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                                                Big “I” Association News

On the Hill
Big “I” Disappointed with House Democratic Health Care Bill
Bill includes “public option" and adds billions of dollars in tax burdens to small businesses.

Higher taxes and an employer mandate: those are two of the possible consequences small businesses might face if the Democratic health care reform bill passed by the U.S. House of Representatives late Saturday night becomes law.

Just one week prior to the floor vote, the House Democratic leadership unveiled a 1,990-page bill that was touted as the byproduct of months of negotiations between House Democratic leadership and members of the moderate and more liberal factions of their caucus, yet the revised bill closely resembled the original bill. After numerous hearings, votes and debate in three House committees, the bill that passed on Saturday did not include many of the hundreds of changes made during the process, and includes a government-run health insurance plan (“public option”) and more taxes.

The Big “I” believes the public option will unfairly compete with the private insurance marketplace, limit consumer choice and increase the taxpayer burden. The association points to the current government-run health insurance plans as ample evidence that the federal government sets its own rules and there is nothing fair or level about them.

To finance the government-run health insurance plan, a 5.4% surtax would be imposed on successful small businesses that file as individuals. The legislation will also force small employers with more than $500,000 in payroll to offer their employees health insurance and subsidize their premiums, at a 72.5% subsidy for individual plans and a 65% subsidy for family plans, regardless of businesses’ current plans and without taking into account what they can actually afford. If a small business is unable to afford this new mandate, it will be subject to an 8% payroll tax. The Big “I” believes that the tax increases coupled with the unreasonable employer mandate will put many small businesses in the uncomfortable position of choosing job cuts, employee pay cuts or shutting their doors.

The legislation also creates a new government program in the form of a Small Business Administration grant program that would award federal money to non-profits for the purpose of providing small businesses with fewer than 100 employees assistance with consumer information, outreach, counseling and enrollment. The Big “I” believes that small businesses seeking information on what health insurance plan best fits their needs should be able to count on sound advice from a licensed health insurance agent, broker or consultant. The bill would allow non-profits that may not have relevant health care background or training to provide this service.

The health care debate now shifts to the Senate where Sen. Majority Leader Harry Reid (D-Nev.) has indicated that floor debate may start as early as next week. After the Senate vote, expected to take place just before Christmas, the Senate and House will need to move to conference and reach a compromise on their bills. Over the course of this debate, the Big “I” will continue to urge Congress to consider the impact health reform legislation will have on consumers and small businesses, and will call upon the membership to participate in grassroots efforts.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.

P-C Trends
Consumers Don’t Connect Coverage Discounts
Study finds 53 million U.S. households are unaware or not using available discounts on homeowners and auto insurance.

Your personal lines customer has home and auto coverage with the same carrier, is a safe driver and has been claims-free for 10 years. Do they know how much money they’re saving in coverage discounts? Maybe not.

As millions of Americans look for ways to stretch their budgets in tough economic times, too many are not utilizing all of the discounts that may be available to them in their homeowner and auto insurance, according to a new national survey conducted for Trusted Choice^® and the Big “I”.

The survey asked home and auto owners if they believed they are taking full advantage of all the discounts they qualified for on their homeowners and auto insurance policies.  More than 34% of respondents, representing 53 million households, admitted they are probably not taking advantage of all homeowners insurance discounts or said that they simply didn’t know. Regarding auto coverage, more than 20% of car owners either didn’t know or said they were not maximizing all the car insurance discounts available to them.

And those who stand to benefit most from the discounts are often those who aren’t taking advantage of them: nearly 38% of respondents with a household income of less than $25,000 said they weren’t taking advantage of all possible homeowners discounts or said they didn’t know.

The survey also found that the largest percentage of respondents, about 26%, estimated they save 6-10% on their insurance premiums by using discounts. In reality, many consumers could be saving significantly more — as much as 30%. 

To help educate consumers on possible savings, click here for customer tip sheets on homeowners, auto and general coverage discounts.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.



P-C Trends
Agents Dominate Workers’ Compensation Marketplace
Majority of small business clients prefer to purchase coverage through an independent agent.

While personal lines customers often turn to the Internet for their insurance needs, small business owners clearly prefer working directly with an agent to purchase workers’ compensation coverage.
 
A recent survey from EMPLOYERS, a specialty provider of workers’ compensation insurance, reveals that 69% of small business owners who have workers’ compensation coverage will purchase it through an agent in the future. In addition, 45% of the 500 small business owners surveyed are combining workers’ compensation with other coverages such as payroll, health care and general liability.

“(Combining coverages) is convenient if you think about all the things a small business owner has to deal with every day,” says Martin Welch, president and chief operating officer of EMPLOYERS. “If you can lump everything into a single transaction, it’s easier and agents have picked up on that.”

Nine percent of the small business owners surveyed said they currently combine workers’ compensation with health coverage for their employees, and 16% said they plan to do so in the future. Twelve percent currently combine payroll with workers’ compensation, while 14% expect to do so at their next renewal. 

