104th Annual Convention - VISION 2000 - A Huge Success!
This year’s AIIA Annual Convention - VISION 2000 - in SanDestin, FL on June 11-13, 2000, was a huge success!  The three day convention started off with a very successful opening cocktail party and Spectacular seafood buffet. The Kid’s Crab Hunt was a huge hit and was a perfect ending to a great first day.  Day number two started off with a record setting Trade Show where 40 companies set-up shop to meet with agents. After the show closed down many participated in the Fishing, Golf and Tennis Tournaments for the rest of the afternoon.  The final day started off with the General Session and industry seminar by Mary Eisenhart, CPCU, ARM, ARe, CIC, RPLU, CPIW.  Participants earned  5 CE credits for attending.  The kid’s were kept busy with the Kid’s Beach Olympics followed by a Family Luncheon, Pool Party, and Beach Volleyball.  The convention closed out with a Cocktail Party and Surf & Turf Banquet during which we had the induction of the new officers and board members, the Grand Prize Drawing, Award Presentations and entertainment by Jimmy Travis.  This was an event to be remembered with lots of fun and networking opportunities.  Please help us welcome the new executive committee members, President, Joe Fuller; President-Elect, Malcolm Dunaway, CIC; Secretary/Treasurer, Arthur Williams, CIC, AIC; State National Director, Elliot Free, CIC; and Immediate Past President, Quinton Hanson, CIC.  The new board members inducted were District 1, Richard Schneider; District 3, Tommy McQueen and Joseph Bennett, CISR; District 4, Cecil Yarbrough, CIC; District 5, Lester O’Neal; District 7, Lisa Worley, CIC, ARM and Kelly Byrne; District 8, Phillip Underwood, CIC; and District 9 Jerry Fowler and Steve Hoggle, CIC.  Congratulations to all the award winners including Mickie Edwards, CISR, CIC, AAI, CPIW of Realty Insurance for winning the Insuror of the Year Award and to Wescoat Free, CISR, CIC of Knight-Free Insurance for winning the Presidential Citation Award.  Best of luck to the new executive committee and board members on making this a successful year! 

Sun, Sand and Sales in August
Registration is already underway for the Annual Young Agents Conference “Sun, Sand and Sales” to be held August 17 - 19 at the SanDestin Bayside Resort. Registration forms were mailed three weeks ago and are in the July issue of The Alabama Independent. You may also register on our web site at www.aiia.org.  This year’s conference will include Speaker and Consultant, Steve Morgan and motivational speaker Jerry Teplitz focusing on the art of selling.  Don’t miss this exciting conference!  Sponsorship and door prize opportunities are available.  Call Nancy Crowe for more details at AIIA (205) 326-4129.

July CE Information & Events
We will be offering Errors &  Omissions  July 11th in Sheffield and July 13th  in Tuscaloosa.  This seminar is approved for 6 hours of continuing education credit. Space is limited so sign up today!  The Dirty Dozen Specialty seminar will also be conducted in July. Keith Wilts, CIC, CPCU will be teaching this seminar. Topics will include problematic areas in Commercial Lines such as GL exclusions, Umbrellas and much more. Class locations include: Mobile, Montgomery, Birmingham and Huntsville. Make plans to join us there.  Our Annual Conferment Ceremony for new CIC/CISR designees will take place in Birmingham on July 20th. Mickie Edwards,  CIC, CISR, AAI, CPIW will be this year’s conferment speaker. This event will take place at The Club atop Red Mountain and tickets are available for $25 a person. Please call Lauren Mashburn for tickets or any additional information.  You may register for any education class online, www.aiia.org. For any additional information call our office today at (205) 326-4129.

