Professional Indemnity Insurance – Managing Risk For Profit

Author: marciano guerrero
Source: articlesbase.com

Senator Chuck Schumer (D, NY) and Patrick Leahey (D, Vermont) seem to be gaining ground in their efforts to pass an amendment to remove insurance companies from the protection of antitrust laws. The ongoing health care overhaul currently being debated has brought to the fore the privilege the insurance industry has enjoyed for the past 64 years: Insurance companies, like Major League Baseball, have been exempt from federal antitrust laws. Monopolies stagnate markets by preventing others from engaging in healthy market competition. Is the exemption a dying dinosaur? Brief history of antitrust laws Given the fears of monopolies in the late 1800s and to preserve America’s free market economy, Congress passed the Sherman Antitrust Act in 1890; its aim being to combat anticompetitive practices, reduce market domination by individual corporations, and preserve unfettered competition as the rule of trade. Soon the courts found certain activities to fall outside the scope of the Sherman Antitrust Act. To plug this loophole Congress passed the Clayton Antitrust Act of 1914. The Clayton Act added the following practices to the list of impermissible activities: price discrimination between different purchasers, if such discrimination tends to create a monopoly; exclusive dealing agreements; tying arrangements; and mergers and acquisitions that substantially reduce market competition. The Robinson-Patman Act of 1936 amended the Clayton Act. The amendment aimed to outlaw certain abuses in manufacturers’ practices. Brief history of the insurance exemption Before the 1940s, insurance regulation fell under sole province of the states. A Supreme Court case by the name of United States v. South-Eastern Underwriters challenged that in part on grounds of antitrust. The Supreme Court rules that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution. The McCarran-Ferguson Act of 1944 provides that federal anti-trust laws will not apply to the “business of insurance” as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation. The intention of the McCarran-Ferguson Act was to return the legal climate to that which existed prior to South-Eastern Underwriters by specifying that the states retained the authority to continue to regulate and tax the business of insurance. According to Senator Patrick Leahey, Judiciary Committee Chairman, the antitrust exemption in the 1944 McCarran-Ferguson Act was meant to be temporary. Senator Trent Lott and others have argued that the exemption has led to collusion by insurance companies on setting rates and denying claims, as witnessed by the experience of hurricane Katrina. McCarran-Ferguson, in other words, is obsolete, and potentially damaging. Department of Justice position Christine A. Varney, Assistant Attorney General (Antitrust Division), testified before the Committee on the Judiciary United States Senate hearing on “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.” The following points can be gleaned from her testimony: Ms. Varney argues, “Health insurance reform should be built on a strong commitment to competition in all health-care markets, including those for health and medical malpractice insurance. Repealing the McCarran-Ferguson Act would allow competition to have a greater role in reforming health and medical malpractice insurance markets than would otherwise be the case. “The House health-care reform bills contemplates quasi-national exchanges, the Senate Finance bill contemplates national health insurance plans, and all the bills contemplate interstate compacts that would allow insurers to sell a single product across an array of states. These moves are all likely to increase competition and make it less likely that antitrust enforcement is necessary, but they also make the presence of the exemption more dangerous.” Conclusion When the top lawyer of the Justice Department identifies the exemption as “dangerous,” to the functioning of quasi-national exchanges [this is the public option, really], the time might just be ripe for Congress to remove the exemption. On the other hand, by spending countless millions of dollars lobbying Congress, the insurance industry might still have the upper hand in influencing the health-care reform. Why should they lose this monopoly? In some states, one or two insurance companies control all the insurance business. Is this a ‘free market economy?”

Retired. Former investment banker, Columbia University-educated, Vietnam Vet (67-68).
For the writing techniques I use, see Mary Duffy’s e-book: Sentence Openers.
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Author: Bob I. Richards
Source: isnare.com

Many insurance agents use the “hit and run” method of prospecting. These agents hit the prospect with a hard close and of the prospect does not buy, the agent runs onto the next prospect. This is a time wasting way to prospect because it assumes that if the prospect does not buy today, the prospect will never buy. In fact, good insurance prospects must be cultivated. And the best way to cultivate a prospect is with dripping on them with an insurance newsletter.

Using an insurance newsletter with new articles each month communicates the following to the insurance prospect:

1. you are on top of insurance news, insurance products and insurance trends and when ready to do business, you are the best candidate
2. that you stay in touch–something that most insurance agents don’t do and the #1 complaint of consumers about their agents
3. that you are knowledgeable about life insurance, health insurance, long term care and annuities
4. you’re not simply a salesman, you’re a professional

Realize that insurance agents have a big problem–that they are mostly indistinguishable from one another. To a prospect, insurance appears to be a commodity, as does the insurance agent, differentiated only by price. While you know that there are tremendous differences between agents and products, you won’t convince the prospect of that fact just by telling them so. You need to SHOW them.

The best way to show them, convince them, is with factual and well written insurance newsletter articles that hammer the same points, implicitly and explicitly, in every issue:

–you are superior to other agents because you know more
–you have greater insight into prospect problems that other agents
–insurance products are very different from each other, not just by price (and you are knowledgeable about these differences)
–if anyone is to be consulted about an insurance issue, you’re the best choice because of your insight and experience

When you use a well constructed insurance newsletter, you get:

-Fresh articles per month, covering not only the items you sell (you don’t want to appear focused on only one topic as that paints you as a sales person) but covering all types of insurance issues: life insurance, health insurance, long term care insurance, fixed annuities

-Email delivery for those prospects who are not yet on your “A” list. Email delivery allows you to reach hundreds and thousands at no cost. Send the print version however to your A list of prospects and clients because an item received in the mail has much greater impact than email.

–The ability to add your own news such as an upcoming seminar, a personal note, a product advertisement or any modification you want to make

–If you are securities licensed, you want the articles in the letters to be FINRA reviewed

While other agents use the hit and run method and waste time always pursuing a new prospect, you can do much better by easily cultivating warm prospects to “hot.” Use an insurance newsletter to maintain a pipeline of warm prospects that can be consistently producing new insurance business. To make 2009 a year when you convert more prospects to clients and reignite your relationship with old clients, start sending an insurance newsletter.

Bob Richards assists financial professionals gain clients rapidly. You can get a sample of the insurance newsletter he authors at the Javelin Marketing web site. And you can read his insurance lead blog for direction on where to find and how to use insurance leads.