For Gail Bortolotti, commercial lines manager at Farrell Backlund Insurance Agency in Taunton, Mass., providing workers’ compensation coverage is just a starting point for addressing all of her small business clients’ insurance needs. Attracting new clients is a highly personal matter–the agency relies on referrals, phone calls and letters to get the word out. The Web site provides generic quotes, but clients call or visit the agency to change or renew policies.

While this personal touch is clearly valued among commercial insureds, EMPLOYERS has identified a gradual shift in how customers plan to service and perhaps even purchase policies in the future. The survey reports that the Internet’s role in workers’ compensation purchases will increase from 11% to 17% in the next 12 months, and many respondents plan to go online for information and quotes at their next renewal.

“Agents have to earn their role (as an advisor) by delivering more and more value,” says Welch. “They can do so with Internet sites of their own to help the insured obtain information.”

One agency has done just that by creating a separate Web site only for workers’ compensation needs. Drew Roberts, an account executive at Black Bear Insurance Agency in Longwood, Fla., says that while agents are still at the heart of selling workers’ compensation coverage at his agency, the Web site simplifies the process by answering customer questions in detail and by allowing quotes to be submitted electronically. Roberts adds that busy small business owners like to be able to read about coverage and complete quote forms “at midnight” if they want to, and he and his fellow agents like the time they save by directing customers to the Web site when questions arise. The agency plans to add a blog section to address even more customer concerns in an online format.

“It’s a way for us to provide general information and an introduction (to workers’ compensation coverage),” Roberts says. “We don’t have to answer questions multiple times and we can answer them more thoroughly by using the Web site.”

Veronica DeVore (veronica.devore@iiaba.net) is Big “I” writer/editor.


On the Hill
P-C Insurers Urge Legislators to Focus Health Care Reforms on Health Care
Health care bill targets p-c insurers, threatening business model and competition.

The Big “I” joined a united group of property-casualty trade associations representing every segment of the p-c insurance industry – primary insurers, agents, brokers and reinsurers – to express strong opposition to provisions included in H.R. 3692, the Affordable Health Care for America Act, as passed by the U.S. House of Representatives on Nov. 7. The p-c trades object to the inclusion of onerous provisions in the bill that go far beyond the issue of health care reform.
 
The bill would repeal the long-standing ban that prevents the Federal Trade Commission (FTC) from conducting burdensome investigations into the insurance market and would permit the FTC to prepare studies and reports on the entire insurance industry.  This would disrupt the industry’s business environment and create substantial legal uncertainty and unnecessary litigation.

“The goal of any health care legislation should be to address issues of health care coverage and affordability,” says the letter. “This purpose is not served by allowing the FTC to encroach on the jurisdiction of the states and conduct duplicative investigations of any insurance company.”

There is also language in the bill that would modify the McCarran-Ferguson Act for health and medical professional liability insurance by broadly applying federal antitrust laws to the “business of health insurance or the business of medical malpractice insurance.” This would fundamentally alter long-standing provisions of the McCarran-Ferguson Act and undo decades of settled case law, thus upsetting McCarran’s careful balance of regulatory and antitrust policy. It would also eliminate pro-competition information resources for insurers and easily compared forms for consumers, making insurance shopping more difficult and expensive.

As the full Senate begins its consideration of health care reform legislation, the Big “I” will work with the p-c industry to keep these misguided provisions out of the Senate bill.
 
Click here to read the full text of the letter.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.


On the Hill
Big “I” Supports Bipartisan Estate Tax Relief Legislation
Estate tax faces uncertainty as year draws to a close.

Last week, the Big “I” joined forces with more than 40 business trade associations as part of the Family Business Estate Tax Coalition on a joint letter expressing support of H.R. 3905, the Estate Tax Relief Act of 2009. The bipartisan bill would increase the estate tax exemption amount to $5 million and would reduce the top rate to 35% by gradually phasing in those new levels over the next 10 years.

The estate tax disproportionately impacts small and family-owned businesses that serve local communities and fuel our economy. Without permanent relief, family-owned small businesses are unable to plan ahead and make important business decisions. Many of these businesses are asset-rich yet lack the liquidity to pay estate taxes when an owner passes away.

The estate tax currently has a top rate of 45% with a $3.5 million exemption for individual filers and a $7 million exemption for dual filers. The estate tax is scheduled to be repealed in 2010 and return in full force in 2011 with a 55% top rate and a $1 million exemption.

Over the past year, the Big “I” has urged Congress to significantly reform the estate tax to encourage investment and growth in small business. Such reform could come in the form of a decrease in the estate tax rate and/or an increase in the exemption amount.

There is evidence that the estate tax hinders the perpetuation of family-owned businesses because survivors are often forced to sell the business to pay the taxes. 

To view the full text of the letter, please click here. 

Joe Wall (joe.wall@iiaba.net) is Big “I” senior director of federal government relations.