Death Tax Elimination Supported By IIAA
The U.S. House of Representatives recently passed the Death Tax Elimination Act (H.R. 8) by an overwhelming vote of 279-136.  IIAA is a strong supporter of the bill because it will help solidify the future of independent agencies.  “This is great news for thousands of small businesses, like many IIAA members,” says IIAA Executive Vice President Robert A. Rusbuldt.  “All too often, surviving family members have no choice but to sell the family business after the passing of an owner in order to pay the hefty estate tax bill.  H.R. 8 will reverse the alarming trend and simultaneously aid the perpetuation of the independent insurance agencies and other family-owned businesses from one generation to another.”  Before the legislation can go to the President, it first must be approved by the Senate, which has not acted on any tax-cut legislation in this session.  Clinton has promised to veto the repeal as fiscally irresponsible, but said he would work with Congress on a compromise.  For more information, contact Jeff Myers at (800) 221-7917 or jmyers@iiaa.net.

Vesta Insurance Group Gets Ratings Upgrades
Vesta Insurance Group, Inc. announced that its insurance subsidiaries have been upgraded to “BBB-“ by Duff and Phelps credit Rating Co.  Duff also upgraded Vesta’s senior debt to “BB-,” its trust preferred securities to “B+” and its convertible preferred stock to “B+.”  The upgrades reflect the agency’s assessment of Vesta’s improved financial condition.

Southern Guaranty Insurance Company Agency Agreement Reviewed
The Southern Guaranty Insurance Companies Agency Agreement AACP 1(1-98) was recently reviewed by IIAA.  IIAA found that the company is required to provide the agent with at least 180-days prior notice of termination which is a positive provision. For a copy of the complete review, contact Cathy Spencer at (800) 221-7917 or chwangspencer@iiaa.net or visit the Legal Group area of IIAA’s members-only site at www.independentagent.com.  For additional information, contact Michael Brody at (800) 221-7917 or mbrody@iiaa.net.

Hartford to Sell Personal Insurance At Sears
Hartford Financial Services Group and Sears, Roebuck and Co. have reached and agreement to sell auto and homeowners insurance to Sears customers and employees.  The Sears Auto & Home Insurance program, underwritten by Hartford, will be launched July 1 in at least 40 states.  It will use direct mail, billing statement inserts and referrals from Sears customer service centers, followed shortly by plans to use independent agents and the Internet.  One improvement in this program, compared to Hartford’s other direct affinity programs, is that Hartford will develop a mechanism where certain leads are referred to its “highly partnered” agents, if the prospect fits the profile of being more likely to buy through an agent.  This independent agent mechanism will be piloted in September.  For a copy of The Hartford’s press release, dial (800) 282-9183 and select fax-on-demand option 206.  For more information, contact Jeff Yates at (800) 221-7917 or jyates@iiaa.net.

P&C Industry’s Net Income Drops & Investment Gains Decline
The U.S. property/casualty industry’s net income after taxes dropped 35.4 percent to $5.8 billion in the first-quarter of 2000, down from $9 billion in the first quarter of 1999 according to Insurance Services Office, Inc.(ISO) and the National Association of Independent Insurers (NAII). Contributing to the decline in net income was a doubling of the industry’s net loss on underwriting to $6.1 billion in the first-quarter 2000 from $2.9 billion in the first-quarter 1999 caused by growth in loss and loss adjustment expenses far exceeding growth in premiums.  In addition, the industry’s net gains on investment declined (consistent with developments in the financial markets) to $13.3 billion in first-quarter 200 from $14.5 billion in first quarter of 1999.

Court Slams OCC, Agents Are Victors
In the case of IIAA vs. the Office of the Comptroller of the Currency (no. 99-5158), the court overturned an OCC interpretive ruling that permitted national banks to directly sell crop insurance.  Then, in a shot at the federal regulators, the appeals court blasted the OCC for not learning from its past mistakes.  Since the potential ramifications of the OCC interpretive ruling could have been very broadly applied to other types of insurance that are tied to loans issued by national banks, this effects areas other than just crop insurance.

Marsh & McLennan Gets Approval for Internet Bank
Marsh & McLennan Cos. Inc, the world’s largest insurance broker, won approval on Monday from U.S. regulators to set up an Internet savings bank.  The new thrift, which will be called “AtBank” and based in Framingham, Massachusetts, will market retail deposit products primarily to Marsh & McLennan’s employees and existing customers and clients.

