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February 2008 National Association of Professional Insurance Agents

P I A ' s G u i d e t o S u c c e s s f u l P l a n n i n g p a g e 1 2

PIA, Stronger Because of You…PIA Agency Ownership Report...PIA/NCOIL Presidents Address Meetings...OFCAdvocates Head to Europe...A Life-only OFC?...PIA Position Papers...A Very Rewarding Business Credit Card

From the President

2 May 2006www.pianet.com

T he entire country seems to have suddenly discov-ered “change.” That one word has become a kind ofpolitical mantra in this presidential election year.

Change may be a new concept to some, but it is a constant factor in our business.The ability of professional insurance agents to harness and master change in themarketplace is one of our most important competitive advantages. As independentsmall business people, we don’t fear change, we embrace it.

Our ability to adapt to changing conditions in the marketplace while continu-ing to offer our clients the choices in insurance products they need is key to oursuccess. For decades, direct writers and captives have predicted the impendingdownfall of professional independent insurance agents. Such predictions havealways been exercises in wishful thinking on their part. Our competitors havealways salivated at the prospect of taking away our market share. But when it comesto free and open competition, the marketplace decides. Consumers want whatMain Street agents provide.

Sometimes when I’m at our PIA headquarters in Alexandria, Virginia, I look atthe archive of our publications, which goes back to our founding in 1931. Every tenyears or so, some industry “expert” is quoted as predicting the imminent demise ofagents. Of course, it never happens. And, of course, it never will.

But not all change is good. Take, for example, the concerted efforts by some tochange the way our business is conducted.

This is the third year in a row in which big banks, large securities firms and ahandful of multinational insurance companies are trying to get Congress to scrapthe system of state-based insurance regulation that has made our industry prosper-ous for more than a century. They say it’s for the benefit of consumers, but it’s not.It is an attempt to get Congress to legislate a very unlevel playing field that will ben-efit their competitive goals by tilting the field against small and mid-sized domesticinsurance companies and the Main Street insurance agents who represent them.

Our competitors are trying to win in the halls of Congress that which they can-not win in a free, open, competitive marketplace. They want to obtain an unfaircompetitive advantage by getting special interest legislation enacted that benefitsthem and puts Main Street agents at a competitive disadvantage.

That’s why this year’s PIA Federal Legislative Summit is so important. For thethird in a row, PIA members will go to Capitol Hill to tell their Members of Con-gress that we are unalterably opposed to federalizing the regulation of insuranceunder a so-called “optional” federal charter.

Main Street insurance agents are true believers in the American system of freeenterprise — a system where the rules are fair, the playing field is level and whetheryou win or lose depends solely on how well you compete.

Robert PagePresident

PresidentRobert P. Page (LA)[email protected]

President-ElectKenneth R. Auerbach, Esq. (NJ)[email protected]

Vice President/TreasurerJon D. Spalding (MI)[email protected]

Secretary/Assistant TreasurerBrian Marino (FL)[email protected]

Immediate Past PresidentDonna L. Pile, CIC, CPIW (KY)[email protected]

Executive Vice PresidentLen Brevik (PIA National)[email protected]

PIA National Image Committee ChairmanWayne Wehr (HI)[email protected]

Publisher/Editor-in-ChiefTed [email protected]

Managing Editor/AdvertisingAlexi [email protected]

Government/Regulatory AffairsExecutive EditorPatricia A. Borowski, CPIW, [email protected]

Contributing EditorsMike BeckerKellie BrayDavid Eppstein

Production EditorLaurel Prucha [email protected]

PIA Connection is published ten timesyearly by the National Association ofProfessional Insurance Agents.400 North Washington Street,Alexandria, Virginia 22314©2008 All rights reserved.

The information in this publication is gen-eral in nature and is not intended to serveas legal, accounting, financial, insurance,investment advisory or other professionaladvice as to any reader’s particular situa-tion. Users are encouraged to consultwith competent legal, financial, insurance,investment advisory and or other profes-sional advisors concerning specific mat-ters before making any decisions and wedisclaim any responsibility for any deci-sions or actions by readers.

All PIA members receive PIA Connec-tion at the member subscription rate of$12.00 per year.Non-member subscriptions availableat $24.00 per year ppd. For additional information on any of thesubjects addressed in this publication,please access the PIA National websiteat www.pianet.com

By Leonard C. BrevikExecutive Vice President & CEOPIA National

T here’s a lot for you to be proud ofbecause you are a member of PIA.You’re a member of an organiza-

tion that is highly respected in the insur-ance industry. In addition, you are part ofan association that has clout on CapitolHill, with state regulators, in state legisla-tures and in our industry.

Why is PIA so highly respected?Because of our willingness to meet chal-lenges and do the hard work necessary toachieve our goals.

PIA took legal action when the rightof agents to receive contingent commis-sions came under attack. Since then, anumber of court decisions have affirmedthat contingent commissions are legal.

PIA continues to fight the attempts bythose who want to overturn state regula-tion of insurance and create a new federalinsurance bureaucracy. PIA publicly chal-lenged U.S. Treasury Secretary HenryPaulson when his department came outwith a request for comment on its studyof financial regulation that was biasedtoward federal regulation.

PIA is never afraid to fight for ourmembers’ business interests when theyare threatened. We don’t go aroundlooking for fights, but neither do wecompromise when it comes to our coreprinciples.

Our involvement in the effort todefend our state-based system of insur-ance regulation extends far beyondopposing OFC proposals in Congress.We work with state regulators, state legis-lators, the NAIC, NCOIL and otherindustry groups to support efforts tomodernize the state regulatory system atthe state level.

PIA is also engaged in the ongoingefforts to develop a national natural catas-

trophe plan; to ensure continuation andreform of the National Flood InsuranceProgram (NFIP); and to make sure thatcrop insurance legislation does notundercut crop agents.

A Commitment toExcellence

In just over one year since its incep-tion, the PIA Branding Program hasachieved phenomenal growth and successwith over 50 carrier sponsors. PIA mem-bers and affiliates have enthusiasticallyembraced the PIA Branding Program,which has received two highly prestigious

MarCom Awards during its first year. Wewill we soon preview the next phase ofthe program, radio commercials agentscan use.

The Partnership, our agency-carrierinitiative, continues to produce excellenttools for PIA members such as Perpetua-tion Central and Successful Planning.

In the past year, the special PIANational Presidential Task Force onAgency Ownership produced a compre-hensive report on the threats to agents’ownership of their books of business and

what can be done about it.PIA combines strong advocacy with a

commitment to excellence in providingmembers with first rate products andservices.

The new PIA National E&O programfrom CNA and Aon, along with ournewly enhanced E&O program withLloyds of London, provides quality cover-age options for all PIA members andexpands the offerings of PIA affiliates.

The newly-formed PIA NationalYoung Insurance Professionals AdvisoryCouncil is working on getting moreyoung people interested in becomingprofessional insurance agents.

Stronger Than EverOur vision statement declares that PIA

is “The Association that creates unlimitedopportunities for professional insuranceagents.” And our mission statement fur-ther defines our purpose as being, “Topromote, protect and defend the integrityof our members, the value of their profes-sion and the success of their businesses.”

These statements are the guiding prin-ciples for everything we do, every day. Itis what PIA members demand of us. Byremaining true to our vision and mission,we enable our collective success.

PIA is highly respected on CapitolHill, in state capitals, with legislators andregulators, in our local communities andthroughout our industry. This is becauseof the well established reputation of PIAmembers as being dedicated professionalswho are always true to their values, firmin their convictions and unafraid to standup for what they believe.

PIA is stronger than ever, because ofyou.

Leonard C. Brevik [email protected] is Exec-utive Vice President & CEO of PIA National.

Perspective

PIA Is Stronger Than EverBecause of You

February 2008 3www.pianet.com

PIA National’s Vision:The Association that createsunlimited opportunities forprofessional insuranceagents.

PIA National’s Mission:To promote, protect anddefend the integrity of ourmembers, the value of theirprofession and the successof their businesses.

©2007 The Hartford Financial Services Group, Inc., All Rights Reserved

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1

P IA members from around thecountry will convene on CapitolHill in Washington, D.C. on Feb-

ruary 27 and 28, 2008 for their 26thannual Federal Legislative Summit (FLS).

The 2008 PIA Federal LegislativeSummit is a gathering of PIA membersfrom around the nation who spend twodays meeting with their elected represen-tatives to advance the views and legisla-tive priorities of professional independentinsurance agents.

