws carry significant financial penalties, not to mention the extreme damage that can be done to the agency’s reputation. One state, for example, specifically requires “encryption of all transmitted records and files containing personal information that will travel across public networks, and encryption of all data containing personal information transmitted wirelessly.” At the most recent count, 46 states have some type of law or regulation addressing the protection of personal information.

E&O Tips: Agencies that collect personally-identifiable information (whether on their websites or not) should take the necessary steps to be knowledgeable about state and federal laws and regulations that protect such personal information and provide the level of data security required by them.

A best practice is for the agency webmaster to create an SSL connection with the visitor’s browser before the visitor is asked to enter an id, password or any personal information, such as that included on insurance applications, so that this information cannot be read by unintended parties over the Internet.

Sabrena Sally (sabrena_sally@swissre.com), CPCU, is senior vice president of Westport Insurance Corporation, a Swiss Re company, and manages the Big “I” Agency Professional Liability Program. This article reflects the views of the author and should not be construed as an official statement by ACT or IIABA. This article is intended only for educational or illustrative purposes and should not be construed to communicate legal or professional advice. You should consult legal or other professionals with respect to any specific questions you may have. Further, the statements and/or opinions contained are those only of the author and do not constitute and should not be construed to constitute any statement, opinion or position of Swiss Re, IIABA or ACT.


On the Hill
Big “I” Continues to Fight Against Proposed Standard Reinsurance Agreement on Federal Crop Insurance Program
Association says RMA language weakens program and will hurt America’s farmers and small businesses.

The Big “I” continues to express its disappointment with the final draft of the Standard Reinsurance Agreement (SRA) as released by the Risk Management Agency on June 30, 2010. Last week, the Big “I” launched a grassroots campaign focused in key crop insurance states urging senators to cosponsor a letter to Agriculture Secretary Tom Vilsack outlining concerns with many of the provisions found in this agreement. The final letter was signed by 16 senators, 11 Republicans and five Democrats. Click here to read the letter.

Of particular concern are the caps on agent commissions, as defined by the final draft of the SRA. These caps do not affect the bottom line of the crop insurance budget, have no policy merit and needlessly weaken a program that has sustained substantial cuts within the last four years. As the Big “I” has repeatedly pointed out, agents are a crucial part of the delivery system, yet decisions affecting their livelihood were made without their direct input. This represents the first time the federal government has proposed to directly regulate the amount of money a company can pay its agents.

Additionally, the letter pointed out that the $6 billion cut to the crop program, coupled with the commission caps, will have a destabilizing effect on the insurance market. Looking ahead to the 2012 Farm Bill, and in particular to the crop insurance program, the Big “I” will continue to fight to safeguard the farm safety net from future cuts and preserve this valuable program for America’s farmers and ranchers.

Jen McPhillips (jennifer.mcphillips@iiaba.net) is Big “I” director of grassroots and political affairs.


Agency Management
Avoid Sales Manager Mistakes
Lack of focus and regular feedback create environment for producer chaos.

Being a sales manager is an incredibly important and difficult job. Unfortunately, it is often the most under-trained job in the entire organization. Instead of providing information on the best practices and processes of the job, most companies hope that their sales managers will have learned enough during their days as a field salesperson to provide some roadmap as to how to do this job well.

Only a small percentage of untrained sales managers ever really figure it out, arriving by trial and error and after hours of study at the best practices of an effective sales manager. The overwhelming majority find themselves caught up in the urgencies of the moment—the tempting details of all the transactions and the continuing onslaught of crises. They are never able to set in place a systematic blueprint for their success.

The net result? Few salespeople are effectively managed. Certain common mistakes often arise out of this unhealthy situation.  As a long-time consultant and educator of salespeople and sales managers, I frequently see these three maladies suffered by sales managers.

1. Lack of a focused sales structure.

This is such a foreign concept to many companies that the term itself is unfamiliar. The structure of a sales force consists of all the articulated and unspoken rules, policies and procedures that shape the behavior of the salesperson.  A highly-focused, well-designed sales structure can be one of the company’s greatest assets, as it ultimately shapes the behavior of the sales force.

Most sales structures, however, haven’t come under the critical review of the company’s management. Typically, the structure slowly takes shape over time. Decisions are often made with heavy input from the salespeople, almost always in response to a single event. These decisions slowly become codified into the company’s written and unwritten structure.

2. Lack of regular and systematic direction and feedback for the producers.

Sales managers often have the best of intentions, but the demands of the urgent often force regular face-to-face discussions about expectations and results to the bottom of the to-do list. As a result, most salespeople are left directionless and provided with little feedback on how they are doing. Of course, we publish sales numbers, but there are lots of reasons why a set of numbers can be up, down or sideways, above and beyond the impact of the salesperson.

Sales is an isolated job. It is not unusual for a salesperson to spend as much as 70% of the work week by himself. All that isolation often leads to anxiety and self-doubt which often expresses itself through complaints and finding fault with the company. All this negative energy can be prevented by providing the salesperson with regular direction, specific expectations, and regular feedback.

3. Lack of an organized training and development system.

No profession in the world expects the serious practitioners of that profession to figure it out by themselves—quite the contrary. Every profession has determined some minimal acceptable course of study, and typically has some event which signals the entry into that profession. It is for this reason that teachers, emergency medical technicians and ministers are licensed; attorneys must pass the bar exam; accountants must pass their certification exam; and so on.

While there are as many other management miscues as there are sales managers, these three are the most common. Address them, and your agency will be on the way to outstanding sales management.

Dave Kahle is a sales coach and author. For more information, go to www.independentagent.com/VU.