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THE INDEPENDENT
JULY 2023
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Jonathan Schreter
President
IIABCal
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President’s Message
The Value of Local Industry Involvement
IIABCal is fortunate to have strong local partners around the state. Throughout the year, these local associations hold events that help independent agents network, learn, develop, and be more involved in this industry.
You may have recently attended a fun golf outing, a festive I-Day, an informative principals’ dinner, or another event. These are amazing opportunities for us to connect and grow as insurance professionals. If you weren’t aware, these are the active local groups around the state:
In addition to industry-related functions, many of these organizations are also very involved in philanthropy for their local communities. Showing those outside the industry that we care about much more than just the premiums they pay is yet another way we can “tell the story” of our industry.
In my opinion, there is tremendous value in being involved in these local groups. From the “water cooler talk” to the philanthropic support, being an active member of the insurance community makes us all a better industry. Whether you’re in it for the networking, the CE, the support, or even just to talk business – there is something in these groups that is worth your time.
IIABCal supports the active involvement – and membership - in these local groups. (Remember – your membership in IIABCal does not include membership in a local association.) I would encourage you to learn more about them at: https://member.iiabcal.org/Events/Local-Association-Events.
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CEO Corner
Coming down the pike…
Now that July renewals are behind you, please take a moment to save these dates for upcoming IIABCal events:
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September 6, 2023 -Annual Membership Meeting and Board Election (10am, via GoToWebinars)
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November 8, 2023 – Installation Celebration (11am-3pm, San Diego Marriott Del Mar)
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May 5-9, 2024 – Blue Ribbon Conference (Westin Hapuna)
We look forward to connecting with you! Happy Summer!
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Jill Epstein
Chief Executive Officer
IIABCal
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IIABCal Advocacy
IIABCal urges CDI to let insurers use rate models
IIABCal urged the California Department of Insurance (CDI) at a regulatory workshop on July 13 to allow insurers to use catastrophic loss rate models—instead of limiting insurers solely to their own historic losses—in rate-making applications. Here is IIABCal’s written testimony.
California is one of the only states in the country that requires insurance companies to base future rates solely on their own historic loss experience, not what they anticipate their losses will be. Such reliance may be rational when losses are predictable and stable, but less so when unexpected, unpredictable and severe losses suddenly emerge, as with the catastrophic wildfires that have plagued California and other western states in the last seven years.
CDI held the workshop as an “information gathering” session that could conceivably lead to proposed regulations, notwithstanding past outspoken criticism of rate modeling by Insurance Commissioner Ricardo Lara and his top deputies.
IIABCal General Counsel Steve Young minced no words in written testimony submitted in advance of the workshop.
The Worst Availability Crisis Ever
“Our members are facing the most severe availability crisis they have ever experienced. Independent agents and brokers are desperate to see a healthy, competitive insurance marketplace restored, and immediate action is required,” Young said. “Insurers need adequate rates and timely approval of their rate requests—and this Department of Insurance is providing neither.”
Young noted that the underlying factors driving the emergence of wildfire losses—global warming, forest mismanagement, utility negligence, population and building growth in WUI zones, inflationary and supply-chain pressures, inadequate building codes—are present in almost every Western state, yet only California is facing an ever-worsening crisis in property insurance availability.
Lara has Exacerbated this Crisis
“Commissioner Lara has exacerbated this crisis by promoting rate suppression over rate adequacy,” Young said, accusing CDI of ignoring its obligation under California Insurance Code Section 1861.05, to prevent insurers from utilizing inadequate rates.
Late last year, IIABCal utilized its Legal Defense Fund to retain a highly respected national law firm, and actuarial experts familiar with California prior approval regulations, to develop a plan to restore the private voluntary insurance market, and encourage insurers to resume writing and renewing property risks.
The IIABCal Plan—which the Commissioner has the legal authority to implement with no new legislation required—has four components, in descending order of importance:
1) Joining the 49 other states that recognize insurers’ reinsurance costs;
2) Adjusting the cost-of-capital factor for wildfire risks retained, rather than ceded to reinsurers;
3) Allowing insurers to use prospective rate models; and
4) Requiring the Department to strictly observe, rather than pressure insurers to waive, the 180-day deemer provision in Insurance Code Section 1861.05(c).