The top priority for PIA members willbe their ongoing efforts to thwartattempts to transfer the regulation andsupervision of insurance from the statesto the federal government. This is thethird year in a row in which the top leg-islative priority of PIA members partici-pating in the FLS is opposition to billscalling for “optional” federal charters forinsurance.

“PIA is adamantly opposed to all pro-posals for federal regulation of insur-ance,” said PIA National PresidentRobert Page. “State oversight of ourindustry has worked well for over a cen-tury. As local Main Street insuranceagents, our members oppose the creationof a big, new federal insurance bureaucra-cy that these proposals require. Webelieve the best regulation is that which isclosest to the people.”

“As everybody knows, turning thingsover to Washington, D.C. just createsmore problems,” Page said.

The Summit begins February 27 withan orientation session followed by an in-depth legislative briefing and Q&A session

conducted by PIA government affairs andcongressional staffers, held at the MarriottCrystal City in Arlington, Virginia, PIA’sheadquarters hotel.

The following morning, February 28,participants will gather for a breakfast pro-gram featuring remarks by PIA leaders.

ABC-TV News Senior CorrespondentClaire Shipman will deliver the keynoteaddress during the PIA Federal Legisla-tive Summit’s kickoff breakfast. Shipman,a top political reporter on ABC’s GoodMorning America and an analyst onABC’s This Week, will offer her perspec-tive on politics in this presidential elec-tion year. She also offers a unique andpersonal perspective on the changingnature of women in politics and in power.Reporting from Baghdad, Beijing andwherever news occurs, Shipman draws onher 15-plus years as a Washington andWhite House reporter for the network aswell as a foreign correspondent coveringthe former Soviet Union in ABC’sMoscow bureau.

PIA members then head over to theHouse and Senate sides of the Hill for afull day of scheduled meetings with law-makers in their offices. At day’s end, areception for all Summit participants willbe followed by the annual fundraisingand awards dinner of the PIA PoliticalAction Committee (PIAPAC).

“The big banks and large securitiesfirms are seeking to transfer insuranceregulation from the states to the federalgovernment for their own economic ben-efit,” said PIA National Executive Vice

President & CEO Len Brevik. “TheMain Street agents of PIA believe thatstate insurance regulation has workedwell and continues to effectively servethe needs of insurance consumers andlocal communities, as it has for morethan a century. PIA agents will bring thismessage directly to their members ofCongress.”

PIA members will also advocate forthe creation of a national natural catastro-phe plan that supports the availability,affordability and stability of propertyinsurance in catastrophe prone areas, aswell as the economic viability of localcommunities.

Improvements and advancements inthe federal flood insurance and cropinsurance programs are also on PIA’s listof legislative priorities for the FederalLegislative Summit. In addition to leg-islative meetings on Capitol Hill, PIAmembers will meet with USDA RiskManagement Agency (RMA) officialson Friday, February 29 to discuss thefederal crop insurance program ingreater detail.


Thank You to the Sponsorsof the 2008 PIA Federal

Legislative Summit

Platinum Level SponsorsThe PIA Partnership

Gold Level SponsorsAmerican Association of Managing

General Agents (AAMGA)

Harleysville Insurance

The Hartford

Silver Level SponsorsMotorists Insurance Group

Travelers

PIA Members Convene on Capitol Hill for FederalLegislative Summit

“PIA is adamantly opposed to allproposals for federal regulationof insurance.”

—PIA National President Robert Page

“The big banks and large securi-ties firms are seeking to transferinsurance regulation from thestates to the federal governmentfor their own economic benefit.”

—PIA National Executive VicePresident & CEO Len Brevik

AmTrust North AmericaAn AmTrust Financial Company

For more information about AmTrust, call 877.528.7878 or visit www.amtrustgroup.com.

By David M. EppsteinDirector, State AffairsPIA National

T he presidents of PIA National andthe National Conference of Insur-ance Legislators (NCOIL) will

address each other’s spring meetings inWashington, D.C.

PIA National President Robert Pagewill participate in an NCOIL panel onMarch 1, and NCOIL President BrianKennedy will address the PIA NationalBoard of Directors on March 2. Bothorganizations are meeting during thesame time period.

“This year, our respective organiza-tions are meeting here in our nation’s cap-ital at the same time,” said Page. “This isespecially appropriate, since bothNCOIL and PIA share a common com-mitment to our state-based insurance reg-ulatory system.”

“PIA is honored to have NCOIL Pres-ident Brian Kennedy as a speaker duringour March 2 National Board of Directorsmeeting,” Page said. “In addition, I ampleased to participate in an NCOIL gen-eral session panel on homeowners insur-ance the day before.”

Page will bring his perspectives oninsuring for natural catastrophes to anNCOIL panel entitled Protecting TheHome: Government Solutions Versus Per-sonal Responsibility.

A Shared CommitmentNCOIL and PIA have a shared belief:

that our state system of insurance super-vision provides the structural platformupon which the most successful insur-ance sector in the world has been built. Itis this system that for over a century hasprovided our industry with the stability,soundness and reliability that has enabledit to protect our citizens, their propertyand their businesses. The insuranceindustry protects our American way of

life by making the success of our econo-my possible.

In 2007, the Professional InsuranceAgents Insurance Foundation (PIA Foun-dation) made a $50,000 donation to theNational Conference of Insurance Legis-lators’ Insurance Legislators’ Foundationin support of NCOIL’s efforts to conductquality research and education of theirstate legislators, who are responsible forinsurance issues in their states.

Released later that year, NCOIL’sStudy on State Authority: Making a Casefor Proper Insurance Oversight took an in-depth, objective look at state insuranceregulation in its current form. It alsoreviewed the legal and statutory authoritybehind primary oversight of insurance,those responsibilities granted and thosepresently undertaken, funding of regula-tory entities, and interaction between theentities within and between states.

“NCOIL would like to express itsappreciation to the PIA Insurance Foun-dation for its sizable contribution to fundthis important study,” said Senator AlanSanborn (MI), then the president of theNCOIL Insurance Legislators Founda-tion. “As staunch supporters of state regu-lation of insurance, both NCOIL andPIA believe this study will yield a com-prehensive blueprint of state insuranceregulation that will serve as an important,authoritative guide for regulators and leg-islators,” Sanborn said.

This year, PIA will work closely withour allies such as NCOIL to advance anationwide system of uniform state basedregulation for insurance. We commendNCOIL for their leadership in opposingfederal interference while also working toimprove the state system. In addition tothis critical issue, we look forward toworking with NCOIL on a comprehen-sive national natural catastrophe plan,increasing affordability and availability ofterrorism insurance, producer licensingreform and several other important issues

facing our industry.PIA has worked with NCOIL on help-

ing the country prepare for natural disas-ters. PIA participated on an NCOILpanel discussion regarding building codesand the need for stronger codes andenforcement. We are pleased thatNCOIL used the information gainedfrom the panel and passed a model build-ing code. In addition to building codes,PIA looks forward to our continued worktogether to address land use and howresponsible building restrictions maygreatly reduce insured losses in the eventof a disaster.

PIA and NCOIL also worked togetherto help get a renewal of TRIA passedthrough Congress. We must now worktogether to do everything we can to max-imize private market participation inoffering terrorism coverage. Innovativenew capital options, such as bonds andinvestment pools, can go a long waytoward alleviating the burden on the fed-eral government.

PIA was pleased to participate on anNCOIL panel to address producer licens-ing uniformity last summer. We appreci-ate the renewed interest in a more uni-form system for obtaining andmaintaining producer licenses.

In addition, NCOIL spoke out againsta bill last year that would have repealedthe insurance industry’s limited antitrustexemption under the McCarran-Ferguson Act.

On several fronts, PIA and NCOILare working together to preserve state reg-ulation of insurance, improve market effi-ciency and protect consumers. We lookforward to a very productive 2008.

David M. Eppstein [email protected] isDirector of State Affairs for PIA National.

Perspective

PIA, NCOIL Presidents AddressEach Other’s D.C. MeetingsGroups Share a Common Commitment to StateInsurance Regulation


Allied HealthA S S O C I A T I O N

By Susan A. Sallada

O ver the past several years, therehas been increasing confusionabout what independent agency

owners actually own. This is the result ofan assault on the definitions of what con-stitutes a book of business. That’s whyPIA National began a public educationeffort that speaks to critical aspects affect-ing the ownership, content and control ofthe independent agency’s core asset —“the book of business” — as well as theother assets of their agency business.

