Presentation on theme: "Dan Ramsey, CIC President/CEO Independent Insurance Agents of Oklahoma 10/13/11."— Presentation transcript:
Dan Ramsey, CIC President/CEO Independent Insurance Agents of Oklahoma 10/13/11
Dan Ramsey – Owner, Independent Insurance Agency 1972-1996; OK House of Representatives 1994-1998; IIAO President/CEO – 1998 – Present; Obtained Certified Insurance Counselor designation – 1979 IIAO – 500 member agencies; all 77 counties; 5,000 producers & CSRs; 100+ associate members – 80% of commercial insurance /40% of personal insurance in OK; 15% from life & health sales
Defines13 Unfair Methods of Competition and Unfair & Deceptive Acts #2 - False Information & Advertising Generally – No insurance company shall issue any policy of insurance of any type as an inducement to purchase real or personal property, offer or give free insurance in connection with the sale of real or personal property. Recent GM/MetLife filing for one year free auto insurance.
#8 – Rebates – Paying, giving, offering to pay, directly or indirectly, as an inducement to any contract of insurance any special favor or other benefit whatever not specified in the contract…giving, or purchasing as an inducement anything of value whatsoever not specified in the contract…or any valuable consideration or inducement not specified in the contract; Rebate/Incentive must not be contrary of any filing made by the carrier on the product; IIAO believes that services purchased from a 3 rd party on behalf of an insured and given to them as an incentive would be a rebate according to the statute.
No insurer, agent, broker, or other person shall as an inducement to insurance or in connection with any insurance transaction, provide in any policy for or offer, buy, or offer or promise to buy, give to the insured or prospective insured or any other person in any manner whatsoever: (d) Any prizes, goods, merchandise, or tangible property of an aggregate value over $25.
Separate consultant’s license is required except for: Attorneys Licensed Insurance Producer or S/L Broker Trust Officer of a Bank Actuary or CPA
Nothing in this title shall prohibit the offset, in whole or in part, of the fee payable …to said duly licensed insurance producer or s/l broker for acting as an insurance producer or broker. (This needs to be reviewed – creates a potential conflict of interest.) Consultant agreement must be approved by the Insurance Commissioner and signed by consultant and the client. The agreement shall outline the nature of the work to be performed and state the fee to be charged.
1887 – Massachusetts – all states except California and Florida “Soft” market leads to lower pricing and in order to compete, some producers tempted to unethical practices; during tough economic times, consumers may be tempted to buy the rebate or incentive, not the product. When the focus is on the rebate or inducement rather than actual policy features & benefits, it produces problems. Insurance is different because the consumer is buying a complex legal document, not a product. If he/she buys an insurance policy for the wrong reasons, he/she may not find out until it is too late.
Only fees allowed in current law are for: Consulting Services as previously described; Actual expenses incurred by the insurance company, insurance agency, or insurance producer. A duplicate fee cannot be charged. Statute needs to be updated to allow for charges for Fee-Based Services
This is an area of commercial law dealing with contracts or non-contractual relationships where an agent is authorized on behalf of another (principal) to create a legal relationship with a third party. (The agent is authorized to act on behalf of the principal.) If Fee-Based Services are allowed in Oklahoma, there must be consideration given to the contract between the third party and the agent/producer. It should be approved by the Insurance Commissioner in the same manner as the Consulting Agreement. Notice of such contract should be given to any insurer (principal) represented by the agent/producer. Reason: A person cannot serve two masters – A producer cannot serve the principal and the third party at the same time. If so, to which party does liability/loyalty exist and to what extent? Clear boundaries must exist and be agreed to.
Currently being provided by many agencies in-house without charge: Loss Control Claims Review Certificates of Insurance Monitoring Experience Modification Management Certified Workplace Medical Plan Services Risk Management Web Sites
The following services are being offered with an additional fee and contracted (some through 3 rd party vendors) for the following: Loss Control – Customized for client needs HR Consulting COBRA Compliance Risk Analysis Audits/Surveys Appraisals Inspections Contract Review Claims Management
IIAO is of the opinion that some value-added services provided within an agency may be allowable as a “free” service as long as they are directly related to the sale or service of the policy and the service is provided in a fair and nondiscriminatory manner to like insureds or potential insureds. Furthermore, IIAO believes that value-added services provided by a third party cannot be offered for“free” to the insured as an incentive to buy. This is in keeping with the provisions of 36- 1204 (8) – the rebating provision.
New York – An agent may provide a service not specified in the insurance policy or contract to an insured or potential insured without violating the anti-rebating and inducement provisions if (1) the service directly relates to the sale or servicing of the policy or provides general information about insurance or risk reduction and (2) the insurer or producer provides the service in a fair and non-discrimatory manner to like insureds or potential insureds.
Indiana – Not prohibited: Loss control, wellness programs, claim filing assistance, COBRA administration, HIPPA compliance, Risk management, Regulatory/Legislative updates, Group policy administration, and adminstration of 125 plans, FSAs, and HRAs. Prohibited: Human resource, Legal, Payroll, Referrals to third-party providers that offer discounted rates contingent upon the purchase of insurance, tax preparation, and accounting.
Missouri – Not Prohibited: Risk assessments, Insurance consulting, Claim filing assistance, Certain services related to HIPAA, Certain services performed pursuant to COBRA, Insurance related regulatory/legislative updates, and providing information to group policy holders. Prohibited: Services related to employee compensation, certain risk management practices, Payroll, COBRA that goes beyond billing and collecting premiums, Tax preparation, and Legal services.