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The Ohio Department of Insurance recently released data showing estimated rate changes for the top 10 homeowners and auto insurers in 2018. The data shows that Ohio continues its trend of having some of the best rates in country, with homeowners rates continuing to remain stable and auto rates continuing to increase, but only slightly.
Homeowners Rates Continue to Remain Stable
Recently released data from the Ohio Department of Insurance shows that estimated rate changes among the top 10 homeowners insurers for 2018 ranged from -3.4 percent to 5.2 percent. When averaged, the overall rate changes were negligible as they averaged zero percent.
Of the ten insurers that make up close to 75 percent of the market in Ohio, two insurers decreased rates, one kept rates flat, and seven increased rates. Of the insurers that increased rates, five took larger rate increases in 2018 than in 2017, with the exception of Nationwide and Grange Insurance.
The largest rate reduction was a 3.4 percent decrease by State Farm. The largest increase of all 10 insurers was a 5.2 percent increase by Cincinnati Insurance Company.
Ohio continues to boast the ninth lowest homeowner's rates in the country, with an average annual premium of $850.
Auto Rates Continue to Increase, But Only slightly
It is estimated that the ten largest auto insurers increased their rates an average of 0.5 percent in 2018 – a lower average increase than the average rate change of 3.9 percent in 2017.
Rate changes in 2018 ranged from a rate reduction of 4.8 percent by State Farm to an increase by Nationwide of 9 percent. Of the 10 insurers that make up 77.5 percent of the market in Ohio, two insurers decreased rates, two kept rates flat, and six increased rates. Notably, only four of the 10 auto insurers took bigger rate increases in 2018 than they did in 2017.
Ohio’s auto insurance premiums average $727, which is the 14th lowest in the country.
Ohio’s combined average premiums for home and auto are $551 below the national averages.
Remind your clients that Ohio has a long history of enjoying some of the best rates in the country and continues to do so as a result of our competitive insurance marketplace which only exists because of our stable regulatory, legislative and judicial environments.
Also see: Insurers put brakes on rising auto rates in Ohio last year
Distracted Driving is Enemy No. 1 for Stable Personal Auto Rates
The Ohio BWC is continuing their trend of lowering workers’ compensation costs for Ohio’s private employers. In July, a 20 percent cut for private employers took effect and this will be followed by another $1.5 billion of the agency’s revenues being given back to Ohio employers covered by the BWC system.
The latest rate cut, which will save Ohio’s private employers more than $200 million, is the largest rate cut in nearly 60 years.
The $1.5 billion dividend equals 88 percent of the premiums employers paid for the policy year that ended June 30, 2018 (calendar year 2017 for public employers). While the bulk would go to private companies, an estimated $114 million would go to counties, cities, townships and other local government entities. Nearly $50 million would go to public school districts.
BWC will begin sending dividend checks to employers in late September.
This dividend marks the fifth time since 2013 the agency has returned at least $1 billion to employers following strong investment returns, falling injury claims and other operational efficiencies.
Employers are free to spend the funds as they wish, but BWC Administrator/CEO Stephanie McCloud urges businesses to invest in workplace safety.
In total, BWC has saved employers nearly $10 billion in workers’ comp costs through dividends, credits, rate reductions and greater efficiencies since 2011.
Overall, the average rate levels for the 242,000 Ohio employers in the BWC system are at their lowest in at least 40 years.
The Ohio Department of Insurance (ODI) recently issued Bulletin 2019-05 which provides guidance to insurance agents who wish to give promotional or advertising items to potential insureds or insureds in exchange for the opportunity to market insurance products. This bulletin supersedes, replaces and rescinds Bulletin 2009-13 which was issued in 2009 by then ODI Superintendent Mary Jo Hudson.
While the content of the updated bulletin is relatively the same as it had been in past years which generally provides that ODI does not interpret the offering of promotional and advertising items, or meals to be an unfair inducement provided the item does not exceed $50 and is not tied to the purchase of an insurance product, it does provide significant clarification for agents who want to hold contests, raffles and drawings.