AIIA Members Earn Recognition
Congratulations to Bill King with The Insurance King/ dba King Insurance Agency in Decatur for qualifying for State Auto’s prestigious Inner Circle.  Requirements include having more than $1.25 million in written premium with State Auto, achieving at least a 5% or $100,000 sales increase and earning a profit over the last two out of three years (1997-1999) or a cumulative profit over those years.  Congratulations also go out to Marian Washburn with Insurance Place in Birmingham for making State Auto’s Fourth Quarter and Year-end 1999 Top 100 list.  To qualify, agencies had to meet profitability criteria (profitable two out of the last three years (1997-1999) or achieved a cumulative profitability over the last three years).  The Insurance Place ranked number 28 out of 100 in order of sales increases.  Congratulations to you both!

Don’t Forget To Vote On June 27!
On Tuesday, June 27, we have an opportunity to help Craig Pittman win the Republican nomination for a seat on the Alabama Court of Civil Appeals.  We have joined with a number of other pro-business associations to help Craig Pittman in the runoff election.  We anticipate an extremely low turnout which makes our votes even more important.  Please make an effort to get to the polls on Tuesday, June 27th and vote for Craig Pittman.

Employment / Agency Buyer Opportunities
*Personal Lines CSR position available for local Birmingham agency.  Excellent Pay! Please send resume to 3824 Montclair Road, Birmingham, AL 35213.
*Immediate opening for experienced Commercial Lines CSR in Birmingham area.  Please fax resume to (205) 822-0241.
 
 

Now that Alabama has seen progress toward tort reform, our Errors and Omissions market place is being flooded with carriers quoting cheap premiums.  Experience has taught us that when a carrier offers reduced premiums to write a new line in a "soft" market, they will always increase premiums or withdraw from the market.  Where were these carriers when times were tough?  They did not wantyour business then.  Who was here and stayed with the membership when there were hardly any E&O carriers writing in the state?  It was Employers Reinsurance Corporation who took large losses during the 1980s and 1990s.  Sure these other carriers can come in now and write for reduced premiums because they did not have to pay any losses during the "Jackpot Justice" days.

We are receiving numerous calls regarding our E&O Program as compared to others, Cigna being the most common one.  When comparing policies, please pay particular attention to the exclusions.  Employers Reinsurance Corp has only four, while some forms have up to 15 or more.  Some of those exclusions that are extremely important to the independent agent are: punitive damages, insolvency, contractual liability, bodily injury, and personal injury.

ERC's form specifically lists libel, slander and advertising activities in its Coverage Section — most other E&O policies specifically exclude these activities by excluding personal injury.  This could be a very important issue if you are involved in advertising, Internet use, etc.  ERC's policy does not exclude mental anguish and emotional distress.  Many E&O claims allege "mental anguish."  The tort reform that was passed does not address the issue of mental anguish.  Cigna (and most other carriers) excludes personal injury that includes mental anguish in the definition.

Another very important aspect of the policy is the definition of CLAIM.  Cigna, Reliance, and Utica define a claim as a "written demand or notice received by you...".  This is very restrictive should you want to change carriers.  If you know of a potential claim, but have not received written notice, that claim will not be acknowledged as a claim with those carriers and will not be covered by the new carrier.  The agent can be prevented from leaving the carrier, but the carrier can raise prices when they want.  ERC states that giving notice of potential claims will be treated as a "claim."

Also, look at the definition of insured.  Does the policy cover stockholders, employees (past and present) and independent contractors (producers)?  It should; ERC's does.

Our program has grown immensely over the past four years.  We currently write approximately 60% of our membership, as compared to 37% four years ago.  The reasons for this growth in policyholders...the product and the ERC team.  The Alabama E&O program's underwriter has been with ERC over 10 years and has been Alabama's underwriter for nearly that long.  His knowledge of the product and support of the Association's E&O Administrator is a major factor in our successful program.  Many agents have expressed their satisfaction with having a local administrator.  Members' E&O policies are renewed and written right in your Association office.  We can issue a renewal in a matter of hours after receiving your order to renew.  We have two staff members dedicated to our members and their E&O needs.

Remember, when comparing and purchasing your E&O coverage, ask yourself if you want a Yugo or a Cadillac.