Florida Association of Insurance Agents

IN THIS ISSUE:

The long awaited condominium "glitch bill" has been signed into law. It is an understatement to say that it's been a long two years for folks who deal with condominium insurance. Back in 2008, House Bill 601 brought us things such as additional named insured, special assessment, HVAC changes, mandatory unit-owner insurance, and more. In the 2009 legislative session, Senate Bill 714 was passed by both houses and had that bill not been vetoed by the governor, many of the problem areas associated with the 2008 legislation would have been resolved.

This year, Senate Bill 1196 was passed, sent to the governor, and signed into law with an effective date of July 1, 2010. Our Education Library has a new article summarizing the changes resulting from the bill. Titled, "Condominium Changes for 2010," the article is available by clicking here. Additionally, I'll be teaching a two-hour webinar titled, "CCC – Condo Changes and Confusion" and this class will deal with the changes under Senate Bill 1196, as well as many of the ever-problematic issues like drywall, adequate insurance, the fidelity bond, condominiums vs. cooperative associations, flood insurance issues, and more. Class dates are June 15, June 18, July 1, and July 15. You can register by clicking here for our Events page.

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Agency principals and managers now have a new tool at their disposal when it comes to providing agency employees with solid P&C training and CE at the same time: the INS (Program in General Insurance) certification, offered by the American Institute for CPCU/IIA.

While anyone in the agency can take the course work, the INS certification is recommended for those who have been licensed for five years or less. Less technical in nature than the AAI designation, INS provides ideal training for those who want to obtain more substantial insurance education than found in pre-licensing courses. The courses cover insurance principles, practices, and policies in depth.

FAIA offers the courses in live classroom format only. Most classes are one day in length and are offered in four cities around Florida. Successful completion of an exam following each segment earns the INS certification. The following courses are required:

1. INS 21 (A, B, C)—Property and Liability Insurance Principles: What Insurance Is, Who Provides Insurance, How Insurance Is Regulated, Measuring the Financial Performance of Insurers, Marketing, Underwriting, Claims, Insurance Contracts, Property Loss Exposures and Policy Provisions, Liability Loss Exposures and Policy Provisions, and Risk Management. The course is divided into three segments taught over 1.5 days total.
   
   
2. INS 22 (A, B, C)—Personal Insurance: Insurance and Society, Personal Auto Policy, Homeowners Insurance, Other Residential Insurance, Other Personal Property and Liability Insurance, Personal Loss Exposures and Financial Planning, Life Insurance, and Health and Disability Insurance. The course is divided into three segments with one full day per section (A, B, C).
   
   
3. INS 23—Commercial Insurance: Commercial Property, Business Income, Commercial Crime, Equipment Breakdown, Inland and Ocean Marine, Commercial General Liability, Commercial Auto, Businessowners, Farm, Workers' Compensation and Employers Liability, and Miscellaneous Coverages. The course is divided into three segments with one full day per section (A, B, C).

For complete information on the INS certification, click here.

For class dates and locations, or to register, click here.

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On June 1, Governor Crist signed HB 965, which, in part, provides for the reassessment of a single family residential property's value if it "needs remediation to bring that property up to current building standards." An adjustment to the home's appraised value is permitted by taking into account the impact of drywall with elevated sulfur levels resulting in corrosion of metals.

Interestingly, the newly created statute (§193.1552, F.S.) expands affected drywall (i.e. drywall with elevated sulfur levels causing corrosion of metals) to include not only imported, but domestic drywall, too.

The new law applies only to:

1. Imported or domestic drywall used in the construction of the property or its improvement;
   
   
2. Imported or domestic drywall with a significant negative impact on the just value of the property or improvement; and,
   
3. The purchaser was unaware of the imported or domestic drywall at the time of purchase.

Upon substantial completion of remediation or repair of the property (it does not apply to commercial residential or commercial property), a reassessment shall be performed as if there were no adverse drywall present.

This provision sunsets July 1, 2017, unless reenacted.

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Management help, including sample job descriptions, training manuals, office organization, and hiring practices, is available on FAIA's website. Just click on the "Ops in a Box" logo on the left. While you're there, check out all the topics and learn how to run your agency better! This section is frequently updated as we discover new and better information. Remember, you'll need to log in; this valuable resource is for FAIA members only!

FAIA members now have access to an easy-to-use chart outlining each state's requirements for registering an out-of-state for-profit corporation or business.

The chart, prepared by the Independent Insurance Agents of Maryland (IIAM), provides what specifically is required of a business entity that wishes to register in each state, fees for incorporation as a foreign entity, registered agent required (if any), non-resident agent license (individual), non-resident license required (entity), and contact information. The chart also contains Internet links and contact information for the appropriate registration agencies.

IIAM prepared the chart in response to complaints from several agents and agencies that are being fined because they haven't maintained a certificate of authority in a certain state where they do business.