IIABCal has Provided CDI a Detailed Roadmap
On the subject of rate models, IIABCal provided CDI with detailed proposed regulatory language that would allow insurers to use catastrophic rate models, yet preserve the Department’s ability to scrutinize the actuarial credibility of those models and their impact on rates.
One barrier to the use of wildfire models in California has been that state law requires all information provided to the commissioner pursuant to Prop. 103 to be available for public inspection. But rate modeling companies have an obvious need to protect their proprietary technology from disclosure to competitors.
The workshop invited participants to explain how those competing considerations—permitting public inspection of rate filings, while protecting proprietary technology—could be reconciled.
Rate Models Aren’t Subject to Prop. 103 Filing Requirements
IIABCal’s testimony offered the Commissioner several suggestions on that point.
“We believe [the public inspection provisions of Prop. 103] can reasonably be construed to exclude confidential and proprietary information developed and filed by rate modeling vendors,” Young wrote. “Nothing [in Prop. 103] requires rate modeling vendors to file any information with the Commissioner. New regulations could readily be promulgated requiring third-party risk modeling vendors to obtain approval of the Department of Insurance before making their products or services available to California insurers; such information would not be predicated on Prop. 103, and would therefore not be subject to the public inspection provisions.”
IIABCal also testified that the Casualty Actuarial Society (CAS) Actuarial Standards of Practice (ASOP) require disclosure when an actuary uses a catastrophe model in ratemaking, including how the model was used in the analysis and details about the model, including its components, inputs, and outputs—which by itself could satisfy the public inspection requirement.
Finally, IIABCal cited creation in Florida of an independent panel that carefully reviews hurricane rate models, and suggested a third alternative would be to create a similar panel of experts on wildfire loss in California.
Immediate Relief is Needed
Young stressed IIABCal’s belief that immediate relief is needed.
“IIABCal and its members are willing, and eager, to work with Commissioner Lara and all interested parties to develop solutions to current marketplace difficulties. But immediate action is needed. Now—not in the 18-24 months it would take the Department of Insurance to promulgate new regulations,” he said.
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IIABCal Advocacy
IIABCal Coalition Calls for Immediate Action on Property Insurance
An IIABCal-led coalition of diverse and influential organizations met this week with Assembly Insurance Committee Chair Lisa Calderon, and also with a key aide to California Gov. Gavin Newsom, urging them to support immediate efforts to reform regulation of the property insurance marketplace.
Describing the current availability crisis in property insurance as the most severe ever experienced by California’s independent insurance agents and brokers, IIABCal Lobbyist John Norwood urged the committee chairwoman and Governor to do everything possible to pressure Insurance Commissioner Ricardo Lara to take immediate action to ensure rate adequacy–or, failing that, to support emergency legislation before the Legislature adjourns in September.
Coalition Unites in Crisis.
Joining IIABCal in describing current market conditions as a crisis were representatives of the California Building Industry Association, the California Association of Realtors, the California Farm Bureau, the California Mortgage Bankers Association, the California Credit Union League, the California Association of Winegrape Growers, the California Association of Community Managers (representing HOAs), among other organizations.
Representatives of the other groups described the dire conditions their members and industries were facing because of the significant withdrawal from the marketplace of numerous insurers because of their inability to obtain approval from the Department of Insurance of adequate rates on a timely basis.
IIABCal has developed a four-part plan that experts believe would encourage insurers to resume writing and renewing property insurance policies. The plan would require CDI to recognize insurers’ reinsurance costs and cost-of-capital for wildfire exposures, to permit insurers to use prospective rate models to predict future losses, and to strictly follow existing law that requires the Department to act upon all rate change requests within 180 days.
CDI Workshop Won’t Provide Immediate Relief
On July 13, CDI held a “workshop” to discuss various issues surrounding use of rate models, but as Norwood told both Chairwoman Calderon and Christine Aurre, the legislative secretary to the Governor on insurance issues, it could take the Department up to two years to promulgate regulations–even if Lara renounced his previously stated opposition to the use of rate models–and California insurance consumers can’t wait that long for a solution.
