In This Issue

hb2783Texas Legislation Would Save Employers Money, Keep People Insured

A new rating method set to take effect Jan. 1, 2014 will likely result in rate increases of 40-100% for certain employers in Texas. New federal insurance reforms require "Small Employer Group" to be defined as employer groups having 1-100 employees, instead of Texas' current definition of 2-50 employees. "Modified Community Rating" requirements that apply to this group have been shown to result in significant rate increases.

 

Fortunately, NAIFA-Texas supports HB 2783 / SB 1332 which, if passed, will make the critical and necessary changes in the existing statute to avoid rate shock for Texas employers with 51-100 full-time or full-time equivalent employees. These employers will retain the ability to buy their group health plan from the "Large Employer Group" market, as they have done for many years, and thereby avoid the new "Modified Community Rating" requirements. As a result, this will save employers significant money on their premiums and, consequently, more employees will continue to have access to their employer's plan.

 

NAIFA-Texas, the Texas Association of Health Underwriters (TAHU), and other industry partners fully support the passage of HB 2783 and SB 1332 in the 83rd Texas Legislature. The House Bill has been referred to the Insurance Committee, while the Senate bill will be heard in the Committee on State Affairs on March 25.

hb459Navigator Regulation Bill Supported by NAIFA-Texas, Industry Partners

The Texas House Insurance Committee heard testimony this week on HB 459, a bill related to the regulation of navigators for health benefit exchanges. The legislation, authored by Rep. Ryan Guillen (D-Rio Grande City), establishes minimum standards for individuals or entities acting as navigators and allows the commissioner of the Texas Department of Insurance (TDI) to establish further standards, qualifications, and training requirements for navigators.

 

The Patient Protection and Affordable Care Act (PPACA) calls for navigators to assist consumers in completing applications and provide culturally and linguistically appropriate information, among other duties.

 

Lee Loftis, Director of Governmental Affairs for the Independent Insurance Agents of Texas (IIAT), testified in support of the bill on behalf of the Texas Coalition of Health Insurance Agents (TCHIA). NAIFA-Texas, IIAT, and TAHU formed TCHIA in 2011 to present a unified position on the creation of a health insurance exchange in Texas and related issues.

 

"As the rules for PPACA continue to be written, it is important that Texas have a mechanism in place to regulate the actions and conduct of the navigators. Consumers in Texas will be sharing personal information, seeking advice and council on options provided through the exchange and the subsidies that may be available from the federal government. Texans deserve to know that the navigators are adequately trained, have undergone background checks and are able to explain health insurance concepts that are necessary to be a value to Texas consumers," said Loftis.

twiaTWIA, Texas Insurance Commissioner Face Challenges

Officials at the Texas Windstorm Insurance Association (TWIA) are considering placing the state's windstorm insurer of last resort into receivership, a move just short of bankruptcy.


If receivership is pursued, the effects could be devastating. It could leave many coastal residents and businesses with no coverage and throw into question millions of dollars in pending claims from past hurricanes. Additionally, lenders likely wouldn't write new mortgages and existing ones would be worthless.


"To me, receivership is the last possible step that anyone should be talking about, " said state Rep. Todd Hunter, R-Corpus Christi. "Some people liken it to bankruptcy. To me, receivership is inappropriate, and it is the wrong thing to do. Receivership could have financial implications for homeowners and commercial property throughout 14 coastal counties."


TWIA was created by the Texas Legislature in 1971 to provide windstorm and hail coverage to people unable to get insurance from the voluntary insurance market. The association has been struggling with solvency since 2008's Hurricane Ike.


Texas Insurance Commissioner Eleanor Kitzman, who has regulatory authority over TWIA, is also facing challenges as of late. She has been criticized for awarding New York-based consultant Alvarez & Marsal contracts totalling a hefty $1.5 million, to provide "organizational analysis" of TWIA, review closed claims, and handle ongoing claims. Critics also believe that she has not done an adequate job of protecting consumers and is too close to the industry.


