Industry News

The recent flooding in Houston could be considered a 1-in-100-year event, but that label is a misnomer in that it can mislead people into thinking that such flooding literally happens once every 100 years and that they will thus be safe for 99 years out of 100. The U.S. government has used the label to suggest that a flood of that severity has a 1 percent chance of happening in any given year, not that it could happen only once per century. However, the label does not take into account other conditions that can alter those probabilities, such as climate change, El Niño, and La Niña.

“That’s why the 100-year event is such a moving target, especially in an urban environment. Someone builds a couple of parking lots, and you just turned a 100-year event into a 70-year event because of the impervious surfaces,” says Chuck Watson, director of research and development at Enki Research. Weather Research Center founder Jill Hasling suggests that residents of places like Houston that get more than one flood per year buy flood insurance. “If you are not in the flood zone, buy it anyway; it will just be cheaper,” she said.

U.S. Justice Department Assistant Attorney General for National Security John Carlin says Internet-connected and driverless cars could be targets for hackers, including hostile nations and terrorists, and he urged the automotive industry to ensure that such vehicles have built-in cybersecurity protection. The market for Internet-connected cars could reach a value of $42 billion by 2025, with more than 220 million vehicles on the roads. Toyota Motor Corp., Google, Ford Motor Co., and Baidu Inc. intend to introduce driverless cars in as soon as five years.

“There is no Internet-connected system where you can build a wall that’s high enough or deep enough to keep a dedicated nation-state adversary or a sophisticated criminal group out of the system,” said Carlin.

Questions about the auto industry’s responsiveness were raised last year when Fiat Chrysler waited 18 months to tell federal safety regulators about a security flaw in radios being installed in more than a million vehicles that security researchers exploited in July, seizing control of a Jeep just to show it could be done. The episode led to the recall of almost 1.5 million vehicles — the first auto recall prompted by cybersecurity concerns.

PIA recently commented on the National Association of Insurance Commissioners’ (NAIC) Cybersecurity Task Force’s Preliminary Working and Discussion Draft of its Insurance Data Security Model Law. PIA’s comments expressed reservations about the model law approach generally and expressed concern about the need for a model law that would be passed with the expectation of adoption in some form in each state, in light of the fact that state laws on this subject already exist in 47 jurisdictions. PIA is also aware of potential conflicts between the Preliminary Draft, existing state law, and existing federal law. PIA continues to monitor this important issue and intends to provide verbal feedback on the Preliminary Draft at the forthcoming NAIC National Meeting in New Orleans.

Is the Internet rising up in the small commercial marketplace—taking the place of agents? No.

What is actually true is that small business owners strongly prefer independent insurance agents as they make choices in today’s online world. But at the same time agents need to be more engaged online—using the Internet to demonstrate and reinforce the value they provide.

These are among the findings of recent research by The PIA Partnership, PIA’s national agency-company council. Read all about “Small Business Insurance & The Internet—The Voice of the Commercial Lines Customer” in this in-depth article in Rough Notes magazine.

Did you see the 2016 PIA National Guide to Member Benefits inserted into the January issue of PIA Connection? Below we’ve listed just a few of the PIA programs highlighted in the most recent Guide to Member Benefits.

DocIT for Agents: Save time and money by placing drivers with the right auto insurance carrier earlier in the quoting process using DocIT for Agents’ online database of driver violation data.

PIA Agency Marketing Guide: Our hands-on marketing tips from industry experts, published annually.

Floodbroker.com: A unique tool for the flood insurance industry that provides National Flood Insurance Program (NFIP) information to PIA members’ clients and prospects to quickly and easily get a flood insurance quote.

Rough Notes Producer Online: Helps identify risk exposures and provides detailed coverage analysis. PIA members get a special rate.

Hartford Flood Insurance: Easy enrollment, dedicated local sales directors and book transfer/rollover team, training/CE, free certified zone determinations, 24/7 claims reporting and great commissions. Not comfortable with flood insurance? Try the “Flood Solutions” option.

The PIA Partnership: Our national company council continually conducts real life applicable research campaigns and makes the results available to PIA members as a dynamic, evolving process — not simply discussed and put on a shelf.

Employee Profiling from OMNIA: OMNIA's behavioral assessment programs give you the insight to take the guesswork out of personnel decisions. Whether you are hiring a new employee, deciding on future roles for current employees, team building or creating a succession plan for your business, Omnia can help.

