The following is a Department of Insurance position issued by David Parsons this morning on the issue of surcharges for accidents caused by defective tires.

“Most of the country is aware that tire manufacturer Bridgestone/Firestone has issued a national and international recall of certain sizes of tires.  The recall was prompted by consumer complaints and auto collision data that demonstrate that tread separation has caused serious and fatal automobile accidents in the United States and abroad.  The insurance industry has been credited with stepping forward and alerting federal authorities to the correlation between insurance claims and defective tires.  For these efforts, the insurance industry should be applauded.

In Alabama, insurers of private passenger-type automobiles are allowed to assess surcharges to insurance premiums following payment of certain claims.  However, most insurance companies do not surcharge a policy if the driver is reimbursed by the person responsible for the accident.  Companies also are not allowed to charge for collisions with animals, "hit and run" accidents, accidents where the insured automobile was lawfully parked and other circumstances in which the driver is not "at fault."

We have learned that some insurers are surcharging policies for accidents caused by defective tires.  In light of the national recall and federal investigation, we believe such rating to be unfairly discriminatory, in violation of Sections 27-13-35 and 27-13-65, Code of Alabama 1975.  Defective tires and the accidents they cause pose an insurance risk to United States insurers.  However, those insurers have full right of subrogation of those losses and are encouraged to pursue the responsible parties.  Policyholders should not be required to bear the burden of surcharges while waiting for the insurance industry to pursue their subrogation claims.  Litigation surrounding this recall and investigation will take years.

We require that insurers authorized to do business in Alabama cease surcharging policies for accidents caused by defective tires, regardless of the brand, effective immediately.  Insurers are further directed to remove such current surcharges and refund or credit the amount of the surcharge to the policyholders beginning from the inception of the surcharge.  This directive applies to surcharges on current in-force policies and policies purchased after the date of this bulletin.”

Questions on this matter can be directed to the Property & Casualty Division, Alabama Department of Insurance Department, 334-241-4174 or E-mail to mfrick@insurance.state.al.us.

Small & Rural Agents Conference Just Around the Bend
This year’s S&R Conference, A Plan For Today & Tomorrow on October 18-19, 2000 at The Birmingham Marriott on Hwy 280 is one you will not want to miss.  Large or small, rural or urban, this year’s Conference will have something for everyone. You will be brought up-to-date on what legislative issues are currently facing our industry and what we can expect.  You will also get an overview of Scoring and the Fair Credit Reporting Act. There will be four Round-Table Discussions you will want to attend including Long Term Care; Agency Evaluation: How to value, How to enhance, What is true worth of  your business; Good, the Bad & the Ugly, Mandatory Insurance; and finally Multiple Offices:  How to Manage. 

This year we have two dynamite programs for you.  On Wednesday, Dawn C. Kohl, J.D., will be presenting “Perpetuate or Sell”!  So many times as an agency owner, we have thought of what we will ultimately do with our agency.  You are not alone.  This program is designed to give you the options you have available.  Why is it important to plan to perpetuate?  What is your agency worth?  How you can tie mergers, clusters, and/or buy-sell agreements to your perpetuation plan.  What factors are used to determine the agency value?  All this and more will be answered in this most requested seminar.  Don’t miss your opportunity to hear this one!

On Thursday, you will hear from Jack Fries of Fries and Fries Consulting who will present “Maximizing Your Sales and Income From Your Existing Personal Lines Customers.”  Jack is a nationally known speaker and conducts seminars which make agents more effective by using the tools they already have.  Not only is Jack able to bring something you can use in your every day tasks, but he is also entertaining at the same time.  He has received excellent evaluations everywhere he goes!  You will not want to miss this seminar which will earn participants 4 C.E. hours! You may register for this seminar separately if you would like to attend only this portion of the conference.

Registration forms should be in your mailbox as we speak, but if you haven’t received yours, call (205) 326-4129 for one today.  To make reservations at the Marriott, call (205) 968-3775 and mention that you are with the AIIA Small & Rural Group. 