IIABCal General Counsel Steve Young told Calderon that many western states are dealing with all of the factors that are now driving catastrophic wildfire losses, but only California is facing an insurance availability crisis of this magnitude because of Lara’s efforts to ensure rate suppression rather than rate adequacy.
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Legal Defense Fund
IIABCal Retains National Expert
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Hiring experts is a crucial role of the Legal Defense Fund, and an expensive endeavor. We need your support to reach our $150,000 Phase One goal!
IIABCal retained Sheri Scott, a Principal & Consulting Actuary at Milliman, to assist with research and data for IIABCal’s testimony at the CDI Workshop. (See article above “IIABCal urges CDI to let insurers use rate models”). Ms. Scott is a foremost authority nationally on this topic and has done extensive work for the California Department of Insurance and other regulators. We expect to continue to work with outside experts as additional CDI workshops and legislative hearings are scheduled.
Please donate to the Legal Defense Fund today to allow us to keep hiring experts who have the ear of the Commissioner.
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IIABCal Member Spotlight
Congratulations to our Members
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Member Markets
The Cost of Resolving an EPLI Claim in CA
Did you know that it costs 260% more on average to resolve an EPLI claim in CA? In addition, Trusted Choice cites an increase of 400% in employee lawsuits in the past 20 years.
As an IIABCal member we are always looking out for the best products and best coverage for our members. That’s why we highly recommend the EPLI product by our trusted market partners, the CRC Group.
For more than 100 years, CRC Group has delivered exceptional expertise and service to the commercial insurance marketplace.
Their competitive and top rated EPLI policy is easy to use and has high success rate classes in:
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Manufacturing
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Engineering
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Restaurants
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Contractors
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Architects, and more
To learn more, take a look at their policy application that includes qualifications, program details, and their self-rating 2023 Premiums and Deductibles grid.
We love what our member, CRC Group Program Administrator and Director, Pete Thrasher said about their EPLI program:
“I feel like this program is still a bit of a hidden gem. When the retailers that haven’t been using the program find out the ease of use, exceptionally low retentions & rates, they are amazed. Not every account is going to fit into the program, but when it does, you can bet that it is much more competitive than the rest of the marketplace.”
Please contact CRC Group’s Lucy Yu or Pete Thrasher with any questions you have about their programs.
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Member Markets
Disability Pride Month
We celebrate Disability Pride Month each July to advocate for and celebrate people with disabilities. In July of 1990, the landmark Americans with Disabilities Act (ADA) was signed into law. “Disability rights are civil rights” and the Americans with Disabilities Act protects people with disabilities from discrimination.
We know that promoting inclusion for all and being an A.L.L.Y in all communities including our insurance community is vitally important not just in July, but all year long.
We were impressed when we heard about our member “Weaver & Associates” partnership with and commitment to NeuroTalent Works.
“We are committed to adding diversity to our workplace, and NeuroTalent Works showed us a way forward.” – Dana Dattola, Agency Principal, Weaver & Associates
NeuroTalent Works (NTW) is a non-profit organization dedicated to advancing neurodiversity inclusion and employment in the workplace. NTW partners with both companies and talent (neuro distinct job-seeking individuals with cognitive and developmental distinctions, such as autism) to train and prepare both to succeed in gainful corporate employment of a neurodiverse (ND) workforce.
Much of our industry is facing a talent crisis and ND candidates represent an impressive untapped talent pool of skilled and educated job candidates. Seventy percent of NTW talent has a Bachelor's Degree.
“As the first insurance agency to hire our candidates, Weaver & Associates has modeled the way for neurodiversity inclusion,” said Jessica Lee, executive director and co-founder of NeuroTalent Works.
To learn more about how our agency member Weaver & Associates helped the nonprofit design and launch this unique initiative, click here.
The (Neuro)diversity in Insurance Job Training & Hiring Program offers onboarding grants, neurodiversity inclusion training and other incentives to insurance companies to hire individuals with disabilities for entry-level transaction processing and related roles.
IIABCAL is proud & excited to promote this unprecedented program because we see it as an important first step into a more inclusive, diverse, and more capable workforce than ever before. We hope our members utilize this great program and partner with NTW for your hiring needs.