The updated bulletin contains language to address contests, raffles and drawings that involve a prize in excess of $50. The bulletin clarifies that as long as the raffle or drawing is open to the general public where all participants are given a free chance to win, so long as it is not tied to the sale or solicitation of insurance and no purchase or renewal of insurance is required to enter, win, or claim the prize, it is not considered an unlawful solicitation or promotion even if the gift exceeds $50 in value. Bottomline: you can hold a contest, raffle or drawing with a prize that is worth more than $50 as long as it is open to everyone and participation is not contingent on the person obtaining a quote or purchasing or renewing a policy.
OIA routinely receives questions about rebating and inducements. If you have questions, contact Carolyn Mangas at firstname.lastname@example.org.
The Ohio Insurance Agents Association, Inc. (OIA) provides this information with the express understanding that 1) no attorney-client relationship exists, 2) neither OIA nor its attorneys are engaged in providing legal advice and 3) that the information is of a general character. You should not rely on this information when dealing with personal or professional legal matters; rather, seek legal advice from retained legal counsel.
The program that has been administered by the Ohio Bureau of Motor Vehicles (BMV) since 1998 to randomly check to ensure that Ohioans are complying with the state’s financial responsibility laws has ended. Effective July 3, 2019, the BMV will no longer require proof of financial responsibility through a random selection verification process.
Earlier this year, language to eliminate the program was inserted by the Senate Transportation Committee to the state transportation budget to eliminate the verification program. This program had been a target for elimination by some legislators for years as it became increasingly ineffective at catching uninsured drivers, and thus was viewed by some as burdening responsible drivers who comply with the law.
OIA is the only organization that weighed in on the elimination of this program. In our testimony, we emphasized that the last Financial Responsibility Study Committee Report issued in 2014 recommended REPLACING the BMV’s random selection program – not simply eliminating it. Furthermore, we made clear that we do have concerns about not replacing this program with a more robust auto insurance verification system that capitalizes on the technological advances that have become available in the last several years. To date, an effort to do so has yet to get underway, yet more than half of the states have passed laws and begun to develop and implement online auto insurance verification systems to identify uninsured motorists.
WHAT CHECKS REMAIN?
With the elimination of this program, the checks that remain for financial responsibility include traffic stops and individuals affirming that they have proper financial responsibility when they apply for a permit/license or they register a vehicle.
IMPACT ON YOUR CLIENTS
According to the BMV, Ohioans with random selection suspensions prior to July 3, 2019, will still be required to provide proof of insurance or comply with the reinstatement requirements. In order to cancel a random selection suspension, the individual must provide proof of liability insurance coverage listing the selected vehicle in effect for the requested verification date. The individual may submit a copy of his or her automobile insurance policy declarations page, insurance identification card or a letter on insurance company letterhead and signed by the agent indicating liability insurance was in effect.
QUESTIONS OR COMMENTS?
Contact Carolyn Mangas, OIA’s Government Affairs Manager, at email@example.com.
Also see: Ohio BMV’s Financial Responsibility Random Verification Program Eliminated
OIA’s Advocacy Day
In June, OIA leaders and members of OIA’s Advocacy and Political Committee from around the state met with Ohio policymakers to advocate on issues that affect their clients and shared the importance of their role as trusted insurance advisors to individuals and business owners.
OIA members shared their perspective on several issues, including advocating against the proposed tax increase that the Ohio House inserted into the state budget that would have a negative impact on many OIA members and their clients. Currently, Ohio has a Business Income Deduction (BID) in place that allows pass-through entities to deduct up to $250,000 of their business income from Ohio income tax liability. Additionally, a flat three percent tax on all business income above the $250,000 exists. In an unexpected move, the Ohio House has proposed that the BID be reduced from $250,000 to $100,000 and that the three percent flat tax rate be eliminated altogether. Further complicating matters, the House has proposed making these changes retroactive to Jan. 1, 2019, potentially subjecting taxpayers to fines and penalties on estimated payments they have already made.
