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Will You Make it to the Post Office On Time Today?
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It is our favorite time of the year again (NOT). It’s tax-filing time and you know that the filing deadline to submit 2015 tax returns is today, April 18, 2016, rather than the traditional April 15 date. Washington, D.C. celebrated Emancipation Day last Friday, April 15, which pushed the deadline to today for most of the nation. This is also the time of the year that we LOVE our CPAs and those tax professionals that take the majority of the filing burden off of us regular folks. They are also the ones who keep us out of trouble most of the time. However, there are a few tax scams that we wanted you to be aware of as we work our way through the tax season (which for many of us ends in October if we have filed for that blessed extension).
1) Emails supposedly from the IRS or other tax collectors. These communications may tout nonexistent refunds or warn of audits and incomplete filings. BEWARE. The real goal is to get our personal information or load our computers or smartphones with harmful programs known as malware.
2) Phone Calls from IRS impostors. This should actually be No. 1 since it is one of the nation’s top scams. These IRS imposters threaten all kinds of things including arrest and deportation to folks who “owe taxes” unless the IRS imposter is immediately paid by wire transfer or prepaid debit card. The truth is, the IRS only reaches out by U.S. Mail, and notices have phone numbers that you can authenticate in public directories. The IRS does not demand instant payments or issue breathless threats AND, unless you initiate a call to the IRS yourself, the agency will not ask for personal information like your social security number. While we hope none of our readers would fall prey to any of these scams, it is the season for them, so stay alert.
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Insurance Commissioner Applicant Watch
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Round Two: As we last reported, Governor Scott and CFO Atwater could not reach agreement on a candidate to succeed Florida Insurance Commissioner Kevin McCarty, who is scheduled to retire on May 2, after 13 years in the seat. Jeffrey Bragg and Representative Bill Hager were both publicly interviewed at the last Cabinet meeting and although both the Governor and CFO later said neither is counting out Bragg (Scott’s choice) or Hager (Atwater’s choice) for the post, they decided to reopen the process to other candidates.
With a deadline of this past Friday, 12 new candidates have applied. Only one has met all six pre-screening requirements (which include five years of full time private sector insurance experience and five years as a state or federal senior insurance regulator – both within the last 10 years). Tracy Bertram is a recent VP for Government Relations for the Kentucky Health Cooperative, who previously served as Director of Property and Casualty for the Kentucky Department of Insurance.
One other notable new applicant though, is Michael Bownes, former general counsel for the Alabama Insurance Department, who also served in that state’s Attorney General’s Office of Consumer Protection.
The Cabinet Aides meeting this Wednesday is expected to provide insight on whether any of these new applicants will warrant a Cabinet interview. Otherwise, look for reconsideration of Mr. Bragg or Rep. Hager at the next Cabinet meeting on April 26. You can view the entire list of candidates here.
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| An Orange County man says a roofing company hijacked his insurance claim for hail damage that didn’t exist.
Tony Annunziato blames the company for a questionable inspection and threats to sue his insurance company. He said he had a small roof leak, but an inspector from ELR Restora- ation claimed there was much more. “They said hail damage, there were spots and marks on the shingles,” Annunziato said. He heard his insurance would pay for a new roof, but he first had to sign an Assignment of Benefits, so ELR handled the claim. Annunziato said it sounded like a free roof.
An insurance company inspector found only normal wear and tear, but no hail. Annunziato thought it was over, but then found out that ELR Restoration was going to sue his insurer for a new roof. “That got me riled up. I was upset by that,” Annunziato said. “No, absolutely not. No indication that hail had fallen in the area,” Brian Kuehner from Collis Roofing said after Action 9 News asked him to do another inspection.
Two months ago, Action 9 exposed ELR Restoration for claiming hail damaged a roof in Oviedo and it wanted assignment of benefits. Our experts said that damage didn’t exist.
An Altamonte Springs man assigned his benefits to ELR, but his insurance company said his roof was not damaged. His insurance company said ELR told it that it has “a lot of good lawyers to pressure the insurance company to go along with what we say.” Many experts warn assignment contracts drive up everyone’s premiums by grossly inflating repair costs.
ELR Restoration denies forcing any client into legal action. “If someone wants released from the contract, we will release them from the contract,” ELR manager Shriane Phoenix said. He claimed both houses had hail damage, but admitted those inspections failed to document collateral damage experts expect to find. Phoenix said the company had already addressed it.