BIG I PAC Golf Outing A Hit!
AIIA held its 1st Annual BIG I PAC Golf Tournament at the Robert Trent Jones Capitol Hill Golf Course in Prattville last week.  The event was a big hit and not only raised money for the PAC, but also gave AIIA members and company reps an excellent opportunity to meet and speak with the Supreme, Civil and Criminal Appeals Courts candidates. Over 80 golfers participated in the golf tournament which was followed by an afternoon cookout and reception for the judicial candidates.  In attendance were Judge Sue Bell Cobb, Glenn Murdock, Judge Bernard Harwood, Craig Pittman, Judge Joel Laird, Greg Shaw, Justice Champ Lyons, Kelli Wise and  Judge Alice Martin.  Thanks go out to the golfers who participated and to the sponsors for helping to make this first-time event a big success.

Southern Agents Conference Coming Up
The 2000 Southern Agents Conference Workshop will be held on Dec. 8-10 at the Ritz Carlton Buckhead in Atlanta, GA.  The program will include an Internet symposium and committee meetings, as well as state leaders meetings.  The workshop will be rounded out with presentations from IIAA's Paul Equale and Bill Hoffman.  Call Nancy Crowe at AIIA  (205) 326-4129 for a registration form or you may register online at www.iiag.org.

Educational Opportunities
During the remaining weeks of September, AIIA will be offering several E&O classes in Mobile, Tuscaloosa and Birmingham on the 20th, 21st, and 27th respectively, as well as an Agents Licensing School in Tuscaloosa on Sept. 25-29th.  Coming up in October we have CISR Commercial Property courses in Mobile, Montgomery, Tuscaloosa, Sheffield and Birmingham, as well as Agents Licensing Schools in Montgomery and Mobile.  Call Lauren Mashburn at AIIA (205) 326-4129 to register or you may register online at www.aiia.org.

Employment Opportunities
Local, well established agency has Personal Lines/Receptionist position, responsibilities include new business prospecting/production, existing business renewal/service, personal lines acctg. input.  Fax resume'/salary requirements to (205)879-2480 or send via e-mail to insurd@hotmail.com.

Experienced Commercial Lines Automobile/Transportation Underwriter; Experienced Personal Lines Property Underwriter  (Homeowners, Dwelling Fire and Mobile homes) and Experienced Commercial Lines Property -Casualty Underwriter positions available. Fax resumes to (205) 326-3086 Attn: H.R. 09/19.

GMAC Enters Agreement with GuideOne
GMAC Insurance and GuideOne Specialty Mutual Insurance Company have announced their intent to enter into a working agreement that will continue uninterrupted service to agents and policyholders in GuideOne's nonstandard auto lines of business.  Alabama is one of eleven states in which GMAC will offer auto coverage for GuideOne's nonstandard auto insurance policyholders.

Chubb Opens Personal Lines to Young Agents
Chubb's Young Agents Access Program which was introduced in 1999 is designed for young producers who are interested in getting into the personal lines arena.  The program allows young agents not already appointed with Chubb, access to the company's personal lines products without being held to specific volume requirements.  Chubb will assist them in risk placement, product marketing, underwriting risks and servicing insurance coverages.  Chubb has plans to offer a similar program for its commercial lines products next year.  For more information about the program, contact the Chubb Customer Center at (800) 884-3770.

Failure of Estate Tax Repeal Missed Opportunity
After President Clinton vetoed the Death Tax Elimination Act (H.R. 8) earlier this month, the House Republican Leadership attempted to override the veto in order to eliminate the inheritance tax burden that is placed on families when a death occurs.  The override attempt which received 274 votes was unsuccessful in getting the two-thirds majority (288 votes).  The override effort was hurt when 13 of the 65 Democrats and one Republican who originally voted for the bill, voted in the override attempt to uphold Clinton's veto.  "When we look back at this attempt to end the death tax we truly see a missed opportunity that could have freed millions of family-run small businesses - including many independent insurance agencies - from the shackles of this grossly unfair levy," says IIAA EVP Robert A. Rusbuldt. 