OIA Members also lobbied for support of forthcoming legislation that will be introduced by Senate Majority Whip Jay Hottinger to make changes to Ohio law to regulate residential roofing contractors. The intent of the legislation is to protect consumers from “storm scammers” who often fail to complete work and deceive consumers about their need for unnecessary repairs following severe weather events.
Conversations with Ohio’s Leaders
Prior to visits with policymakers, OIA committee members met with the ODI Director Jillian Froment, Chairman of the Senate Insurance Committee Bob Hackett and high-level representatives from the Ohio Bureau of Workers Compensation, including John Logue who serves as Chief of Strategy and Kendra DePaul, manager of the Other States Coverage Program.
To kick off Advocacy Day and thank committee members for their involvement, OIA hosted a reception and dinner with key legislators in the evening on June 18. Legislators in attendance included Sens. Jay Hottinger and Bob Hackett and Reps. Haraz Ghanbari and Tracy Richardson. To conclude the evening, special guest Lt. Gov. Jon Husted discussed how his role as Director of both the Governor’s Office of Workforce Transformation and InnovateOhio will lead the way for better solutions to the state’s greatest challenges. Much like OIA is leveraging data to help independent agents in a number of ways, the state of Ohio also sees the value in capturing and utilizing datapoints to get a more comprehensive view of different issues and better direct resources in problem solving.
OIA’s Advocacy Day was a great opportunity to showcase the thought leaders in Ohio’s insurance community and at the same time advance our advocacy agenda in the Ohio Legislature. OIA greatly appreciates the time and expertise our members offer to support OIA and the independent agent community.
If you are interested in becoming involved in our advocacy efforts, contact Carolyn Mangas at firstname.lastname@example.org.
Advocacy Day was “a great combination of interaction and information with legislators as well as networking with other agents”.
– Andy Stephey CIC, CRM, LUTCF - UIS Insurance & Investments, Tiffin
Big “I” Legislative Conference
In May, OIA’s advocacy team, along with a group of Ohio independent agents, visited with lawmakers in Washington, D.C. during the annual Big “I” Legislative Conference.
A diverse group of Ohio independent agents were in attendance, from young professionals to experienced leaders in the industry, as well as representatives from small and large agencies. Overall, the event brought together more than 1,000 independent agents from across the country to lobby for issues such as crop insurance, state versus federal insurance regulation, health care and cybersecurity.
“I definitely now see our
issues on a larger scale
and the impact we as
agents and OIA can
have on the outcomes,”
shared Kirt Trimble,
CPCU of Trimble Insurance
in Delaware after
attending the conference
Top issues discussed were a long-term reauthorization of a modernized National Flood Insurance Program (NFIP) that would increase take-up rates, both in the NFIP and the private market, and calls on Congress to extend the NFIP before it was set to expire on May 31, 2019. Fortunately, a lapse was averted, and Congress has ultimately extended the program until Sept. 30. Since 2017, the NFIP has seen numerous lapses which have significantly impacted consumers, small businesses and real estate markets in addition to undermining confidence in the program.
In addition to the NFIP, continued tax relief for independent agents was also a key issue. As part of the tax reform package passed in 2017, a significant victory was secured for independent agents when the Treasury Department issued regulations earlier this year that ensured that insurance agents and brokers could take advantage of the 20% deduction for certain small businesses that are sent up as pass-through entities. Notably though, the 20% deduction is currently scheduled to expire at the end of 2025. With this date not far off and Congress oftentimes waiting until the last minute to act, independent agents made a push while on Capitol Hill for members of Congress to support legislation which would make the small business deduction permanent.
After seeing how advocacy works at the federal level by attending the Legislative Conference, Bill Brooker, CPCU of Brooker Insurance Agency in North Royalton, said “I had a very rewarding experience and now feel a strong curiosity towards state level legislative issues.”
Interested in Attending?
If you are innterested in attending the 2020 Big “I” Legislative Conference on May 13-15, contact Carolyn Mangas at Carolyn@ohioinsuranceagents.com.