Appointed by Perry in 2011 between legislative sessions, Kitzman now faces her first confirmation process. Several Democrats - and at least a couple of Republicans - have said the commissioner faces long odds for confirmation. If the Senate does not approve her appointment by a majority vote, or if there fails to be a vote at all, she will be out of a job.

narabNARAB II Introduced in House and Senate

Legislation to create a national non-resident licensing program for life insurance agents and brokers, NARAB II, was introduced last week in both the House and the Senate, a watershed legislative event for the insurance agent industry.

 

In the House, Rep. Randy Neugebauer, R-Texas, joined by Rep. David Scott, D-Ga., introduced the bill. The House of Representatives has approved NARAB twice now, but this is a milestone for the entity, as it is now being championed in the Senate by Sens. Jon Tester, D-Mont., and Mike Johanns, R-Neb.

 

Neugebauer and Scott said they drafted H.R. 1155 to maintain the successful state-based system of insurance regulation while improving consistency and streamlining procedures from state to state.

The NARAB reform act only relates to marketplace entry and would not impact the day-to-day state regulation of insurance. NARAB would not be part of, or report to, any federal agency and would not have any federal regulatory power, supporters assured. The new licensing entity would be governed by a 13-member panel of state regulators and insurance industry representatives.

 

"The NARAB Reform Act will create a more efficient, modern, and workable system of insurance agent licensing," Congressman Neugebauer said.

 

Congressman Neugebauer & 2010 LILI
Congressman Neugebauer (center) visited with the 2010 LILI Class in May 2010.

 

NAIFA President Rob Smith praised NARAB II's common-sense approach. "This will be a win for both insurance consumers and for agents, reducing unnecessary costs and establishing standards that exceed existing requirements."

conferenceRegister Today for the NAIFA Conference, Sept 28 - Oct 1, in San Antonio

Registration is now open for NAIFA's Career Conference and Annual Meeting, which will take place September 28 - October 1 in San Antonio, TX at the Grand Hyatt San Antonio & Henry B. Gonzalez Convention Center.


In addition to registering, you are encouraged to secure sleeping arrangements today as a limited number of rooms are available for $159/night (non-refundable prepayment required) at the Hyatt. Additional rooms are available at $199/night at the Hyatt or $159 at La Quinta.


Finally, show your home state pride with an embroidered NAIFA-Texas polo. Order your shirt now for $40 (includes a complimentary lapel pin) to complete your conference uniform.


President Doug Massey has set goals of being #1 in membership, #1 in IFAPAC contributions, and #1 in attendance when Texas hits the national stage come September. Help NAIFA-Texas achieve those goals by recruiting a new member, contributing to IFAPAC, and of course, joining us in San Antonio!

taxersCall to Arms: The Taxers are Coming!

InsuranceNewsNet's March cover story provides a call to action for insurance advisors to use their grassroots influence with Congress to preserve the tax status of life insurance and annuity products. The article provides a rundown of NAIFA's historical involvement in the protection of life insurance, beginning in 1913 with passage of the federal income tax code. It then explains the present threat as Congress considers tax-reform proposals in 2013.

 

Advisors have heard warnings about efforts to tax their products several times through the decades. However, Diane Boyle, NAIFA vice president of federal government relations, notes that the industry's success at protecting life insurance in the past doesn't mean the threat this time is not real. "Frankly, our products are on the line every year and we're successful at having them taken off the table," she said. "So it's not so much crying wolf as it is being prepared and making sure that folks on the Hill understand."

 

NAIFA's grassroots Congressional Conference is fast approaching, bringing 1,000 advisors to Washington, DC to visit congressional offices to discuss life insurance, annuities, and tax issues. 

yatFocus is on Young Advisors During March's YAT Awareness Month

The needs of insurance agents and financial advisors just starting out in the industry are far different from the needs of a veteran who has grown their business over many years.  For this reason, in 2004, NAIFA created the Young Advisors Team (YAT). YATs are NAIFA members who are 40 years of age and under or within their first five years in the business. Each March, particular care is paid to offerings for young advisors as part of YAT Awareness Month. The future strength of NAIFA, and our industry more broadly, is dependent upon new agents and advisors receiving the tools, resources, and networks necessary to succeed.