Election Day Not Far Away!
The 2000 Elections on November 7th are only 51 days away!  Please mark your calendars now and speak to your employees about the importance of voting.  Also, please remember the importance of allowing time off for your employees to vote. If you're not already registered to vote, it's not too late!  Just call your probate judge's office to get a registration form mailed to you. 

Small Businesses Seeking Insurance on the Web Look to Agents
According to a study by IVANS, an e-business integrator for the insurance industry, more that half (51%) of those looking for business insurance said they were interested in researching business insurance online, but most still rely on agents to inform them of their options.  The role of the agent becomes increasingly important in guiding small business owners through online transactions and extending the trust of traditional agent/customer relationship to the Web.  As the fastest growing part of the US economy, and one that is becoming increasingly connected to the Internet, small business owners represent an untapped market for online business insurance.  Small business owners said they would like their agents to move to the Web where both agent and customers could access information more easily 24 hours a day, seven days a week.  Agents need to develop an Internet presence now to meet the growing demand of this untapped market. 

Reliance Enters Agreement With Pennsylvania Regulators
Reliance Insurance Company, a subsidiary of  Reliance Group Holdings, announced last week that it has entered into an agreement with the Pennsylvania Insurance Department to have it’s transactions reviewed by the Insurance Department.  Under the terms of the agreement, Reliance Insurance is to file reports with the Insurance Department detailing its business plan, financial information and proposed material transactions.  Additionally, Reliance must seek review and/or approval from the Insurance Department prior to engaging in certain financial transactions, including the payment of dividends.  A copy of the agreement has been filed with the SEC.  George Baker, CEO of Reliance Group Holdings, said, “This agreement is consistent with the dialogue we have been having with the Pennsylvania Department of Insurance. As this agreement shows, we intend to cooperate with insurance regulators in Pennsylvania and elsewhere as we work with our creditors to develop a financial restructuring plan.”

Comprehensive CAT Insurance Comes to Alabama
Catastrophe insurance specialists International Catastrophe Insurance Managers, LLC (ICAT) this week announced its entry into the Alabama market.  The company provides comprehensive windstorm insurance to businesses operating in coastal areas that often lack adequate insurance protection.  Due to the restriction and elimination of much of the windstorm coverage by many insurance carriers, companies have been forced to rely on state windpools.  This residual market coverage has left many losses uncovered or forced companies to purchase coverage from a non-admitted market.  “By contrast,” says Jack Graham, CEO of ICAT, “our coverage is provided through an admitted ‘A” rated carrier and provides all of the essential insurance protections that help businesses open their doors after a hurricane.”  For more information on this program, contact Ron Scott at AIIA (205) 326-4129.

Texas Agent Earns $12,500 in Minutes!
A Dallas, TX insurance agent referred a customer to the IIA of Texas’s Premium Finance broker for help in financing rock hauling equipment.  The customer’s current lender was unable to extend the client further credit, while the IIAT’s Premium Finance broker was able to arrange equipment financing in the amount of $2.5 million dollars.  For that one referral, the agent earned a $12,500 referral fee.

AIIA’s Independent Finance can do that for you!  They can arrange similar equipment financing packages in addition to financing for real estate, computer hardware and software and accounts receivable factoring for businesses all across Alabama.  While providing a financial solution for your business clients, you can also earn substantial monetary rewards for your referrals.  Contact Ron Riggins with Independent Finance for more details at AIIA (205) 326-4129.

GEICO Settles Ohio Dispute
The Ohio Insurance Department filed charges against GEICO alleging that the company was in violation of numerous Ohio consumer protection laws.  GEICO has settled the dispute admitting it allowed unlicensed agents in the state to give rate and coverage information.  The company agreed to pay a $20,000 fine and to come into compliance with Ohio laws on agent licensing.  In addition, GEICO agreed to allow the Ohio department to review its operations within three-to-six months to ensure compliance. 