PIA’s effort to educate in this areabegan with the publication of a series ofarticles that explained the issue. Afterthat, in 2005, then-PIA National Presi-dent Ray Peretti appointed a special Pres-idential Task Force on Agency Ownershipto look at the broader issues involved andrecommend additional actions.

The final full report of our Task Forcewas released in September 2007, at whichtime the Task Force was dissolved. Goingforward, the results of our efforts will bereported in more detail in a series ofupcoming articles of PIA Connection. Inaddition, the Task Force’s report will beavailable to all PIA members onwww.PIANET.com. Last, PIA Nationalwill continue to work with PIA affiliatesand members in adding to and refiningthis resource center.

Our FindingsThe Task Force confirmed that PIA

members currently are confronting anincreased number of challenges in thearea of agency ownership rights. In eval-uating these challenges, the Task Forcehas come across market data demonstrat-ing that too many critical groups:

• Are unclear how property lawapplies to, affects, and supportsagency ownership rights.

• Are unable, or sometimes unwill-ing, to form a consensus as to whatconstitutes the entire “expirations”asset that belongs to the independ-ent agency.

• Do not recognize “control” as acritical element of agency owner-ship rights.

Also among the “critical groups” isPIA agency owners themselves. Toooften, independent agencies shy awayfrom or overlook regular, public,assertive, and/or effective demonstrationof their ownership rights. Independentagencies own the expirations not onlybecause the law says so, but also becausethey demonstrate ownership.

The scale, scope and number of chal-lenges that agencies owners face in thisarea will continue to increase in the nearfuture. This creates a potential for mate-rial, adverse effects and interferences withPIA agency ownership rights.

The core nature of these threats hasgreatly changed and now present muchmore complex and sophisticated chal-lenges that are somewhat similar to play-ing a multi-dimensional game of chess.

Because advocacy for and of agency own-ership interests of PIA members continuesto be one of the fundamental stewardshipresponsibilities of the PIA organization, theTask Force looked at a range of potentialactions in formulating its recommendations.

For example, agencies could betterestablish written practices and policiesmaking clear to staff and others as towhat comprises the agency's assets, thescope of ownership and control theagency has over these assets, that theagency will exercise and protect its rightsof ownership and control over theseassets, and that staff and others arerequired and expected to operate withinthese understandings.

To best support independent agencyinterests in this ever evolving and activearea, the PIA organization and PIA mem-bers must share the same knowledge base,legal presentations and goals for out-comes in a coordinated and deliberateeffort to protect PIA members.

Actions Going ForwardMembers of the Task Force believe

that the PIA National President andBoard should decide what course ofaction PIA National will take to furtherdevelop resources to protect our mem-bers’ ownership interests. We present aseries of detailed possible steps in ourreport for consideration.

PIA National should undertake a pub-lic education campaign to reach criticalaudiences (i.e., insurers, wholesalers, reg-ulators, and PIA members), making itclear that PIA National will continue topress for the respect, consideration, value,and protection of these rights of and forPIA members.

Our report provides the basis for a PIANational information series in PIA Con-nection as well as other publications. Italso suggests how PIA National shouldmodify its agency review service, thus pro-viding a more useful final product formembers’ reference. A suggested first-stepimplementation action follows the report.

We would like to thank the membersof the Business Issues Committee, whoprovided key assistance throughout ourwork on this project.

In addition, special recognition is dueto the members of the Task Force: DonFlanders (VT), Jose Ortiz Garcia (PR),Rick Russell (PA-MD-DE) and FredThomas (MT), along with ExecutiveCommittee Liaison Kenneth R. Auer-bach (NJ) and ex-officio committeemember Ray Peretti (WA) — who, dur-ing his term as PIA National President,had the foresight to identify this need andappoint our group. PIA National staffprovided us with valuable assistance.With the publication of our final report,the Task Force was dissolved as of Sep-tember 30, 2007.

Susan A. Sallada, CIC, is a national directorof PIA from Pennsylvania, Maryland andDelaware.

Perspective

Task Force on Agency OwnershipPublishes Report


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A dvocates of federal regulation of insurance are not onlymaking their arguments on Capitol Hill, but they arealso airing their views in Europe.

We receive a newsletter from the International Association forthe Study of Insurance Economics in Geneva, Switzerland. It is ahigh-level academic journal addressing insurance regulation andsupervision. In the December 2007 issue, two articles on thesubject appeared.

One article argued at length for an optional federal charter. Itidentified one supposed “misconception” about an OFC, thatstates would lose premium tax from nationally-chartered insur-ers, saying “There is no precedent for, nor is there any expecta-tion of, exclusion from this state tax obligation.” The article wenton to say that all versions of OFC legislation expressly providefor the continued ability of states to tax national insurers.

One reason PIA is skeptical of such assertions is that last June,as Sen. John Sununu (R-N.H.) prepared to introduce his OFC billagain, a “phantom provision” briefly appeared in a draft of the bill.A widely circulated draft of S. 40, the National Insurance Act,contained a provision for funding a proposed federal insuranceregulator by siphoning off taxes currently collected to fund theexisting state regulatory system. The provision declared stateswould be prohibited from assessing not just premium taxes, butany state taxes on federally chartered insurers unless they creditedthe companies’ state tax liability with amounts equal to the sum ofall fees paid to the federal regulator.

When asked by reporters where the new subsection languagecame from, a staffer for Sununu said it was “sent to us by somefolks.” The staffer added that the provision was stripped out ofthe final bill that was introduced. The mere existence of this leg-islative language and the fact that it appeared in a draft of S. 40makes us suspicious.

Just who are “some folks?” Could they be the same folks whoare saying state premium taxes would not be affected by an“optional” federal charter?

“Connecting the Dots”In another article in the newsletter, David Snyder of the Amer-

ican Insurance Association (AIA) asserts that the National Insur-ance Act is “aimed at…the unique powers of state insurance regu-lators.” Then in the article’s concluding paragraph, we get aglimpse of OFC advocates’ overall strategy, which is to createpressure on several fronts, to 1) enact an OFC; 2) support adop-tion of “principles-based” regulation in New York State; 3) use theTreasury Department’s review of financial regulation to advancefederal insurance regulation; and 4) put concerns for insurance inthe “global economy” on an equal footing with those for thedomestic U.S. insurance marketplace. Here is the excerpt:

“This legislation [National Insurance Act], the con-tinuing Congressional hearings on the U.S. regulatorysystem, some state efforts such as New York’s reviewof financial services regulations, and the Treasury’sregulatory efficiency initiative, are helping to create agrowing awareness of the need for regulatory reformand greater efficiency. The debate cannot but help U.S.

and foreign insurers, as well as their customers.”A theme heard in the arguments of those criticizing state

insurance regulation is that there is just too much regulation,that the states are engaging in unnecessary supervisory activitiesbetter left to the marketplace. This philosophy of “the-market-place-solves-everything,” if taken to its extreme, would encour-age chaos in the insurance marketplace, create legal conflicts thatspark costly litigation and cause confusion for consumers.

Such changes would destabilize the insurance marketplace tothe detriment of domestic American insurance carriers, MainStreet insurance agents and insurance consumers, whose choiceswould be severely limited under such a system. It would also seri-ously destabilize the insurance marketplace at a time when effortsare underway to combat extreme volatility in the world economy.

The fact remains that federal insurance regulation is beingproposed by the “big boys” for their competitive benefit, not forthe benefit of our industry as a whole, their protests to the con-trary notwithstanding. PIA will continue to oppose efforts toundermine state insurance regulation and impose federal insur-ance regulation.

A review of what some advocates of federal insurance regula-tion are saying in the foreign press confirms that with so muchmoney at stake, the effort to undermine our system of stateinsurance regulation is quite sophisticated. It also shows thatsometimes you have to take a step back and “connect the dots” inorder to see the whole picture clearly.

Advocates of OFC Airing Their Views in EuropeA Clearer Picture Emerges by “Connecting the Dots”


P IA members and insurance com-pany representatives workingtogether through “The Partner-

ship” have carefully studied this question.Through discussion and interviews withagencies of various sizes and descriptions,we have come up with some interestinganswers and observations. One thing isclear: While the most successful agencies(regardless of size) vary in their approach-es to success, the element they most com-monly share is having a plan and follow-ing through.

Another important observation aboutplanning is that when asked if they plan,many agencies will answer NO. However,when asked additional questions, theywill often say the following:

• As owners or principals, they dohave goals for their agencies andmethods for reaching those goals.

• They have regular meetings withstaff (whether that is 2 people or 20people) and communicate thosegoals and methods either directly orindirectly.

• They have ways of measuring,tracking and comparing theiragency’s results whether throughtheir management system orthrough their accounting.