Disclaimer: FAIA did not verify all of the information contained in the chart; it may contain some minor errors.

The chart is located in the FAIA Education Library, under "Miscellaneous." Click here to view chart.

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Since hurricane season is upon us, I want to remind everyone of FAIA's Disaster Command Post (DCP). The DCP is located on FAIA's website and it is filled with everything you need to prepare your agency and your clients for the upcoming hurricane season. Some of the information that is included on the DCP is:

• After A Loss
  
  
• Agency Disaster Planning Key Considerations
  
  
• Hurricane Coverage Fast Facts
  
  
• Consumer Info
  
  
• Weather-Related Websites

It really is worth your time to review the site. The Disaster Command Post has a letter you can use to send to all your clients telling them about the upcoming season and how to be prepared in case a hurricane hits your area. Use the link to access the Hurricane letter.

If you are interested in joining the Catastrophe Task Force or becoming a volunteer, just drop me an email at jodom@faia.com.

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My will directs the following to appear on my tombstone, hopefully not any time soon: "David Thompson, avid runner, BBQ connoisseur, always stack UM even on a single-car policy."

That proves it folks; I am crazy! First off, what kind of crazy person would think about something like this and who, in their right mind, would stack uninsured motorist coverage on a single-car policy? After all, we all know with just one car, "There is nothing to stack on." Right? (The answer is, "No.")

If you are reading this thinking that I have totally lost my mind, then all I ask of you is one hour of your time. I am rolling out a new one-hour webinar titled, "Uninsured Motorist—Why Stack On One Car?" The initial dates are July 9, July 19, and July 28. I will, however, teach this class at least every other month until the e-mails and calls stop coming in! You can sign up for the class by visiting our "Events" page or clicking here to go directly to the Events page.

If you'll give me an hour of your time, I promise that if you don't understand the benefits of stacking UM on a single-car policy by the time the class is over, I'll buy your lunch at Sonny's the next time I am in your city.

Fair warning: this is an extremely fast-paced class and in an hour there will be 21 times when I ask you to respond to a question. So kill the e-mail, close the door, buckle up, and get ready to rock and roll!

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Citizens held several meetings on May 26 and 27 in Ft. Lauderdale.

On Wednesday, May 26, the Audit Committee noted during their meeting that the year-end audit by Carr, Riggs & Ingram has been completed and no management comments were outlined. Citizens did experience a slight increase in gross premiums through the first quarter of 2010 due to the glide path being implemented. The committee heard reports from staff related to the loss ratio increases in the PLA account due to frequency and severity, in the CLA account due to sinkhole losses, and in the HRA account due to conversion of many wind-only policies to multi-peril policies. As discussed in the past, non-cat losses are driving increased loss ratios for Citizens related to theft, fire, water, and sinkhole losses. Sinkhole claims are on the rise in the CLA and we learned that Citizens sets reserves for these claims at maximum limits when the claim is set up.

The Finance and Investment Committee reported that the bond offering has been completed with $2.4 billion in bonds being sold for pre-event liquidity purposes.

The Market Accountability Advisory Committee (MAAC) received updates from Citizens' staff related to an uptick in new business submissions due to current market conditions, legislation, and the inspection project. This committee also discussed the new agent appointment agreement.

Citizens experienced an increase in new business submissions in April. Of the 43,000 applications, 17,000 of those submissions used the new expedited procedures for agents designed to transition the business back into Citizens. Citizens' staff feels they will continue to see a flow of business into Citizens based on current market conditions and carriers like State Farm and Nationwide reducing their book of business. Citizens' staff will continue to monitor submissions and work flow, but feel they have staff to deal with the influx of new business.

Staff updated the committee on the legislative session with the many changes in SB 2044, but more specifically on how Citizens is impacted. One change would rename the High Risk Account to Coastal Account due to bond holders misunderstanding the name. The legislation also delays the HRA, now Coastal, boundaries to be reviewed and revised until December 1, 2012. Senate Bill 2044 exempts Citizens from the 100-day nonrenewal requirement and reduces it down to 45-day notice like other carriers affected by this bill. There are many other provisions in SB 2044 that affect the marketplace, which we have highlighted in FAIA's Legislative Summary and Roundup classes.

Citizens' reinspection program is still underway and, as many of you know, has received a lot of heat from the press regarding how this contract has been handled. Citizens extended the contract with Inspection Depot for the rest of 2010 and more inspections are being ordered in order to complete several thousand inspections a month. There is pending litigation against Citizens and Inspection Depot as the inspection program works its way through the bid process to be completed in the next few months. The 50 or so commercial residential policies that have been re-inspected represent over 250 buildings reviewed for wind mitigation features.