And you can help NTW win a $10k grant from Liberty Mutual & Safeco Insurance:
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Click here, to see their story and vote!
They need 500 votes by July 31st to win – with our members' support we can all help them win $10,000!
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Volunteer Opportunity on Aug 2nd
Conduct mock interviews for the (Neuro)diversity in Insurance program.
NeuroTalent Works is seeking volunteers who can dedicate approximately 1.5 hours of their time (along with a 45 minute pre-event training on July 26 at 11am PT or anytime before Aug 2nd) to help conduct these mock interviews, which will provide candidates with valuable practice and help build their confidence.
If you are interested in joining as a volunteer interviewer on August 2nd, please sign up using the following link: Volunteer Sign Up.
If interested but can't make it on the 2nd, please email NTW here.
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Save The Date
Upcoming CE Class: The Ultimate Account Manager
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Join us from September 26-28, 2023 from 8:30 AM- 4:00 PM, in Sacramento, CA. Location details are coming soon!
This valuable CE class will address the needs of Account Managers, the agencies they represent and the clients they serve!
There is a special discount for IIABCal Members! $695 for IIABCal Members, $849 for non-members.
To register please contact Cheryl Koch.
Click here to learn more information.
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Member Survey
Thank You For Your Feedback
Thank you to all the members who completed the 2023 Member Survey. Your feedback is invaluable!
Congratulations to Alexandra Pina from Hal Rakowski Insurance, from Lakeside, CA for winning the Member Survey raffle prize of two free tickets to the "Installation Celebration" on November 8th at the San Diego Marriott Del Mar. We look forward to hosting you!
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Installation Celebration
Registration is Now Open
We are excited to announce that registration is open for our 2023 Installation Celebration, which will be held at the San Diego Marriott Del Mar on Wednesday, November 08, 2023 9:00 AM - 3:00 PM.
Come see the 2024 Board of Directors installed and hear from Business Growth Strategist and Award-Winning Author, Meridith Elliott Powell, in a high-powered keynote “Thrive: Turn Uncertainty To Your Competitive Advantage.”
Plan to join us for “Cupcakes and Cocktails” immediately following the program!
Click here to register for individuals!
Click here to register for tables of 10!
Event Schedule:
Registration/Networking: 9 AM-11:15 AM
Luncheon Program: 11:30 AM-1:15 PM
Cupcakes and Cocktails: 1:15 PM-3:00 PM
Thank you to all of our generous sponsors!
• Grand Grand Sponsor: CRC Group
• Premier Sponsor: State Fund
• Prime Sponsor: Liberty Mutual/Safeco
• Plus Sponsors: CIG, CompWest, Cowbell, Employers,
Epay Policy, Markel, Mashnerry, Sentry, The Greenspan
Company, United Valley, WCF Insurance, and Zenith.
• Host Sponsor: Morris & Garritano
If you would like to sponsor the Installation Celebration, please contact Jenn Pouey our VP, Operations & Member Services.
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Who We Are
The longest tenured Earthquake insurer, GeoVera, is your catastrophe insurance expert. IIABCal Associate Member, GeoVera is based in Fairfield, CA and provides “A” rated, stand-alone residential Earthquake coverage across California, Oregon and Washington.
What are the most important issues we face in the insurance industry?
With the recent Homeowners and Auto market disruption, independent agents may ask themselves, “How can I make up the margin I am losing? What can I do to keep more of my clients?” GeoVera has the solution. See below for the top five reasons why pivoting from traditional Homeowners and Auto sales to Earthquake may be the best opportunity to generate revenue and retain more business.
1.) Added revenue/ longevity of revenue: High-retention products are the most valuable to any agency. GeoVera EQ products have one of the highest retention rates of any product sold. High retention equals increased longevity and lifetime value of an insured.
2.) Protect E&O: Offering Earthquake insurance protects an agency’s E&O as the client is not covered for earthquakes under any other policy. California is a litigious environment, and insureds will seek compensation elsewhere, especially if the agency does not offer a policy
3.) Account rounding: Adding Earthquake to an agency’s portfolio creates a bundling effect, creating a higher lifetime value from an insured.
4.) Ease of doing business: Quickly email an offer to clients from the quote screen.