ELR said it changed marketing fliers for free roofs that could have misled some customers and said out of thousands of customers, there have been very few complaints. After the customers contacted Action 9 the company released both homeowners from their contracts.
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Supreme Court to Decide Future of Florida’s Workers’ Comp Law
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After being on the books for almost 13 years, legal arguments to reverse provisions in Chapter 440, Florida Statutes were presented recently in Florida’s highest court. The case, Daniel Stahl v. Hialeah Hospital, is an appeal of a judge of compensation claims (JCC) decision regarding co-payments Stahl was supposed to pay his provider to continue receiving care. The First District Court of Appeal (DCA) in Tallahassee sided with the JCC’s decision and issued a written decision finding that the $10 co-payments, the elimination of permanent partial disability, and the lost wages associated with that are “constitutional” because they passed the rationale basis. Mr. Stahl’s attorney, Mark Zientz, Esq., appealed the DCA decision to the Florida Supreme Court, taking the position that the harder to meet standard (strict scrutiny) denies injured workers access to the courts and juries.
Mr. Stahl’s attorney asserts that the workers’ compensation system should not be the exclusive remedy for injured workers because the benefits provided them after a 2003 major rewrite of the law are not sufficient to waive their right to access to court and a trial by jury. In his brief in the Supreme Court case, attorney Mark Zientz argued that the options (for addressing the constitutional problem) would be to leave the workers’ compensation law just as it is, but invalidate the exclusive remedy, an option asserted by 11th Circuit Court judge Jorge Cueto, who, in 2014, wrote in a different case that the exclusive remedy of the workers comp system was unconstitutional. Attorney Zientz also suggests the Legislature return the state’s workers’ compensation laws to their exact wording prior to the 2003 reforms. However, opponents of attorney Zientz’ proposals like to point out, among other things, that prior to the 2003 legislative reforms, Florida had one of the most difficult to maneuver and expensive workers’ compensation systems in the nation with rates being the highest among the top 10.
Mr. Stahl’s case, and two other workers’ compensation cases currently pending before the state Supreme Court — Westphal v. City of St. Petersburg, involving comp benefit payments for temporary total disability and Castellanos v. Next Door Company challenging the constitutionality of the 2003 legal fee caps –would have an untold impact on the comp system in Florida, including ramifications for Florida’s overall economy.
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DFS Moves to Amend Public Adjuster Rules Regarding Claim Notices
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Last Tuesday (April 12, 2016) the Department of Financial Services (DFS) published notice in the Florida Administrative Register of its intention to amend the public adjuster administrative rules to define what constitutes “prompt notice” of claims to insurers. According to DFS’s notice of rule-making, the proposed rule amendment establishes a presumption that the statutory requirement that a public adjuster provides prompt notice of a claim to an insurer is met if notice to the insurer is given within 5 business days after the date on which the contract for adjusting services with the insured was executed. As support for the rule amendment, DFS went on to state that requiring public adjusters to notify insurers of claims within a rule required (5 business days) time period will assist insurers in the assessment and timely settlement of such claims.
If requested, DFS will hold a rule workshop on the proposed changes on April 26, 2016 at 10:00 am in Room 116 of the Larson Building in Tallahassee. The DFS contact person for this rule amendment is Jeffrey Young, Division of Insurance Agent and Agency Services, and he can be reached at (850) 413-5630 or [email protected]. Click here if you would like to see the entire rule with the proposed new language regarding prompt notice underlined. Please contact our office if you have any questions about the proposed rule changes or the workshop.
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Telematics Ushering in New World of Claims Efficiencies
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Developments in telematics are impacting the entire automobile insurance sector as the technology becomes better and faster. Telematics and usage-based insurance is about much more than capturing driving behaviors and providing subsequent discounts. For insurance companies, it’s also about harvesting the data to reduce claims costs and improve customer service, too.
Championed by industry leaders such as Verisk and its affiliated Insurance Services Office (ISO), an entire new generation of advanced predictive modeling tools considers hundreds of variables for better risk management. ISO developed and filed its first telematics-based rating rule three years ago, which is in use across the country today.
Insurance companies are learning more about the benefits of using information gleaned from telematics to improve efficiency, accuracy, and consistency in claims processing and reducing actual claims costs. While most companies have a pilot program in telematics, too few are using the data for claims to predict loss costs. Industry experts say it’s a task made more difficult as time goes by and more data is collected.
