THURSDAY, AUGUST 12, 2010  

                                                Big “I” Association News





L-H Leads
Many May Outlive Their Retirement Savings
Independent agents should talk to customers now about tax-efficient savings.

Given the recent recession and subsequent economic malaise, there is a common perception that many Americans will not have adequate funds and resources to maintain a reasonable standard of living in retirement. So in light of the current economic news, independent insurance agents would do well to note the results of the 2010 EBRI Retirement Readiness Rating™ from the nonpartisan Employee Benefit Research Institute (EBRI). They released their most recent findings which indicate that well over one-third (41%) of Americans in the lowest preretirement income level will be running short after just 10 years in retirement. In addition, the EBRI Retirement Readiness Rating™ finds that after 20 years of retirement, almost one-third (29% ) of those in the next-to-highest income level will run short of money, as will more than 1 in 10 (13%) of those in the highest-income level.

The risk that someone will outlive their retirement income is known as “longevity risk.” It is not simply a function of the fact that Americans are living longer but also the inability of people to save money to supplement Social Security. It is understandable that the lowest income earners have difficulty accumulating adequate retirement income. That is the chief reason that Social Security benefits are front-loaded—e.g. provide a disproportionately higher benefit level for lower wage earners. However, the table indicates that a significant percentage of middle class and upper middle class Americans will not have adequate funds to sustain 20 years of retirement. This will become an enormous policy issue for the government to wrestle with in coming years. And, it is recognized that Social Security benefits will have to be modified in the coming years to deal with the actuarial and fiscal reality that the current eligibility and benefit levels are unsustainable.





An individual or family is considered to “run short of money” if their aggregate resources in retirement are not sufficient to meet aggregate minimum retirement expenditures—defined as a combination of basic expenses from the Bureau of Labor Statistics’ Consumer Expenditure Survey and some health insurance and out‐of‐pocket health-related expenses, plus expenses from nursing home and home health care expenses, at least until the point they are picked up by Medicaid.

Independent insurance agents should be having conversations with their customers to discuss what steps they are taking and what avenues are available to save in a tax-efficient manner. For many Americans in their fifties and early sixties, their retirement plan was to cash in on the increased value of their homes and take advantage of the twenty five year bull market. Unfortunately, there has not been a meaningful recovery in home values and in the stock market to grow personal balance sheets to a level to provide adequate retirement income for 20 or more years of retirement. This study indicates that Americans will have to work longer, save more and revisit their planned standard of living in retirement.

Dave Evans (dave.evans@iiaba.net) is a certified financial planner and an IA l-h contributing editor.





On the Hill
Big “I” Urges Congress to Repeal 1099 Filing Provision
New health care law requires additional IRS Form 1099 filings.

In the months following passage of the health care overhaul law, the Big “I” and others have deemed many provisions from the 2,000 plus page bill problematic, the latest of which is the new IRS Form 1099 reporting requirement for businesses. This provision is slated to take effect in 2012 and would require all businesses to file a Form 1099 for any business-to-business transaction for goods or services over $600 (cumulative throughout the tax year). Businesses will be forced to track down and record the name, address and taxpayer identification number of each vendor. At the end of the tax year, businesses will have to file a Form 1099 with the IRS and send a copy to each vendor.

The Big “I” and many others in the small business community oppose this mandate citing the massive amounts of resources that will be poured into new record keeping, accounting and compliance procedures. The mountain of paperwork required to comply will divert resources and prevent investment in job growth and business expansion.

The Big “I” recently sent a letter outlining this position to the Chairmen and Ranking Members of the tax-writing committees as well as Congressional leadership asking for repeal of the provision. In addition to its own letter, the Big “I” signed onto similar letters authored by the U.S. Chamber of Commerce and the American Society of Association Executives (ASAE), both of which will be sent out in early September.

