IA editors and Big “I” leaders round up the year’s biggest stories for the independent agency system:
Hurricanes wreak havoc on the U.S. Hurricanes Harvey and Irma alone caused $150-200 billion in damage to Texas and Florida, according to an estimate from Moody’s Analytics. That’s a serious blow to the insurance industry—the growing consensus, according to Willis Towers Watson, is that combined losses from Hurricanes Harvey, Irma and Maria will exceed $100 billion. Such a staggering total is likely to prompt a market correction for commercial lines in 2018. Keep an eye on the February issue of IA for a more in-depth commercial market forecast.
Tax reform plows ahead. Just this week, Congress passed the widest-ranging tax reform legislation in decades—and it promises to impact the tax liability of agents and brokers in 2018 and beyond.
Throughout the process, the Big “I” led a coalition of other major producer groups in expressing concerns about the bill’s initial treatment of some small businesses, resulting in improvements to the final bill’s treatment of pass-through entities. The Big “I” government affairs staff also worked closely with the American Society of Association Executives and other key stakeholders to advocate against a provision that would have subjected royalty income derived from the licensing of a tax-exempt organization’s name or logo to taxation. Removal of this provision saved the Big “I” and its state associations from millions of dollars in new taxes.
NFIP reauthorization pushed to 2018. The NFIP, which must be periodically reauthorized by Congress, was set to expire on Sept. 30. The program has since been extended through multiple short-term reauthorizations. At press time, the NFIP is set to be reauthorized again through a continuing resolution that would fund the government through early January 2018.
Throughout 2017, the Big “I” was at the forefront of policy discussions surrounding flood insurance, including advocating against cuts to the NFIP. The Big “I” worked with other stakeholders to garner concessions in the U.S. House of Representatives’ reauthorization bill to protect millions of dollars in annual compensation for agents and brokers. The Big “I” also continues to make the case for the gradual development of the private market as a complement to the NFIP.
NAIC adopts Insurance Data Security Model Law. The Big “I” worked tirelessly to improve an NAIC data security model law as it made its way through the NAIC process. The final model is more reasonable and less onerous than early versions of the proposal and does not include some of the troubling elements found in the cybersecurity regulation promulgated by the New York State Department of Financial Services earlier this year. Most importantly, most of the model’s provisions do not apply to agencies with nine or fewer employees.
Agencies with 10 or more employees would be subject to these new provisions, which would require them to establish an information security program that is commensurate with the size and complexity of the agency, the nature and scope of its activities, and the sensitivity of the information it guards. The requirements are flexible and risk based, and each individual licensee’s tailored security program would be required to respond to and mitigate the risks identified in periodic risk assessments performed by the entity. In 2018, the Big “I” expects at least some state legislatures to introduce the proposal.
Court strikes down overtime rule. On Aug. 31, the Big “I” scored a major legal victory when a federal judge struck down the Department of Labor (DOL) overtime rule. The overly complex rule would have required employers to pay overtime to many employees who were not previously legally entitled to it. More than 55 business groups and 21 state governments sued the DOL over this issue in 2016, and the Big “I” was the only insurance trade association involved in the lawsuits.
The ruling means the 2016 overtime rule will not take effect. However, the Trump Administration has indicated an intention to propose an amended version of the 2016 rule. The Big “I” will continue advocating before Congress and the Administration on this issue in 2018.
ISO files big changes to commercial property forms. Effective Sept. 1, the changes include broadening coverage for water damage in the CP 10 30; introducing two new endorsements related to building coverage for tenants, and removing one tenant-specific endorsement; revising two protective safeguards endorsements; creating new waiting period options for the CP 15 45 Utility Services – Time Element endorsement; developing new optional Ordinance or Law coverage; and introducing a new endorsement for tenants’ improvements and betterments.
InsurTech continues expanding. According to FT Partners, total InsurTech funding increased from $128 million across 18 transactions in 2010 to $1.7 billion across 174 transactions in 2016—and not just from venture capitalists, but from insurers themselves. Consider that 2012 saw only one InsurTech investment from an insurance company; last year marked a whopping 100. How do you effectively compete with InsurTech and make sure your agency holds tight to market share in the New Year? Get the scoop in the January issue of IA, coming soon.
Wyatt Stewart is Big “I” senior director of federal government affairs. Jennifer Webb is Big “I” federal government affairs counsel. Chris Boggs is executive director of the Big “I” Virtual University. Jacquelyn Connelly is IA senior editor.