Here’s a typical scenario to explain just how telematics works. When an accident happens, a wealth of information about the crash and the environment is transmitted back to the telematics company, where it’s used as an actual first notice of loss. The carrier is alerted to the accident and can reach out immediately to send help to the scene in the form of a company-provided tow truck. The car can be towed to a repair shop and a rental car dispatched to the stranded customer. This process alone can help avoid “bandit tow trucks”, high tow and storage costs, and better control over repair costs, too. This also provides a much improved customer experience.
Telematics automatically provides weather and other environmental data about the accident as well, making it easier on adjusters, and further reducing claims costs. The customer is happier because often adjusters can decide liability and compensation more quickly.
Experts point out that telematics can be indispensable in cases where there are no impartial witnesses or where a customer is unresponsive. The traditional parking lot collision that often turns into a “he said, she said” can be made more definitive through telematics data. Automobile insurance fraud is another area where telematics can come to the insurer’s rescue, by revealing exactly where the vehicle was (or wasn’t) at the time of the claim.
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Property Insurance Customer Satisfaction Declines
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J.D. Power reports that customer satisfaction with the property insurance claims process slipped this year for the first time in five years. The decline was a modest 5 points in the overall satisfaction score, to 846 this year on a 1,000-point scale. Leading the decline was satisfaction with the total settlement and service interactions.
The study asks insurance customers who have filed a damages claim to rate their experience on the five factors of settlement, first notice of loss, estimation process, service interaction, and repair process.
J.D. Power notes the P&C industry is entering a cycle of reduced profitability due to declining premium rates.
Among the key findings:
- Providing an Outstanding Claims Experience Can Generate Advocacy and Retention: The study finds that 81% of highly satisfied claimants (overall satisfaction scores of 900 or higher) say they “definitely will” renew their policy and 81% say they “definitely will” recommend their current insurer, while only 14% of displeased claimants (scores of 549 or less) say they “definitely will” renew and 7% say they “definitely will” recommend. Strikingly, 13% of displeased claimants indicate they have switched insurers due to their claims experience and 40% indicate an intention to shop within the next 12 months.
- Younger Property Claimants Looking for More Assistance with the Process: The desire for more help is strongest among the youngest groups such as Gen Y, where 31% indicate they want additional help selecting a contractor. This suggests that younger customers, who presumably have not had the same tenure of home ownership and also have less experience in having property work done, are looking toward their insurer to help coordinate the repairs.
- Non-Weather Water Claims Not Weathering Satisfaction: Non-weather water claims are the most frequently reported claims in 2016. Satisfaction with the handling of non-weather-related water damage dropped 19-points to 835, while satisfaction with the handling of hail damage claims is highest at 858. Additionally, satisfaction with theft claims is 840 (+20 points from 2015), while satisfaction with fire claims is 839 and with mold 834 (-27 points and -38 points), respectively.
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Commercial General Liability Covers Data Breach
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A federal circuit court has ruled that a commercial general liability (CGL) policy can cover a data breach, a setback for the insurance industry, which has been struggling to clarify whether such policies exclude data breaches.
The case involved a cyber hacking of private medical records kept by Portal Health Solutions of Virginia, which ended up on the Internet and were found by several patients searching their own names on Google. Portal was sued in a class action for the publication of those records. Its insurance company, Travelers Indemnity, refused to defend the case, arguing that its CGL policies didn’t require it.
The U.S. Appeals Court for the 4th circuit upheld a federal district court ruling that Travelers was obligated to defend Portal under its Coverage Part B Personal and Advertising Injury. The Appeals Court chastised Travelers for trying to “parse alternative dictionary definitions” to escape its responsibility.
Several years ago, the Insurance Services Office issued optional endorsements for the industry to use, which deleted invasion of privacy and related offenses from the definitions applicable to Coverage Part B and addressed disclosure of confidential or personal information. Some insurers also offer stand-alone cyber policies to address these circumstances.
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Economic Boom May Bring Labor Shortage
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With Florida’s economy continuing its recovery from the Great Recession, driven in part by retiring baby boomers moving to the state, comes a report that says those retirees will create an economic boom but one that could lead to labor shortages and a drain on state resources in the future.
The report by the Federal Reserve Bank of Atlanta predicts the number of seniors in Florida will continue to grow, from 3.3 million in 2010 to a projected 7.4 million in 2050, representing more than 25% of the state’s anticipated population.
On the plus side: Those moving to Florida tend to be more wealthy and healthy than their peers and their influx will boost state sales tax revenues with a lot of new spending on homes and furnishings.