The Big “I” letter notes that this provision is unrelated to health care and was added only to partially offset the cost of the bill at large. The additional reporting requirements are aimed at closing the “tax gap,” or the amount of money owed to the federal government but never collected. The Congressional Budget Office (CBO) scored this provision as raising $17 billion for the federal government but many question this prediction since tax evaders will likely continue to be successful. The provision is expected to dramatically increase the cost of doing business for entities of all sizes, especially hitting small businesses hard. Additionally, with the increased costs at the IRS associated with enforcing this mandate, any net revenue collected by the federal government will be negligible.

Bipartisan support recognizing the damage this provision could do to the economy is growing in Washington. Most notably, the Senate has scheduled a vote for Sept. 14 on a clean repeal amendment authored by Sen. Mike Johanns (R-Neb.). This proposal also recently garnered support from across the aisle from Sen. Blanche Lincoln (D-Ark.). If that amendment is voted down, a proposal authored by Sen. Bill Nelson (D- Fla.) will be brought up to modify the 1099 reporting provision by repealing it for businesses with less than 25 employees, and for larger businesses, raising the $600 threshold to $2,000. The Big “I” strongly prefers a full repeal.

Since the House and Senate are both currently in recess until mid-September, nothing more can happen legislatively until they return. However, the Big “I” is working diligently to build support for repeal and will keep members abreast of events as they unfold.

Ryan Young (ryan.young@iiaba.net) is Big “I” senior director of federal government affairs.





On the Hill
FTC Insurance Regulation Bill Introduced in the Senate
Big “I” opposes legislation that would result in duplicative regulation of insurance.

Recently, Senators Mark Pryor (D-Ark.), Jay Rockefeller (D-W.V.) and Barbara Boxer (D-Calif.) introduced S. 3685, the “Insurance Competition and Transparency Act of 2010,” which would allow the Federal Trade Commission (FTC) to oversee and investigate “insurance issuers.” While this appears to be aimed at allowing the federal government to have more control over the health insurance marketplace, it would apply to all insurance companies and consequently have a huge impact on independent insurance agents and brokers across the country. Under this legislation, the FTC would have the authority to conduct investigations and issue reports on the insurance industry without prior congressional approval.

Currently, the FTC possesses no authority over the business of insurance. If enacted into law, this bill would present sweeping changes to the insurance regulatory system providing dual regulation over the business of insurance as the FTC would be granted this authority in addition to that currently possessed by the states. The Big “I” believes that the state-based system has proven to be effective over the years in the important areas of insurer solvency and consumer protection. Adding another layer of federal bureaucracy is not only redundant but overly burdensome to smaller insurance companies and agents and would adversely impact consumers and compromise the effectiveness of the state-based system.

While believing that the state system can be improved via targeted federal legislation, the Big “I” is a staunch supporter of state regulation and opposes any effort to regulate insurance at the federal level. Earlier this year, FTC oversight over insurance surfaced as part of the broader health care reform package. Efforts were also made during the financial services reform debate to allow the newly-created Federal Insurance Office to have broader powers over the insurance industry via mandatory data requests and federal preemption authority. The Big “I” along with other industry groups successfully worked to defeat or drastically improve these provisions.

The Big “I” opposes S. 3685 and will work to ensure that it does not gain traction in the Senate.

Lauren Cialone (lauren.cialone@iiaba.net) is Big “I” senior director of federal government affairs.


Tech Trends
Maximize Your Local Search Results
Think consistency, keywords and content to boost your agency’s presence.

Can consumers easily find your agency when they are shopping for insurance? Last week, IN&V covered the basics of local search—the name used to describe search engine results that show local business listings when a consumer searches for products or services in his or her area. A local search can give your agency excellent visibility at the same moment consumers are looking for a local agent. But how can you maximize your presence now that local search is on your radar screen?

Here are some tips to get the most out of your local listing:

Be consistent: Make sure your agency information appears exactly the same everywhere online. When search engines locate information about your agency, they look for exact matches. By providing consistent information, you can start pushing your agency toward a higher local search rank.