• When results are negative, theyunderstand the need to makechanges and adjustments.

• When results are positive theyappreciate the opportunity to buildon these results and achieve evengreater success.

• Based on results they meet with staffto discuss what these results meanand what changes can be made.

What this indicates is that while manyagencies may say they don’t plan, in factthey have all of the elements of planningalready built into the day-to-day manage-ment of their agencies. The opportunityfor these agencies is to build on the waysin which they are already planning as apart of management.

As The Partnership further studiedhow agencies plan, we also interviewedthose who were already actively engaged

in planning. These ranged from simpleplans involving a few annual key goals toagencies which were using more involvedmethods for various reasons. In somecases, agencies were large — with dozensof employees and multiple departmentsor divisions. For them, planning was anecessity to keep everything runningsmoothly. In other cases, agencies hadalready gone through or were anticipatingmajor changes – such as mergers, owner-

12 February 2008www.pianet.com

Planning: How important is it toyou and your agency?

The Practical Guide to Successful Planning is now available to PIA members in "The Partnership" sec-tion of the PIA National website, www.pianet.com.

By Bill JenkinsVice President, Business Development and MarketingPIA National


ship transfers or leadership changes.For agencies already involved in plan-

ning, their questions centered aroundapproaches being used. Could they beimproved or adapted to better meet theirneeds. What are valid planning options?Often a different approach to the agencyoperations or changes in the marketplacecan be exactly what’s needed to furtherenhance success.

The Partnership Goes toFlorida

The importance of planning to anagency was tested during a recent session

held in conjunction with a meeting ofThe Partnership in Tampa Florida. Thisspecial session was put together by thePIA of Florida and involved more than30 agents from across the state. A specialthanks goes to Bob Fowinkle, immediatepast president of the PIA of Florida,Mark O’Connell, Executive Vice Presi-dent of the PIA of Florida, along withMary Frederick and Annette Smith fromthe PIA of Florida office.

Each agent attending this meeting wasgiven an opportunity to express their opin-ions and “cast their vote” on a series ofquestions, which focused on various topics.

In the area of planning, the charts dis-played here show their responses on 2 keyquestions: First, they were asked how theiragency currently plans. As you’ll see inthese charts 35% employ a “seat of thepants” owner driven, or simple approach toplanning. The next most common methodinvolves having one or two general goals.

Next, they were asked how they wouldlike to plan. Looking at the last three barsin the chart, 65% of these agents indicatedthey would prefer either to develop abroader plan, which is implemented,measured and adjusted, employ completestrategic planning or develop a detailedplan which is integrated with carrier plans.

These results not only point to the gapbetween what these agents wanted to doand what they were able to do. They alsopoint to a strong desire to be able to planmore effectively. In fact they indicate adesire to not just plan within their agen-cies — but to be able to coordinate theirplans with the companies they represent.

Guide to SuccessfulPlanning

Successful Planning, produced by ThePartnership, is a new online tool which isdesigned to assist an agency with plan-ning. It is designed to be effective in anyagency, no matter how large or small theagency and no matter how an agency iscurrently planning or would like to plan.

Successful Planning is available to PIAmembers via the PIA National website,www.pianet.com. Simply look for the tablabeled “The Partnership” on the side ofthe page. Since Successful Planning islocated in a section of the website which

0% 5% 10% 15% 20% 25% 30% 35%

How would you LIKE TO PLAN?

Continued on page 14

No Plan

Seat of the pants – owner driven or simple planning

Weekly, monthly or bi-weekly meetings

One or two general goals

Focus on value proposition / culture

Broader plan is developed, implemented, measured and adjusted

Complete strategic planning

Detailed plan – integrated with carrier plans

How do you currently plan?Planning: 0%

0%

8%

0%

35%

8%

27%

27%

0%

19%

15%

31%

8%

12%

4%

8%

can be accessed only by PIA members, youwill need your PIA National member idnumber and password. Your default PIANational member id number can befound on the mailing label of this maga-zine above your name. Your default pass-word is your last name as it appears on themailing label. If you have questions aboutaccessing this “members only” section ofthe PIA website, you will find additionalinstructions on the login page.

Once you access Successful Planning onthe PIA National website, you will find amain menu with five major sections (seescreen shot this page).

The first section “Choosing to Plan”discusses planning in general and providesan overview. It includes information onplanning in general and discusses the ben-efits it can bring to you agency.

In the “How to Plan” section of thewebsite, you choose the method in whichyou currently plan or would like to plan.If this list sounds familiar, that’s becausethese were the choices offered to agentsduring our special session in Tampa. Theirresponse was based on the choices whichare actually offered in the Successful Plan-ning website tool.

Once you have chosen the closestmatch to your individual situation, youare presented with narratives, white papersforms and other resources tailored for usein an agency. That’s because this tool hasbeen designed by agents — for agents!

“Coordinating with Carriers” offerssuggestions and tools to help you workwith your carriers through planning,cooperation and mutual agreement. It canhelp you plan in ways which can help youboth achieve mutual success.

The “resources” section is our library. Ithas reference materials on a variety of top-ics including:

• Simple Planning Processes • Smart Goals • SWOT – (strengths, weaknesses,

opportunities and threats)• Goals for your agency• Your Approach to Planning• Anticipating Change• Vision and Mission Statements• Values and Vision• Your Value Proposition

• Strategic Planning• Strategic Market Planning• Planning Retreats• Balanced Scorecards• Change Management• Operational Flexibility and• Budgeting

In the conclusion section, weask for your input. It’s an opportu-nity to share success stories andoffer your comments and sugges-tions

While successful planning takestime and effort, it can also be animportant investment for you andyour agency — with results that arewell worth the effort. The PIA and“The Partnership” have created thisnew tool to assist you in successfulplanning.

Bill Jenkins [email protected] is VicePresident of Business Developmentand Marketing for PIA National.

Continued from page 13

The Practical Guide to Successful Planning


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Access the Practical Guide to Successful Planning at www.pianet.com/ThePartnership/SuccessfulPlanning/

W e may be getting a very earlysign that our fight against fed-eral regulation of insurance is

beginning to have the desired effect.Recently Rep. Barney Frank, Chair-

man of the House Financial ServicesCommittee, said that his committeecould work on creating a federal regulato-ry option for life insurers before workingon making that option available to prop-erty-casualty insurers. Frank said thatwhile no final decision has been madeabout how the committee will handle theso-called “optional” federal charter issue,proposals to include property-casualtyinsurers in an OFC have proven to bemore controversial than an OFC just forlife insurers.

For years, conventional wisdom in theindustry held that an OFC for insurerscould only be achieved if it were confinedto life insurers. But as the current pushfor an OFC moved into high gear, sup-porters apparently decided to “go forbroke” by including property-casualty intheir proposals.

At various times before this shift instrategy occurred, congressional leaderssuch as Rep. Frank and Rep. Paul Kan-jorski (D-Pa.), chairman of the FinancialServices Committee’s Capital MarketsSubcommittee, had indicated that theonly real chance an OFC proposal hadwas if it applied just to the life sector.

At the time, we were a bit surprisedthat the forces backing an OFC haddecided to ignore the political realitiesand go for an industry-wide OFC. Fortu-nately for the supporters of state insur-ance regulation such as PIA, this strategyappears to have backfired.

Support for OFC ErodingThere were two very strong indica-

tions in the fall of 2007 that the concert-ed push for a comprehensive OFC hadrun up against a wall. Both involved thetop players in the House on this issue,Reps. Frank and Kanjorski.

On October 3, Rep. Kanjorski held ahearing entitled The Need for InsuranceRegulatory Reform. It was during thathearing that supporters of federal insur-

ance regulation heard clear indicationsthat their arguments were failing to per-suade. Kanjorski said that he still hasmixed feelings about the concept of anoptional federal charter and hadn’t madeup his mind.

“I have no battle plan, no axe to grind,and am open to considering all points ofview,” he said. “I may have inclinationstoward pursuing certain reforms, but Ihave made no final decisions about howto implement such reforms and how tobuild a broad consensus that garners thesupport of many, not just a slim majority.”

The Pennsylvania lawmaker then indi-cated he was in no hurry. “The imposi-tion of the federal government in someform into an area traditionally regulatedby the states has enormous implicationsfor insurers, businesses, and consumers.Therefore, we should not rush ourselvesinto considering reform legislation,” Kan-jorski said.