On the down side: The spending on taxable items will eventually slow, as the aging rely more on non-taxable services such as medical and personal care services. The growth of sales tax revenues will slow as a result. Florida’s services-dependent economy, from which we’ve been trying to diversify, will expand as a result.
While demand for service workers – from waitresses to hairdressers to nursing attendants – will grow, labor shortages will develop in more affluent Florida communities where those traditionally lower-paid service workers won’t be able to afford to live.
Florida will also have fewer working age-adults to support the public services those retirees require. Currently, there are three working-age adults for each retiree in Florida, but by 2030 that ratio will drop to two-to-one. According to the legislature’s Office of Economic and Demographic Research, there will be shortages of highly educated and skilled workers, making labor-intensive jobs, such as police and construction workers, harder to fill.
Experts warn much work is needed to get support systems and workers in place to adequately handle the influx of seniors into Florida.
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Insurance Industry Labor Shortage
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You can add insurance agents and other related support personnel to that list of labor shortages, too.
According to the Jacobson Group, an insurance industry recruiter, the coming wave of retirees and an aging workforce are diminishing the ranks of talented and skilled personnel. In the past 10 years, the number of insurance professionals age 55 and older has increased by 74%. So 25% of the industry is now ready to retire by 2018.
There’s also a shortage of young people to take their place. Only 27% of the industry is under the age of 35. The industry will need to add 400,000 positions by 2020 to remain fully staffed, yet graduates from risk and insurance programs currently meet at most 15% of the growing need. Surveys show less than 5% of Millennials are interested in working in insurance. Unemployment in the industry is near an all-time low of about 2%.
The Jacobson Group joins with the Ward Group to publish the semi-annual U.S. Insurance Labor Study. The new edition just out reports that two-thirds of insurers surveyed plan to hire more people in 2016. That’s the highest anticipated rate in the seven-year history of the survey, which is also fueling the competitive labor market.
Although the level of recruiting difficulty eased up slightly over last year in nine of the 12 disciplines in the Jacobson/Ward Survey, most jobs are still considered difficult to fill. Personal lines companies are seeing a constant churn among project management people, making it more difficult to recruit there. Underwriters in personal lines however, were actually easier to recruit than commercial lines companies.
International outsourcing company HDT notes this is especially true in title insurance, where it’s becoming more difficult to fill spots – quickly – with qualified candidates. Two decades of offshore outsourcing of those jobs has led to shortages overseas as well now. That’s driving greater competition for bodies, higher wages, and more churn, as employees move from company to company in search of better wages or more attractive locations in which to live.
Escrow officers, abstractors, indexers, title searchers, and examiners are all affected. As this work is complex, with potential liabilities of hundreds of thousands of dollars from missing a mortgage or lien during a title search, the stakes are high for companies (and their customers) to find qualified, competent individuals.
Among the recruitment strategies Jacobson recommends to the industry: greater transparency by insurance companies to appeal to an employee-driven market and an accelerated hiring process to get them on the payroll before someone else does.
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The IRS Does Want Your Money
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While none of us love paying taxes and we certainly don’t want any of our friends, family, colleagues or other good citizens to fall prey to those scams we shared in our opening article, paying taxes is a part of life. And while we don’t love paying those taxes, we need to be aware that the IRS is very aware of many of the strategies that taxpayers use to avoid paying taxes. Of late, the U.S. is cracking down on offshore accounts in an effort to identify and penalize suspected tax evaders. Some recent statistics are showing that offshore tax evasion is costing the Department of Treasury over $100 billion annually. The Department of Justice and the IRS started a very serious crackdown on this practice in 2008, focusing on certain banking giants who are actively marketing financial services to U.S. citizens. What they found in 2009 was that these banks created undisclosed offshore accounts for American clients and sent its bankers on secret trips to the U.S. to help the clients evade taxes. As a result of one of these investigations, a banking giant agreed to a deferred prosecution agreement that required the bank to pay a $780 million settlement and turn over account information for nearly 4,500 U.S. clients. Since then, the investigations have broadened to other banks, financial institutions, and companies in multiple countries. The investigations are also resulting in prison terms, as was the case with U.S. military doctor Michael Canale of Jupiter, Florida, who was sentenced to a six-month federal prison term in 2013 after pleading guilty to failure to notify the IRS about Swiss bank accounts that three years earlier had held nearly $1.5 million. No, there is nothing fun about sending a share of our hard earned income to the federal government each year, but it is the cost of living in our great country.
Until next time – Lisa and the LMA Team |
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