5.) Low agency transaction costs: Easy quote and bind process.
Why Join IIABCal
“GeoVera can further build its brand amongst the diverse community of independent insurance agents of IIABCal. We also appreciate the credibility which is gained from participation with industry associations,” GeoVera COO, Deepak Menon said. "Our field sales team is looking forward to the opportunities for networking at upcoming conferences. These events also give agents the chance to learn more about the value of selling Earthquake insurance and GeoVera’s unique offerings.”
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IIABCal Virtual Town Hall Meeting
California Earthquake Authority: Navigating Success through Challenging Times
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Join us on Tuesday, July 25th, 2023 at 10:00 AM PST for this IIABCal Virtual Town Hall Meeting with the California Earthquake Authority, the largest earthquake insurer in the United States and one of the largest in the world.
CEA CEO Glenn Pomeroy will present a high-level overview of the opportunities for agents and brokers who offer earthquake insurance to their policyholders, despite the current challenging economic times.
He will also share details of a new financial incentive program designed to provide financial assistance to CEA policyholders in certain high risk ZIP codes.
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Member Question of the Month
Advance Notice of Non-Renewal Required Only By Admitted Insurers
Q. We have just received a telephone call from one of our non-admitted insurers informing us that they have decided NOT to renew a particular policy that expires tomorrow. Isn’t there a law that requires insurers to provide advance notice of their decisions not to renew policies?
A.There are a variety of provisions in the California Insurance Code that require insurers to provide advance written notice of non-renewal decisions, or even renewals that are predicated on changes in rates, coverage, deductibles, or other factors. But those laws apply only to admitted insurers—not to insurers in the non-admitted market.
Click here to read the full response.
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IIABCal’s “Member Question of the Month” features questions from agents & brokers.
IIABCal General Counsel Steve Young provides answers to your legal questions as part of your membership benefits.
Have a question?
Email Steve Young at syoung@iiabcal.org.
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Local Association News
IIAB Sacramento
Under the leadership of Golf Chair, Mark Diele and the members of the golf committee (Amy Parker, Rob Oates, Jeremy Parker, Diana DePaola, Dora May Cruz, Erica Weill, Mandy Chinn, Megan Purcell, Jennifer Knighton, Peyton Reeves) the 79th Annual IIAB Sacramento Golf Tournament was a huge success.
The tournament sold out as it does every year, with 144 players and perfect weather. This popular event provides great networking opportunities between sponsors and our members. A hole on the course was dedicated to a former member of IIAB Sacramento, Paul Hammack, who passed away suddenly in December 2022. The proceeds collected were donated to The Hammack Foundation, a charity focused on educating young people in the insurance industry.
IIAB Sacramento would like to thank the following sponsors for their support and participation:
Grand Sponsor – Amtrust as well as other sponsors: Applied Systems, Atlas, Berkshire Hathaway, Burns & Wilcox, CRC Group, Carewest, CompWest, CopperPoint, DH Construction, Deans & Homer, Duarte Construction, Employers, Enterprise, First Insurance Funding, Grange, Greenspan, Hanover, The Hartford, Heritage, ICW, IPFS, Kniesel’s, Liberty Mutual, Markel, McGee & Thielen, Mercury, Midwest, Oregon Mutual, Philadelphia, R.E. Chaix, RT Specialty, Set Point Wellness, Staff Boom, State Comp Insurance Fund, Stonemark, Tokio Marine, Travelers, United Fire Group, USI, and Zenith.
Make sure you mark your calendars to join us at next year’s event. Remember, members of the association have priority when the event sells out – which happens every year!
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Jeremy Parker (GL Anderson Insurance Services and IIAB Sac Director of Programs), Amy Parker (MidWest Workers Compensation Specialist), Stuart Nelson (InterWest Insurance Services) and Brennen Cull (Coremark Insurance Services and IIAB Sac President-Elect).
The team wore matching hats and jersey’s to honor the late Paul Hammack, an active member of IIAB Sacramento who passed away in December of 2022.
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AmTrust Photo from left to right:
Jason Burns, Nicholas DiNapoli, Darlene Zanassi, & Elijah Cruz with AmTrust
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Continuing Education Webinars:
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