  

As part of this commitment to provide increased training and education focused on young advisors, NAIFA's Professional Development and Education Department has launched a new, free program series titled NAIFA Solution Sessions.  Each month these sessions will feature a different practice area management topic. The first 25 YATs to register will be invited to participate in an exclusive one-hour, interactive group coaching session led by Advisor Solutions Coach, Daniel C. Finley. Sessions are taped and archived as podcasts for all members to access. 

alzheimersIncreasing Number of Alzheimer's Patients Presents Risks to Advisors

The number of people suffering from Alzheimer's Disease is expected to almost triple - from 5 million to nearly 14 million - over the next 40 years. This sharp increase will pose significant challenges not only for the disease's victims and their families but also for the advisers who serve them.

 

In addition to the added complexity and challenges of working with aging clients and the complicated family dynamics that often go hand in hand with an elderly client, advisers must also be aware of the risks to their own practice of working with persons who may be showing signs of diminished mental capacity.

 

These risks are heightened by the slow but steady movement we are seeing towards imposing a fiduciary, "best interests of the client" standard of care on all advisers, as well as by the fact that neither FINRA, the SEC or state insurance regulators have issued any clear rules or guidance to help advisers navigate their way through these dangerous waters.

 

While advisers may be able to find some guidance by carefully reviewing company and broker-dealer compliance manuals, they need to realize that statistically speaking the odds of their working with a client who may be cognitively disabled are on the increase. Advisers could also ask their companies and broker-dealers to help familiarize them with the signs of Alzheimer's, and should consider "erring on the side of caution" when considering whether or how to work with a client who may have these type of cognitive issues.

calsuranceCalSurance Tip: Fee Activity and Your E&O Policy 

As the Patient Protection and Affordable Care Act progresses to a reality for the nation, health insurance agents have already begun to feel the effects to their business. The NAIFA Endorsed Errors and Omissions team at CalSurance have received numerous inquries from agents who are considering changing the way they are compensated for their services as health carriers reduce commissions or indicate they will be quoting "net" of commission. The agents are interested in determining if changing the way they are paid will impact E&O insurance coverage.

   

For the 2013 NAIFA Endorsed E&O program, coverage is provided for those services rendered to others as a life, accident and health, insurance agent, general agent, broker, insurance consultant, or registered representative, solely with respect to the sale and servicing of covered products. The manner in which you are paid to provide these services is not defined in the NAIFA policy and the carriers' underwriting application provides a place for you to report your commission and fee revenue so it is considered in the underwriting process.

 

Risk Management Tip:

Your individual state may have rules regarding charging a commission AND fees for service, so consulting your state department of insurance or an attorney is recommended. You should also consult your carrier contracts for any possible limitations. Your individual situation, facts and circumstances vary and may impact coverage under your policy. It's always worth a review of your policy and a call to your insurance agent, broker or provider to verify the impact of a change in your business and its impact on your E&O coverage.

 

For more information about CalSurance and/or to apply online, visit www.naifaeo.com or call 888-833-2304.

 

Additionally, save 10% on your premium by completing a new online risk management course available exclusively to NAIFA members. The course is free, or pay a nominal fee to receive CE credit as well. For more information, visit naifamember.smartpros.com.

 

newsINDUSTRY NEWS HIGHLIGHTS

ncoilNCOIL Adopts PPACA Resolutions

State lawmakers with an interest in insurance say they want to keep the Patient Protection and Affordable Care Act (PPACA) from casting health insurance customers adrift. Members of the National Conference of Insurance Legislators (NCOIL) adopted two resolutions related to PPACA at their recent spring meeting in Washington. Full story.

clashAdvisor Role in Exchanges Causes Clash

The former head of the agency overseeing implementation of the health care reform law disagreed with state officials over the need for insurance agents to be involved in the purchase of health insurance once the exchange system kicks in come January. Full story.

slamInsurers Slam New Reform Rules

The health insurance industry is arguing that new health reform regulations just issued by the Obama administration will result in sudden and sharp cost increases for health care. Full story.

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