At one point in the hearing Rep. Kan-jorski said, “Perhaps an optional federalcharter for insurance is a solution insearch of a problem.” Consensus aboutthe shape of reform was lacking on thesubcommittee, as well. Kanjorski plans tohold several hearings this year on OFCproposals.

In January, Rep. Frank came out withhis statements indicating an openness toworking on a life-only OFC. This sent astrong signal to not only subcommitteechairman Kanjorski, but told advocatesof an OFC that their ambitious strategyfor an industry-wide charter may have tobe curtailed.

An effective committee chairmanmust always have finely tuned politicalradar, and Chairman Frank certainlydoes. He realizes that the opposition to abroad proposal may be too intense. Oneof the reasons is the effective campaignagainst optional federal charters that hasbeen ongoing by PIA.

“No major change will come in theinsurance laws of this country over theobjections of insurance agents,” declaredRep. Frank during a speech in November.“Insurance agents are the most influentialgroup within the property-casualty

industry…They are not only numerous,but they are an outgoing culture…[they]are extremely active and influential froma political grass-roots standpoint in theircommunities.”

PIA Remains SteadfastThe fight against federal regulation of

insurance is being led by insurance agents— with PIA in the lead, providing firm,vocal, steadfast and, when needed, stri-dent opposition. The result: we havedemonstrated to all concerned that ourindustry is sharply divided on proposalsfor an optional federal charter.

Whether or not committees in theHouse or Senate take up proposals foroptional federal charters that include justlife insurers, or life as well as property-casualty, is immaterial — our oppositionto OFC is resolute.

PIA’s battle against federal insuranceencroachment is far from over, but it isreassuring to know that our efforts todate are starting to have the intendedeffect.

OFC May be Confined to Life Sector, ChairmanFrank SaysIntense Opposition From P/C Sector and Main Street Agents Is Effective


A P I A P o s i t i o n P a p e r — U p d a t e d F e b r u a r y 2 0 0 8

Federal Interference in the State-Based InsuranceRegulatory System

PIA PositionPIA supports the continued regulation of insurance by the states and opposes federal regulation of insurance.

• PIA opposes the National Insurance Act of 2007, S. 40 and H.R. 3200, and all proposals calling for OptionalFederal Charters (OFC) for insurance.

• PIA supports continued modernization of the state-based system of insurance regulation. The state based systemis the most efficient and experienced oversight system. It accommodates needed changes better than any feder-al process.

• PIA supports states achieving modernization goals through an all-states compact, a proven alternative to OFC.

Optional Federal Charters for InsuranceCurrent Situation

Senators Tim Johnson (D-SD) and John Sununu (R-NH) introduced S. 40, the “National Insurance Act of 2007,” onMay 24, 2007. Representatives Melissa Bean (D-IL) and Ed Royce (R-CA) introduced a companion bill, H.R. 3200, in theHouse of Representatives on July 26, 2007. This legislation proposes an Optional Federal Charter for insurance regulation,in addition to creating an Office of National Insurance within the Department of the Treasury, and a Commissioner ofNational Insurance. Hearings are taking place in both the House Financial Services Committee and the Senate BankingCommittee to examine the regulation of insurance and the potential of a so-called optional federal charter. PIA opposes S.40 and H.R. 3200 and will continue to oppose any legislation that transfers regulation of insurance to the federal level.

Requiring an additional set of federal rules and oversight for federally chartered insurance entities would add anotherjurisdiction to the insureds’ insurance coverage. This could result in a consumer having one form of coverage from a state-chartered, state-regulated insurer needing to be coordinated with coverage from a federally-chartered, federally regulatedinsurer in order to have complete coverage and protection against one disaster. Such a requirement is redundant and unnec-essary. PIA continues to support state efforts to streamline, simplify, and modernize insurance regulation.

All States CompactCurrent Situation

The states have long used both formal and informal multi-state compact vehicles to regulate the business of insurance.From this successful basis of experience, states and insurance representatives can work through the National Conference ofInsurance Legislators (NCOIL) and the National Association of Insurance Commissioners (NAIC) to further expand andutilize the interstate compact structure to achieve more open borders, reciprocity based on substantial similar treatments,and implement efficiency in insurance regulation, while preserving and strengthening their strong commitment to consumerprotection. Further, utilization of a coordinated all states umbrella compact through which state-federal insurance issueswould be managed would alleviate any need for direct federal government pre-emption of, or involvement in, insurance reg-ulation. Specific changes of state insurance regulation and oversight per line or area would further be expressed througharea-specific coordinated interstate subcompacts.

PIA fully supports compacts and we are working to address reciprocity, substantially similar treatments, and uniformity(only where required) in areas such as surplus lines and producer licensing. The interstate compact is a proven solution tothe need for modernization of insurance regulation and, in our opinion, a more sensible approach than throwing out the cur-rent system in favor of an untested federal charter.

BackgroundPIA believes that consumers are best served by an insurance system that is regulated by state Departments of Insurance.

These state departments are more knowledgeable about the specific concerns of their state and region. When urgent needs arise,a state regulator is able to respond in a more efficient manner than a federal regulator who may be subject to federal political pres-sures. This helps ensure that consumers, both individuals and businesses continue to have access to a robust insurance market-place to protect them, rather than one that is mired in bureaucratic red tape and leaves them with uninsured exposures.

Additionally, nationally chartered insurers would not be subject to the many consumer protections that have developed overthe years to ensure there is a balance between insurers’ need for profit and solvency and consumers’ right to be treated fairly.These protections have developed at the state level and often differ based upon the unique experiences of a states’ insurance mar-ketplace and the unique characteristics of America’s varying regions.



Natural Disaster LegislationPIA PositionPIA supports a coordinated natural catastrophe program that does not compete with pri-vate sector capacity to provide insurance.

• Natural disasters affect every area of the United States. This is not a regional problem; rather it is a nationwideproblem.

• Any catastrophe program should be designed as a public-private collaborative effort, involving participation bystates and local governments.

• Comprehensive natural disaster legislation cannot be fully addressed by combining it with other forms of cata-strophic events such as flood insurance.

• PIA supports the availability, affordability and stability of property insurance in catastrophe (CAT) prone areas.Without a viable market, consumers have fewer or no choices.

ConsiderationsAny comprehensive natural catastrophe program that is national in scope must take into account the fact that a govern-

ment role in natural disaster mitigation and remediation is not a matter for debate; it is a given. The private sector does notpossess the needed authorities to deal with the broad array of considerations attendant to natural catastrophes. Theseinclude, but are not limited to, concerns related to the public health and welfare, as well as economic recovery in the post-catastrophe environment. Other examples of responsibilities unique to government entities are building codes, coastal set-backs and coastal restoration. In short, involvement by government at all levels is required. It is the level of involvementbetween the government and private sector that must be determined in the development and implementation of a coordi-nated national natural catastrophe plan.

A comprehensive natural catastrophe program should:• Be designed as a public-private collaborative effort, involving coordinated participation among federal, state and local

governments.• Work with full cooperation with private sector insurance. • Recognize the role of federal government in the event of a major natural catastrophe. • Create or expand existing state residual property market facilities to provide an immediate response for adversely

affected communities.• Cover residential and commercial losses.

A comprehensive natural catastrophe program should not:• Compete with private sector capacity to provide insurance. • Combine a natural catastrophe program with other pre-existing programs such as the National Flood Insurance Program.• Lessen or eliminate the consumer’s choice of insurer, forms of coverage, or the benefits of price competition in the pri-

vate insurance marketplace.• Interfere with rights of states to regulate the insurance industry, except where coordination of the federal-state-private

reserves is required.

Current SituationThere are numerous bills in both the House of Representatives and the Senate that address approaches to natural catas-

trophe relief. PIA understands that there may never be one “silver bullet” that alleviates hardships caused by natural catas-trophes, but that with effective legislation, strong state and local enforcement of codes, and homeowner accountability, thenegative outcomes following catastrophes can be lessened.

PIA is encouraged by the legislative attention being shown to the issue of natural disaster in the United States Congress aswell as in the National Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legisla-tors (NCOIL). Both the NAIC and NCOIL have been discussing comprehensive national plans for managing natural catas-trophes and support the creation of a multi-layered state and federal system to augment the private insurance market in loca-tions where support is necessary. PIA supports innovative state-based solutions such as interstate compacts; individual andregional state pools, to provide relief to consumers while encouraging economic development.

PIA continues its work with states and the private sector insurance industry to support open and stabilized insurance mar-kets in all affected areas in order to support economic recovery. We will continue to work with interested parties to craft leg-




National Flood Insurance ProgramPIA PositionPIA National supports comprehensive reforms to the National Flood Insurance Program(NFIP).