Get verified: As part of the claiming process, you’ll need to verify that you are who you say you are. This verification is different for each search engine, but is typically done by sending a confirmation code via phone or postcard. 

List multiple locations: If your agency has multiple locations, claim a listing for each office.  However, avoid creating duplicate local listings for the same location. Search engines will likely penalize you for doing so.

After you claim your listing, adding more relevant information will likely help your agency move up on the list of local results. Here are some ways to enhance your local listing:

Include keywords: Update your business description and categories to reflect your offerings (i.e., auto insurance, home insurance, business insurance). If you represent carriers with recognizable brands, include carrier-approved keywords (i.e., “Authorized Progressive Agent” is pre-approved for Progressive agent use, and other carriers have similar programs).

Get reviewed: Encourage customers to post reviews of your agency.

Increase exposure: Add your agency to other free online directories, like SuperPages.com, MerchantCircle.com, Localeze.com and your local Chamber of Commerce website. Also consider submitting your agency information to Universal Business Listing, which distributes your agency information to online directories for $30 a year.

Add content: Post additional content like photos and videos to your listing.

Learn from others: Study the listings of high-ranking agencies in your area and adopt their best practices.

Monitor your listings: Assign one person in your agency to monitor listings on a monthly basis.

The local search environment is constantly changing. By acting before your competition, you’ll get the greatest impact and value from your listing. You have nothing to lose—it’s easy, it’s fast and it’s free.

Matthew Marko (matthew_marko@progressive.com)is a marketing process manager for Progressive Insurance. He works to provide local marketing strategies and tools to help independent agencies grow their business and has developed several online marketing webinars for Progressive agents on ForAgentsOnly.com. Marko prepared this article for ACT. This article reflects the views of the author and should not be construed as an official statement by ACT.


Agency Management
Accept Responsibility for Sales Success
In a tough economy, are your agency’s producers playing the role of victim?

What is it that empowers some people to change smoothly and effortlessly, while getting others to modify their behavior seems like moving a mountain? What is the fundamental building block for individuals that, more than anything else, equips them to successfully implement change? It is something that is becoming increasingly rare—a motivating sense of personal responsibility, that one is responsible for one’s own behavior and the consequences.

It seems like common sense, but few people actually exhibit it. It’s far more popular to be a victim. It’s common to see a newspaper account of someone who commits some act of irresponsibility and then successfully sues someone else. In our litigious world, being a victim often pays and that is an unfortunate consequence of an unhealthy belief.

As long as we view ourselves as victims, we’re unable to change ourselves or our circumstances and achieve better results. We tell ourselves that it’s not our fault that we’re not doing better—someone else caused it. And because it’s someone else’s fault, the power to make it better rests with someone else. We’re unable to fix it ourselves.

While few people admit it, or even realize it consciously, this victim attitude—the direct opposite of personal responsibility—is very common and embraced to some degree by most people. This is especially true of sales people, who could always do better if only something were different—something that someone else controls. “If only...we had lower prices...our coverage was better...the boss was more understanding...customer service was more responsive...etc.”

Implementing change in your agency will depend on the depth to which your employees embrace their responsibility to make personal changes. Improving the producer productivity ultimately depends on the degree to which your sales force accepts personal responsibility to make the changes in behavior that will improve their results.

Can you instill a sense of personal responsibility? This is one of those aspects of character that is always easier to hire then to instill. If you hire people who already have a sense of personal responsibility, your job will be much easier.

However, if some of your current employees lack this characteristic, it is not hopeless. By understanding the importance of this quality and regularly making it a part of conversations, you can raise the awareness of this fundamental building block for implementing change. Talk about it, write about it and preach it in agency meetings in the hope that your employees will see the light.

Dave Kahle (www.davekahle.com)is a sales consultant and author. For more information click here. If you do not know your Big “I” website user name and password, e-mail logon@iiaba.net to request your information.