Agency Revenue Tools: Boost personal lines sales by engaging in employee worksite marketing using your appointed markets at regular commission rates.

In a recent Nationwide survey, 66 percent of small business owners said they still lack business interruption insurance, and 75 percent said they do not have a disaster plan in place. About 51 percent of owners said they are taking steps to prepare for the impact of climate change and El Niño on their companies, though many are divided on the impact of climate change and El Niño. Nationwide President and COO Mark Berven said small business clients should be reminded about the benefits of business interruption insurance. “Some of America's small business owners may be feeling overconfident, even as we head into the spring storm season. There hasn't been a major U.S. disaster in years, so there may be a sense of complacency,” he said.

This is a further update and summary on PIA's previously issued special bulletins on the National Flood Insurance Program (NFIP) and these changes.  It is more critical than ever that PIA members work very closely with their WYO partners through this next set of changes.

Despite the efforts of both the Flood Insurance Producers' National Committee and WYOs and the Insurance Institute for Business & Home Safety (IBHS) Flood Committee, as of this moment the REVISED Manual incorporating the April 1, 2016 changes has NOT yet been published (as final revisions are being polished).

Thus far, the inventory of NFIP bulletin references involved in these changes can be found here and here.

2016

w-16010 – Changes to the FEMA Mapping Center Services - As FIPNC requested.

w-16003 - Addendum #3 to the April 1, 2016 Changes – a rate table

w-16002 – Revised & Approved EC & Floodproofing Cert.

2015

w-15063 – Addendum #2 to April 1, 2016 Changes – Correction to premium language

w-15055 – Addendum #1 to April 1, 2016 Changes – Revised rates - high-rise condos

w-15046 – The original and core content of April 1, 2016 changes

Be sure to review the procedures for the Newly Mapped Program and its transition. We also encourage members to read the section for property owners, and the one for lenders on this subject as well so that you have a fully rounded appreciation.

PLEASE NOTE: The FEMA/NFIP Specific Rating Guidelines "paper" published by FEMA in December for the April 1, 2016 changes is no longer completely accurate.   So, please rely on your WYO for guidance and education/information.

WHY Flood Coverage & WYOs ARE Important: Since 4^th quarter 2010, and more especially since 4^th quarter 2015, many areas of mid-America and elsewhere that have not experienced flooding in a long time have been flooded, and most are experiencing repeating events.

PIA agencies know the value of risk management for their agency and their customers.  Hence, it is critical that all private sector insureds remember that the typical private sector property insurance policy does not cover the perils of, nor damage from, floods and flooding events to include mud-flows.  Further, property insureds should also be aware that the federal government program, NFIP, provides coverage for property and contents from damage by flood and flooding events to include mud-flows.  While NFIP is not as complete a claims answer for your customers as anyone would like, the private sector property insurance policies are no answer to the damage after a flood.

PIA members operate best in off

Google is shuttering Google Compare, its U.S. comparison-shopping site for auto insurance, credit cards and mortgages, according to a report in the Wall Street Journal. The company said in an email to its partners that Google Compare’s U.S. and U.K. services would start winding down this month and terminate on March 23, according to the Journal. Google said the service didn’t meet its expectations and that the company will now focus on AdWords and future innovations, the paper reported citing the email.

“Google has apparently discovered what independent insurance agents have always known: when it comes to insurance, customers appreciate that it is a complex transaction that requires professional advice,” said PIA National Executive Vice President & CEO Mike Becker. “PIA’s research has consistently shown a strong preference among both personal lines and commercial lines customers for doing business with a local agent.”

“However, independent agents should not interpret this decision to wind down Google Compare as an indication that they need not compete in the digital arena,” Becker cautioned. “Customers also want local agents as experts who are capable of online interaction concerning their accounts and are backed by the efficiency of the Internet.”

(Left to right) Bill Hartnett, Keith Savino, Mike Becker

Just what does the independent agent “Buy Button” mean? How could utilizing technology to allow an agent to bind policies in real time anywhere he or she decided—in person by the agent during a consultation, or after hours on the agent’s website by the customer—be an advantage? What are the possible pitfalls?

The Buy Button is being likened by its advocates to earlier milestones in technology development in the insurance industry.

ACORD’s Bill Hartnett discusses these issues with PIA’s Mike Becker and Keith Savino, following up on an industry-wide discussion session that was convened by PIA in January and held at the headquarters of ACORD in Pearl River, New York. [video]