• PIA supports the positive reforms embodied in the Flood Insurance Reform and Modernization Act of 2007,H.R. 3121 and S. 2284. However, PIA does not support the addition of the multiple peril coverage in H.R.3121.

• PIA supports the forgiveness of the NFIP’s debt so that the program can use current policy premium to pay cur-rent policy claims and build up reserves for the next flooding events. S. 2284 provides debt forgiveness.

• It is critical that Congress address reforms to the National Flood Insurance Program now to ensure the continu-ation of the program beyond its current September 30, 2008 expiration.

Current SituationAt this time, the principal source for insurance coverage protection against property damage caused by flooding is that

made available through FEMA and the NFIP. The National Flood Insurance Reform Act of 2004 expires September 30, 2008. It is critical that Congress address

reforms to the National Flood Insurance Program now to ensure that all concerns are adequately addressed and variousstakeholder concerns are heard.

The House of Representatives passed its version of the Flood Insurance Reform and Modernization Act of 2007 in Sep-tember of 2007. This reform bill included reauthorization of the program, needed reforms and the addition of multiple perilinsurance to address the wind vs. water argument that often accompanies policy claims after a storm. The inclusion of multiperil insurance would allow policyholders to purchase both flood and wind policies through the National Flood InsuranceProgram at actuarial/risk-based rates. To be eligible to take part in the program, a policyholder’s community must adopt theprogram and agree to meet building standards.

PIA National believes that while searching for solutions to the difficulties presented in wind vs. water claims is necessary,combining the two perils in this program will inadvertently create more problems than solutions. Currently, only floodinsurance is covered by the NFIP, while wind insurance is covered under homeowner’s insurance and statewide wind pools.Several important operational questions arise from the addition of wind coverage into the NFIP and must be addressed. PIAencourages further study of the implications of coordinating wind coverage with the existing flood insurance program todetermine economic impacts for both the flood insurance program and consumers.

The Senate Banking, Housing and Urban Affairs Committee passed its version of the Flood Insurance Reform and Mod-ernization Act of 2007, S 2284, out of committee in November of 2007. This bill includes many necessary reforms, but doesnot include multiple peril insurance provisions. Chairman Christopher Dodd (D-CT) has stated that passing flood insur-ance reform is a priority of the committee this year.

PIA supports reforms to improve the current system in order to protect consumers from future events. These reformsinclude:

• Multi-year authorization of NFIP by Congress, in this case five years, in order to operate a balanced, consistent pro-gram.

• Increase insurance maximum limits for all classes of insurable property including building and contents coverage. Atthis time, less real dollar coverage is provided than in the past, since current limits have not been adjusted for infla-tion since 1968.

• Coordinate flood coverage for commercial policies in the area of business interruption insurance (BII). BII is now onlyavailable in the private sector property market on a “covered peril” basis. Flood is not a “covered peril.” Thus, busi-nesses affected by Hurricanes Katrina and Rita were not covered for ongoing business needs and costs in the aftermathof these storms.

• Ongoing modernization of flood maps. The terrain of the United States is constantly changing. Therefore a mapmodernization program must have ongoing funding.

In February 2006 Congress increased the borrowing authority of the National Flood Insurance Program to $20.775 bil-lion to cover claims from Hurricanes Katrina, Rita and Wilma. This was absolutely essential to ensure that policyholdersreceived payment on their flood insurance claims and PIA wholeheartedly supported this move by Congress. FEMA is nowheld responsible to repay this loan from the Department of Treasury with an annual payment of an estimated $800 - $900million to cover the interest on the loan only. FEMA receives approximately $2 billion each year in flood insurance premi-




Crop InsurancePIA PositionPIA supports a federal crop insurance program that provides needed insurance coverage toAmerica’s farmers in a fair and equitable manner.

• PIA is opposed to budget cuts in the Farm Bill coming at the expense of the crop insurance program.

• PIA supports the State and Federal Rebating Enforcement Initiative initiated by the Risk Management Agencyto combat illegal rebating.

• PIA supports an updated information technology system for the federal crop insurance program.

• PIA supports the Senate proposal to prohibit control-of-business, self-dealing, illegal inducements and othersuch abuses of insurance licenses or schemes that create the potential for agent conflict of interest or moral haz-ards for the federal crop insurance program.

Current SituationPIA is opposed to budget cuts in the Farm Bill coming at the expense of the crop insurance program. The integrity of the

crop insurance program would be compromised by continually cutting the program. The federal crop insurance program isthe best risk management tool farmers have to protect themselves against losses. There is a greater need now than ever forsound risk management for farmers and further cuts in the crop insurance program puts the program in jeopardy.

PIA believes it is critical that all providers of crop insurance participate and compete in a fair and equitable manner.Therefore, we support the State and Federal Rebating Enforcement Initiative initiated by the Risk Management Agency tocombat illegal rebating. The Standard Reinsurance Agreement strictly prohibits the rebating of federal crop insurance pre-miums by approved insurance providers (AIPs) and their affiliates, except under certain conditions outlined in the FederalCrop Insurance Act. In response to allegations of illegal rebates in recent years, RMA and state insurance departmentsbegan this initiative for coordinated enforcement of rebating prohibitions. PIA supports this initiative and is proud to lendits expertise to the dialogue on this topic.

It is important that RMA update the current information technology used to maintain information from farmers. Thecurrent system is antiquated and the multiple databases now used magnify the potential for data errors, increase costs tocompanies to collect and report crop producer data, and limits the ability for RMA to produce timely information. In addi-tion to updating the system, private insurance companies could have direct access to data mining information now held byRMA. This would allow companies to query only information related to their clientele and could be used to identify poten-tial fraud and abuse.

PIA supports the Senate proposal to limit the control of self-insured business to a threshold of 30 percent. This combatsthe potential conflict of interest for any licensed insurance agent who may enter into the business solely to self-insure orwrite insurance for family members. This is a positive step toward reducing instances of abuse in the federal crop insuranceprogram.

BackgroundThe federal crop insurance system together with the participation of the private sector insurance industry offers farmers a com-

prehensive form of insurance coverage to better meet their farming financial needs. That in turn benefits the U.S. economy. By par-ticipating in the crop insurance program, farmers lesson their reliance on federal disaster aid while still protecting their investments.

The federal government, through the Risk Management Agency (RMA) of the U.S. Department of Agriculture, has played anactive role in helping to temper the effects of risk on farm income. Over the years, government has expanded coverage andincreased the subsidy for the federal crop insurance program. The program is expected to provide about $68 billion in risk protec-tion on about 288 million acres in 2008 ($53.7 billion in risk protection when normalized to reflect constant commodity prices).This represents 80 percent of the nation’s acres planted with principal crops.

For many years PIA has encouraged RMA to have greater communication with state insurance regulatory bodies including theNational Association of Insurance Commissioners (NAIC) and the National Conference of Insurance Legislators (NCOIL.) PIAis pleased to know that RMA, NAIC and other insurance regulators have increased communication and have agreed on advance-ments such as the NAIC providing data directly to RMA, thus alleviating companies from providing RMA duplicate data. Thisenhanced relationship has also improved training and oversight of companies that provide crop insurance.

There is still work to be done to ensure that crop insurance is administered in a fair and equitable manner. Advancements intechnology, oversight and information are key factors to accomplishing this task. PIA looks forward to continuing its work withRMA, state Departments of Insurance and independent insurance agents selling crop insurance to make this the most efficient andeffective program possible.



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islation that is politically viable and meets the needs of the affectedstates, consumers and insurance community.

BackgroundPIA supports legislation that assists local, state and federal

involvement in working together to address the grave economic con-cerns that arise when a natural disaster strikes. The economic viabil-

ity of our nation as well as the lives of our citizens is at risk when dis-aster strikes.

Natural disasters affect every area of the United States. This is nota regional problem; rather it is a nationwide problem. Therefore, it iscritical that Members of Congress pass legislation that would encom-pass plans for dealing with any form of natural disaster.


Natural Disaster Legislation Position Paper

ums and fees, thus leaving slightly morethan half to keep on hand to cover anyfuture policy claims and to continue admin-istering the program. PIA National feels it isnecessary to forgive the debt of the NFIP toensure that the NFIP can build reserves forfuture flooding events.

BackgroundThe NFIP provides an important service

to people and places that have been affectedby a flooding event. The private insuranceindustry has been almost entirely unwillingto underwrite flood insurance because of thecatastrophic nature of these disasters. There-fore, the NFIP is virtually the only way forpeople to protect against the loss of theirhomes or businesses.