Work Comp Rates Expected to Rise
A new Conning & Company study reports that 90.4% of workers’ compensation insurers surveyed believed that the industry will see increased premium rates, suggesting that the era of price competition is ending.  Of this group, 32% believed that rate increases in the coming year would surge by as much as 20%.

Rates Continue Upward
The Council of Insurance Agents and Brokers reported recently that commercial property-casualty rates continued to spiral upwards across the country.  Through its quarterly Market Index Survey, The Council reports that property-casualty rates for small, medium and large commercial lines all continued to rise through June 30, 2000.  Including results from July 1 policy renewals, the data show rate increases for four of the five commercial P&C lines including commercial auto, workers’ compensation, property, and general liability.  Of all P&C lines, only umbrella coverage remained fairly constant for the quarter, although it too showed a slight upward trend.

Political Panel To Highlight Big “I” Convention
A free-ranging political discussion led by IIAA CEO Paul Equale and EVP Bob Rusbuldt will be one of the highlights of the 105th Annual Convention in Orlando.  The political roundtable at the opening General Session October 30 will feature Republican commentator Laura Ingraham and former Clinton White House Press Secretary Mike McCurry and will include a look at the presidential and congressional elections. Business visionary Tom Peters will discuss business trends, e-commerce and innovative marketing during his motivational session on October 31.  Registration forms, the convention schedule, and hotel registration forms are available at www.independentagent.com or call Fax-on-Demand at (800) 296-0578 and select option 2501.  For more information, call the Convention Department at (800) 221-7917.

Small & Rural Agents Conference Around the Corner
The AIIA Small & Rural Agents Conference to be held October 18-19 at the Birmingham Marriott on Hwy 280 East is just around the corner.  Be on the lookout for registration forms which should go out in the next week.  For more information, contact Nancy Crowe at AIIA (205) 326-4129.  Call the Marriott at (205) 968-3775 for reservations at $105 for a  single/double room.

InsurBanc Application Complete
InsurBanc’s application for a federal thrift charter was deemed complete by the OTS on August 18, 2000.  This means that the OTS believes that it has sufficient information to act on InsurBanc’s application.  The OTS now will have 60 days in which to act on the application, but may pose additional questions during that period as it drafts its recommendations on the application.  Once InsurBanc is approved, agents will be able to offer their clients savings accounts, CDs, money market accounts, checking accounts, auto loans and  leases, home equity loans, mortgages and credit card services.

CPCU Class Scheduled
A Class for CPCU 9 Economics, sponsored by the North AL Chapter, CPCU Society will be held Tuesdays 5-7 pm starting September 12, 2000 in Birmingham at State Farm on 100 State Farm Parkway.  The cost for the course is $125 which does not cover the textbooks and exam registration.  For more information and to register, contact Mary Henderson, CPCU, CIC, API at (205) 970-7191.

Employment Opportunities
Birmingham General Agency has the following positions available:  Please fax resumes to Dennis Dunne at (205) 824-2838.
Two entry level personal lines underwriters, preferably with some experience handling Non-Standard Auto.
One entry level commercial lines underwriter, preferably with some experience handling Commercial Auto.
One marketing, field rep preferably with at least one year experience in Alabama. 

September Educational Opportunities 
We will be offering CISR Personal Residential in five locations throughout the month of September. This class is approved for 8 hours of CE credit. For additional information you may visit our website at www.aiia.org or call our office. Personal Lines and Life & Health are the two remaining CIC’s in Birmingham this year. Space is limited so sign up today on www.aiia.org or by calling (205) 326-4129!

Football Handbooks Great Tool for Marketing
The 2000 Alabama Football Handbook, specially produced for AIIA members, is an excellent way to market yourself and the independent agency system to your clients and prospects.  The full-color, 4" X 5" handbook fits into any shirt pocket and includes schedules from all of Alabama’s twelve college football programs.  This publication features the BIG I logo prominently, as well as promotional ads for the Independent Agency System.  In addition, each handbook can be personalized with your own agency information including name, address, phone, fax, etc.  The handbook is a great gift for your clients!  Complete the form below to place your order today!