As many of you know, we have written and talked about the new Citizens Agent Appointment Agreement that is under review for changes. FAIA has had many discussions and meetings about the new agreement, as well as discussing it at the Citizens roundtable and this committee meeting. The agreement is now at a stage where Citizens is drafting another version based on comments from many groups so it can seek board approval in August with implementation scheduled for Jan. 1, 2011. The MAAC gained consensus from Citizens' staff that the new agreement, along with all supporting documents referenced in the new agreement, will be available for review by July 2010, at least 30 days prior to the next board meeting. The committee will conduct a teleconference to discuss the new agreement in order to solicit additional comments for Citizens' staff and to address any necessary changes.

The Citizens' Board of Governors meeting was held on May 27. We'll not rehash the committee reports, but just give some highlights from the board meeting. During Scott Wallace's report, the president of Citizens advised of some senior management changes, namely elevating Yong Gilroy (former VP of Claims) to chief insurance officer and Lance Malcolm to VP of Claims. Paul Palumbo will remain senior vice president of Underwriting and will now report to Yong instead of Susanne Murphy. Scott's report outlined a 30 percent increase in call volume to Citizens and feels that service levels will suffer for a period of time due to this increase.

The board heard a report from Dan Sumner, new general counsel with Citizens, regarding the inspection lawsuit and a chronology of events leading up to the recently amended complaint filed, bringing Inspection Depot into the suit. In addition, we heard John Forney, Citizens' financial adviser with Raymond James, outline his visit to Washington, regarding a national catastrophe program to assist in the event of a disaster. Representative Klein and Sen. Nelson have legislation moving through Congress to try and address this issue; once we learn more about this program, we will update agents with that information.

The next meetings are scheduled for August 25–26 in Orlando with a teleconference of the board set for July 26, 2010.

We will continue to monitor the marketplace, but, as you can see from the numbers represented above, Citizens will be the go to carrier for many agents to provide coverage for their clients.

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by Melissa Champany, CCSR, API

We YACs have quite a lot going on right now! How many different activities are you involved in? Will we see you at FAIA's Convention and have you signed up to help out at the golf tournament and reception, in the Exhibit Hall, or at Friday's YAC invitation-only luncheon? FAIA's Convention affords YAC members a great opportunity to network with other YAC members and companies that you may not see during the year otherwise. Be sure to thank our many sponsors for their generous contributions for our Convention and other events.

Speaking of sponsors, we owe a great big "THANK YOU" to the Tower Hill Insurance Group and United P&C Insurance for providing additional items to our SmartStart4Kids drive. That kicks off on July 1 and runs through the entire month. Our zone members in Tampa have already jumped the gun on their fellow zones and have requested the Trusted Choice CRV attend their grand finale to pick up their collected items.

Finally, the summer ends with our task force meetings during FAIA's Planning Session. We'll meet in August to discuss our plans for the upcoming year. What activities would you like to see YAC undertake next year? What suggestions do you have for the future of YAC? To participate, register for Planning Session and sign up to participate on a task force. Remember, we also need representatives to serve on all of FAIA's task forces.

Just because the summer ends, doesn't mean the YAC fun is over! We'll continue hosting zone meetings throughout the year. And, in December the newest FFIL class will begin. Florida's Future Insurance Leaders, a biennial program open to all YAC members, is designed to help a select few of Florida's top producers become strong leaders through an immersion program that focuses on education and mentorship. Click here to start the application process today and increase your leadership skills in your agency and in the insurance community for tomorrow.

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There are no enemy lines here you have to worry about. You'll learn from others' ideas throughout FAIA's 106th Anniversary Convention & Education Symposium. You'll gain insights from strategic communication that will help you become more valuable to your agency or company and better prepare you for the future on the insurance battlefield. Here is a preview of one of the many breakout sessions we have planned.

2010 Legislative Roundup with FAIA Instructor Bill Perkins, AAI, FAIA Director of Governmental Affairs and General Counsel Laura Pearce, Esq., and FAIA Director of Political Affairs Kyle Ulrich, CAE. The purpose of this four-hour CE approved class is to provide you with an understanding of the 2010 legislative efforts that impact the Florida insurance industry. Information will be provided to describe what laws were passed, what legislation was defeated, and what the future may hold for upcoming legislative initiatives. Discussions will include how the legislation will affect you, your clients, and your agency.This session has been approved by the DFS for four (4) hours of continuing education credits (intermediate) CE #72425, CE0220 —General Lines (Property & Casualty); Adjuster Law and Policy CE #72426, CE0324.

Please click here to register for the Convention.

Please click here for a complete version of the online Convention brochure.

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DISCLAIMER All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the prior written permission of the Florida Association of Insurance Agents.

NOTE: FAIA is not in the business of giving legal advice. Whenever questions arise, agents are urged to seek the counsel of a competent attorney licensed in Florida and familiar with the Florida Insurance Code.

Please note that all coverage analysis done by FAIA is based on standard ISO forms. Many carriers in Florida file their own forms with the OIR, some of which are derivations of ISO and some that are unique. It is imperative that you carefully read your carriers' forms to make an informed decision about coverage questions.