In the early 1980s, independent agentsconvinced reluctant insurance carriers toparticipate in the NFIP by conducting thebusiness of insurance in much the same waythey always had. The only difference wasthat the government would remain responsi-ble for setting rates, coverage limits and eli-gibility requirements, and for paying off loss-es. Thus the “Write Your Own” program wasborn, and an entirely new phase of the floodinsurance program began. Today approxi-mately 95% of flood insurance policies aresold through 88 private insurers workingthrough their agents.

From 1986 until the devastating hurri-canes of Katrina and Rita, no taxpayermoney was used to support the NFIP. Rather,the NFIP was able to support itself using thefunds from the premiums it collected everyyear. All previous loans have been repaidwith interest.

It is important to note that the NationalFlood Insurance Program was created to pro-tect policyholders and provide loss mitiga-tion during an average loss year. The pro-gram was not created to handle majorcatastrophic losses. Separate solutions thatidentify the needs of the nation’s taxpayersand property owners must be identified forfuture large-scale natural catastrophes.


Flood Insurance PositionPaper


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sNEBRASKA/IOWAPIA of Nebraska/Iowa, 920 South 107th Avenue, Suite 305, Omaha, NE 68114PHONE: (402) 392-1611 • FAX: (402) 392-2228e-mail: [email protected] • Web Site: www.pianebraska.comNEW HAMPSHIREPIA of New Hampshire, P.O. Box 997, Glenmont NY 12077-0997PHONE: (800) 424-4244 • FAX: (518) 434-2342e-mail: [email protected] • Web Site: www.piaonline.orgNEW JERSEYPIA New Jersey, P.O. Box 997, Glenmont NY 12077-0997PHONE: (800) 424-4244 • FAX: (518) 434-2342e-mail: [email protected] • Web Site: www.piaonline.orgNEW YORKPIA New York, P.O. Box 997, Glenmont NY 12077-0997PHONE: (800) 424-4244 • FAX: (518) 434-2342e-mail: [email protected] • Web Site: www.piaonline.orgNORTH CAROLINAPIANC, 16976 Justice Branch Road, Littleton, NC 27850PHONE: (704) 892-4645 • (877) 337-4262 • FAX: (704) 892-4645e-mail: [email protected] • Web Site: www.piaofnc.comNORTH DAKOTAPIA of North Dakota1211 Memorial Hwy Holiday Park Office #6, Bismarck, ND 58504-5213PHONE: (701) 223-5025 • (800) 733-1050 ND&MN onlyFAX: (701) 223-9456 • e-mail: [email protected] • Web Site: www.piand.comOHIOPIA of Ohio, Inc., 600 Cross Pointe Road, Gahanna, OH 43230PHONE: (614) 552-8000 • (800) 555-1742 • FAX: (614) 552-0115e-mail: [email protected] • Web Site: www.ohiopia.comOKLAHOMAPIA of Oklahoma, P.O. Box 12921, Oklahoma City, OK 73157PHONE: (405) 942-1119 • FAX: (405) 943-4380e-mail: [email protected] • Web Site: www.piaok.comOREGON/IDAHOPIA of Oregon/Idaho, 3205 Northeast 78th Street, #104, Vancouver, WA 98665PHONE: (503) 287-7570 • FAX: (360) 571-7600e-mail: [email protected] • Web Site: www.piawest.comPENNSYLVANIAInsurance Agents & Brokers of Pennsylvania P.O. Box 2023, Mechanicsburg, PA 17055-0763PHONE: (717) 795-9100 • FAX: (717) 795-8347e-mail: [email protected] • Web Site: www.iabgroup.comPUERTO RICO & CARIBBEANPIA of Puerto Rico and the Caribbean IncPO Box 192389, San Juan, PR 00919-2389PHONE: (787) 792-7849 • FAX: (787) 792-4745e-mail: [email protected] • Web Site: www.piaofpr.comRHODE ISLANDPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comSOUTH CAROLINAPIA of South Carolina, PO Box 21367, Columbia, SC 29221-1367PHONE: (803) 772-0557 • (888) 742-6372 • FAX: (803) 772-0846e-mail: [email protected] • Web Site: www.piasc.netSOUTH DAKOTAPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comTENNESSEEPIA of Tennessee Inc, 504 Autumn Springs Court Suite A-2, Franklin, TN 37067PHONE: (615) 771-1177 • FAX: (615) 771-3456e-mail: [email protected] • Web Site: www.piatn.comTEXASTexas Insurance Professionals, P. O. Box 90908, Austin, TX 78709-0908PHONE: (512) 301-0226 • FAX: (512) 301-0265e-mail: [email protected] • Web Site: www.piatx.orgUTAHUtah Association of Independent Insurance Agents4885 S. 900 E., Suite 302, Salt Lake City, UT 84117PHONE: (801) 269-1200 • FAX: (801) 269-1265e-mail: [email protected] • Web Site: www.uaiia.orgVERMONTVermont Insurance Agents Association, P.O. Box 1387, Montpelier, VT 05601PHONE: (802) 229-5884 • FAX: (802) 223-0868e-mail: [email protected] • Web Site: www.viaa.orgVIRGINIA/DCPIA Assn of Virginia & DC, 8092 Villa Park Drive, Richmond, VA 23228PHONE: (804) 264-2582 • FAX: (804) 266-1075e-mail: [email protected] • Web Site: www.piavadc.comWASHINGTON/ALASKAPIA of WA/AK, 3205 Northeast 78th Street, #104, Vancouver, WA 98665PHONE: (360) 571-7100 • FAX: (360) 571-7600e-mail: [email protected] • Web Site: www.piawest.comWEST VIRGINIAPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comWISCONSINPIA of Wisconsin, Inc., 6401 Odana Road, Madison, WI 53719-1126PHONE: (608) 274-8188 • (800) 261-7429 • FAX: (608) 274-8195e-mail: [email protected] • Web Site: www.piaw.orgWYOMINGAssoc. of Wyoming Ins. Agents, PO Box 799, Sundance, WY 82729-0799PHONE: (307) 283-2052 • FAX: (775) 796-3122e-mail: [email protected] • Web Site: www.awia.com

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sALABAMAPIA of Alabama, 1276 Perry Hill Rd, Montgomery, AL 36109PHONE: (334) 244-7422 • FAX: (334) 244-9921e-mail: [email protected] • Web Site: www.piaal.comARKANSASPIA of Arkansas Inc., 10 Corporate Hill Dr., Suite 130, Little Rock, AR 72205PHONE: (501) 225-1645 • FAX: (501) 225-2550e-mail: [email protected] • Web Site: www.piaar.comCA/NV/AZ/NMPIA Group, 3205 Northeast 78th St #104, Vancouver, WA 98665PHONE: (888) 246-4466 • FAX: (360) 571-7600e-mail: [email protected] • Web Site: www.piawest.comCOLORADOPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comCONNECTICUTPIA of Connecticut, P.O. Box 997, Glenmont, NY 12077-0997PHONE: (800) 424-4244 • FAX: (518) 434-2342e-mail: [email protected] • Web Site: www.piaonline.orgDELAWAREInsurance Agents & Brokers of DelawareP.O. Box 2023, Mechanicsburg, PA 17055-0763PHONE: (717) 795-9100 • FAX: (717) 795-8347e-mail: [email protected] • Web Site: www.iabgroup.comFLORIDAPIA of Florida, Inc., 1390 Timberlane Road, Tallahassee, FL 32312-1766PHONE: (850) 893-8245 • (800) 277-1171 FL only • FAX: (850) 893-8316e-mail: [email protected] • Web Site: www.piafl.orgGEORGIAThe PIA of Georgia, Inc., 3805 Crestwood Pkwy NW #140, Duluth, GA 30096PHONE: (770) 921-7585 • FAX: (770) 921-7590e-mail: [email protected] • Web Site: www.piaga.comHAWAIIPIA of Hawaii, 146 Hekili St # 201A, Kailua, HI 96734-2835PHONE: (808) 261-9460 • FAX: (808) 262-5355e-mail: [email protected] • Web Site: www.piahawaii.comILLINOISPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comINDIANAPIA of Indiana, 600 Cross Pointe Road, Gahanna, OH 43230PHONE: (614) 552-8000 • (800) 555-9742 • FAX: (614) 552-0115e-mail: [email protected] • Web Site: www.indianapia.comKANSASKansas Association of PIA103 SE 10th Ave., Topeka, KS 66612PHONE: (785) 232-4143 • FAX: (785) 232-0272e-mail: [email protected] • Web Site: www.KansasPIA.orgKENTUCKYPIA of Kentucky, P.O. Box 4205, Frankfort, KY 40604-4205PHONE: (502) 875-3888 • FAX: (502) 227-0839e-mail: [email protected] • Web Site: www.piaky.orgLOUISIANAPIA of Louisiana Inc., 8064 Summa Avenue, Suite C, Baton Rouge, LA 70809PHONE: (225) 766-7770 • (800) 349-3434 LA only • FAX: (225) 766-1601e-mail: [email protected] • Web Site: www.piaoflouisiana.comMAINEMaine Insurance Agents Association, 432 Western Avenue, Augusta, ME 04330PHONE: (207) 623-1875 • FAX: (207) 626-0275e-mail: [email protected] • Web Site: www.maineagents.comMARYLANDInsurance Agents & Brokers of Maryland P.O. Box 2023, Mechanicsburg, PA 17055-0763PHONE: (717) 795-9100 • FAX: (717) 795-8347e-mail: [email protected] • Web Site: www.iabgroup.comMASSACHUSETTSPHONE: (703) 836-9340 • FAX: (703) 836-1279e-mail: [email protected] • Web Site: www.pianet.comMICHIGANThe Association of PIA, 4550 Cascade Road SE, Suite 205-B, Grand Rapids, MI 49546-3697PHONE: (616) 454-4461 • FAX: (616) 454-4491e-mail: [email protected] • Web Site: www.mipia.comMINNESOTAPIA of Minnesota, 3600 Holly Lane N. #90, Plymouth, MN 55447PHONE: (763) 694-7070 • FAX: (800) 546-3428e-mail: [email protected] • Web Site: www.piamn.comMISSISSIPPIPIA Association of Mississippi, 4 River Bend Place, #115, Jackson, MS39232PHONE: (601) 936-6474 • FAX: (601) 936-6477 • (800) 898-0136 MS onlye-mail: [email protected] • Web Site: www.piams.comMISSOURIMissouri Association of Insurance AgentsP.O. Box 1785, Jefferson City, MO 65102-1785PHONE: 573-893-4301 • FAX: 573-893-3708e-mail: [email protected] • Web Site: www.missouriagent.orgMONTANAPIA of Montana, 3205 NE 78th St Ste 104, Vancouver, WA 98665-0697PHONE: (888) 246-4466 • FAX: (360) 571-7600e-mail: [email protected] • Web Site: www.piawest.com

Get a Very Rewarding Business CreditCard

W ith PIA’s Platinum Plus® Busi-ness Rewards MasterCard® fromBank of America, every pur-

chase earns points for travel, gift cards, electronics, and more!The PIA Business Card has many other useful features for

PIA members:• Online account access and reporting• Online monthly report of employee spending• Additional cards available for your employees - Request as

many as you need!• Control employee credit lines with limits you choose• Unauthorized charge protection for lost or stolen cards• Employee Misuse Insurance Protection• Purchase Protection for theft or damage• Extended Warranty Protection• No Annual Fee

To learn more andapply for your cards, call1-800-598-8791 today.Be sure to mention prior-ity code “FAB2XF AQ.”

To learn more aboutthis and all of the PIA/Bank of America finan-cial products — and toapply online — please visit http://www.pianet.com/BankofAmerica.

Visit www.PIANET.com for additional Member Benefits including the PIA Branding Program, Guide toSuccessful Planning, Perpetuation Central, Agency Agreement Review Service, PIA logos and more.

Insurance Productsn Errors and Omissions InsuranceSolid E&O protection built around yourunique needs. (800) 742-6900 Ext. 382

n Penn National Insurance Agent’sUmbrella ProgramComprehensive and affordable excessinsurance protection includes E&O andBusiness Liability coverage with availableendorsements for EPL and Personal Cov-erage. Call your local PIA affiliate or (800)742-6900 Ext. 382

n The Insurance On-line Network (ION)Easy-to-use, on-line, multi-carrier, term lifequoting system. www.PIANET.com/ION

n Agency Revenue ToolsEmployee worksite marketing using yourappointed markets at regular commissionrates. (703) 518-1363

n Catastrophe Major MedicalThe $2,000,000 Catastrophe Major MedicalInsurance Plan picks up where your basiccoverage leaves off! (800) 503-9230;https://www.personal-plans.com/pia

n GE Auto Warranty ServicesMarket a proven vehicle service contract pro-gram to auto dealerships. (800) 782-9753.

n PIA HealthQuality health insurance for you, youremployees and families through a top insur-er in your area. Coverage and product avail-ability vary by state. (800) 742-6900 Ext. 382

n Hartford Flood InsuranceEasy enrollment process, competitive com-missions, advanced Internet services, plus avariety of programs and surplus lines. Call(888) 410-2963 x73932 or visit www.hartfordfloodinsurance.com

n Unimerica ProductsBasic, Voluntary and Dependent Term Life;Long Term Disability; Short Term Disability;ADD; Hospital Indemnity (800) 336-4759;www.piatrust.com

Financial Servicesn Bank of America Financial ProductsTell the BoA operator you are a member ofthe “National Association of ProfessionalInsurance Agents.” Personal cards: (800)932-2775. Business cards: (800) 598-8791.Gold Option Loan Program: (888) 332-5233.CDs: (800) 900-6653.

“PIA Plus” Products/Discountsn PIA Logo Wear & GearShirts, jackets, mugs and more with the PIAMain Street Logo featuring PIA’s new tagline,Local Agents Serving Main Street AmericaSM.http://promotiontechnology.com/pia.html

n On-Line CE and Skills CoursesAvailable to agents in participating statesat www.PIANET.com/Education For othereducational programming, including designation programs, please contactyour local PIA affiliate.

n Alamo Car RentalGet unlimited mileage and up to 20% offalready low retail rates. 1-800-GO-ALAMO(1-800-462-5266) (I.D. # 93140)

n Central Licensing BureauSave time and money by using CLB for allyour agency licensing needs. (501) 664-8044n Consumer BrochuresAnswer clients’ questions with professionalbrochures from PIA. (703) 518-1353.n Free SubscriptionPIA members, receive a free subscriptionto Rough Notes magazine atwww.pianet.com/FreeSubscriptionsn Mines Press Calendar ProductsPersonalized calendars at member onlyprices. (800) 447-6788n Omnia Employee ProfilingSkills and personality testing. Contact Sean Neumeyer at (800) 525-7117 Ext. 1242.n Online Data Backup & RecoveryBackup critical files to a secure, remotelocation through Courtesy Computers, the insurance agency specialists.www.pianet.com/courtesyn Rough Notes Agency OnLineHelps identify risk exposures and providesdetailed coverage analysis. Avail. to PIA mem-bers for $400 annually (reg. $1,699). Call 800-428-4384. Use your PIA member ID#above name on mailing label.n Sircon’s Producer WorkbenchMeet your licensing and renewal needsquickly and easily on the web. PIA member-only 15% discount. Visit www.PIANET.com/Sirconn United Parcel ServiceReceive reduced rates on many popularovernight and 2nd day air shippingoptions. Call (800) 325-7000 or your localUPS representative and mention “BidCode #CP990007896.”

Visit the PIA Main Street Store at www.PIANET.com or use the information below to act now.

PRSRT STANDARDU.S POSTAGE

PAIDPERMIT #593

MERRIFIELD, VA400 N. Washington StreetAlexandria, VA 22314

Help Build Your Family’s Financial Future With

PIA Trust Insurance Plans

INSURANCE PLANS DESIGNED WITH LOCAL AGENTS IN MIND

As a PIA Member* serving

Main Street America, you and

your employees have access

to a variety of high-quality,

competitively priced

insurance plans.

Plans available include:

! Long Term Disability! Short Term Disability! Business Overhead Expense! Accidental Death & Dismemberment

! Basic Term Life**! Voluntary Term Life! Dependent Term Life! Hospital Indemnity

PIA SERVICES GROUPINSURANCE FUND

For additional information, contact your local PIA A�liateor call the Plan Administrator at 1-800-336-4759.

Information also available on-line at www.piatrust.com.*PIA National membership, when required, must be current at all times.

**Only available if 100% employer paid and if the employer and 100% of the employees enroll.No medical underwriting necessary up to guaranteed issue limits.

Policies or provisions may vary or be unavailable in some states. Policies have exclusions or limitations which may a�ect any bene�ts payable.Underwritten by Unimerica Insurance Company, Portland, ME. Administered by Lockton Risk Services.

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