Friday, January 18, 2013

How Can Users Benefit From Life Insurance Leads?

Life insurance is one of the important policies of investment for single parents and sole bread winners for sustaining their dependents in the event of a mishap. Life insurance leads are thus important to insurance agents. A lead is a person who is interested to get their life insured, but has not yet taken the policy.

The agents can obtain insurance leads for life in various ways. Door to door inquiries are an old approach to generate a life insurance lead by collecting the postal addresses and contact numbers of the leads. These are a few of the details that you can get to inform people about new insurance policies or offers which would convince them for making a policy.

A lot of insurance agents offer leads potential incentives for attracting new customers and informing them about them. There are also a lot of social networks online that will tell you about where to look for the existing leads. You should follow a proactive approach to get new clients, or even approach insurance companies who can offer you potential leads for it if you request them. This is however a costly approach and the amount can vary depending upon the number of leads you are looking to attain.

Get your Family Involved: In fact, your family members can put up advertisements on your behalf or even ask after their friends or colleagues about possible leads. Get your staff members involved along with other insurance agents. Make it a point to ensure that they are asking for referrals while they speak to a prospective client. This method allows you to approach clients and even offer them policy handouts.

Use Lead Software: This method is based on hits and their search criteria. It allows you to generate the number of future clients and even then if you are not able to get sufficient leads, try cold calling. Picking up the phone and calling up numbers at a random often fails than works, but if it works, it can be a potential way to generate a god lead. Getting a life insurance lead should be done on a constant basis as this is the only way to make the most of your insurance lead.

Generating a lead for life insurance can make your business successful and take it to new heights altogether. As customer data contacts, leads go a long way in ensuring the satisfaction of consumers who have expressed a desire to purchase them. Good quality policies help boost your insurance quotas over the period of a month by offering customer contacts which are targeted towards a particular locality or specialty.

Every life insurance lead should have an applicant who can be insured. They should be delivered to the owner of the business within real time. Most big names use filtering devices for eliminating fake or duplicate applications. Other than determining the costs per lead, owners of businesses need to ask after minimum order requirements and even bulk discounts.

Thursday, January 17, 2013

May 2010 - Monthly Insurance Q&A

Q: What is EPLI Insurance?

A: EPLI Insurance or Employment Practices Liability Insurance covers the employer for exposures relating to employment (i.e. discrimination, wrongful termination et al).

Q: What's the difference between term life insurance and whole life insurance?

A: Term insurance is for people who do not want life insurance to be paid when they die of old age. It is normally purchased to cover a 10 or 20 year period, like when someone with young children want coverage in case they die prematurely. The premiums are cheap, but skyrockets at the end of the term, so most people cancel the coverage. It seldom results in a claim, since most people who buy term buy it when they are young and healthy. If there is a term life death claim, it is usually the result of an accident or a premature death due to an unexpected disease.

Whole Life insurance is as the name implies, it covers your entire life. This insurance is for someone who wants coverage for their entire lifetime. Since this has a greater coverage period, it is more expensive. But on a net basis, whole life is cheaper than term life. When you pay your premiums, a small portion goes to the cost of the life insurance and most goes toward an investment. As you pay your premiums after 20 or 30 years, you likely will have double what you paid in premiums in the investment portion of the policy called cash value. You can use the cash by borrowing it, or you can leave the cash alone, and it will likely (depending on the design) pay for your premiums for the rest of your life.

Q: What is the average cost of malpractice insurance?

A: We get this question all the time, and it depends on which state, specialty, the year of the retro date and the doctor's claims. If you want a ballpark, in CA a non invasive specialty, fully mature, with no claims is $10K a year, and an invasive specialty is $45K. If it is NY, multiply those numbers by 3 or 4.

Q: How much is the most basic professional liability insurance for a small business?

A: It's tough to say because it depends on what they do for a living, but a ballpark small business is $5K to $10K a year.

Q: What is Personal Injury Medical Malpractice?

A: This is a new insurance that allows the patient to buy life, and a product similar to AD&D for claims arising from complications related to a recent surgery. Example, if you die from complications of a surgery, then your family will get a death benefit. If you lose your limb(s) or other functions, then you get a benefit. This new insurance may lower the chances of claims against the surgeon. First, if a family or patient suffers a loss and they get paid under this policy they may be less likely to sue the doctor since they received compensation. Also, this may help negate a patient or family's lawsuit claim alleging that the doctor did not provide adequate information regarding the surgical risk, and therefore never obtained informed consent. How would a patient claim that he/she did not know the risks if he/she buys insurance to protect himself/herself from the surgical risk?

Q: FMLA vs workers comp?

A: FMLA is the Family Medical Leave Act. This provides job protected leave for non job related illness or leave to care for an immediate family member. Workers Comp provides benefits for job related injury disability or death.

Q: Are most ASO also stop loss?

A: ASO is administrative service only. These are the services that the employer needs to self-insure its health insurance; the business that performs this is called TPA or third party administrator. ASO includes claims processing, utilization review, case management, PBM-pharmacy benefit manager, and PPO.

Stop Loss is the insurance that the employer buys to cover himself/herself for catastrophic claims that exceed a defined dollar amount (i.e. $50K or $100K). He/she would also purchase Aggregate Stop Loss Insurance. This covers the employer if his/her total annual claims exceed a defined amount of money. So do all ASO plans have stop loss? Not always. There are large employers who have thousands of covered employees that may feel they do not want to purchase stop loss since their risk is very predictable, and when it is not they have the necessary funds to cover bad years.

Q: Why do you have to issue a broker of record to a broker?

A: This is done when you want to hire a new broker to handle your insurance. Perhaps you currently have the best deal on your insurance, but you find another broker who provides more services than your current broker, and you want to change. You simply sign a letter addressed to all your insurers with your policy number which states, "I am appointing broker X as my new broker and please pay him/her the normal commissions that are being paid in relation to my insurance." You should think about why you are changing brokers. Some clients sign this without knowing what it means or they think it is no big deal. It means the person who is handling your insurance now is going to be fired. It is similar to firing an employee. You would not do this for any particular reason. Also, do not do this midway into the policy if it is for group benefits. Inform your current broker, and make the change 30 days prior to renewal. Since the current broker did the work of shopping all your coverages for free, and he/she is paid a monthly commission throughout the year, if you fire him/her midway into his/her policy then that money goes to the new broker for doing nothing. For all other insurance coverages you can make the change anytime after the renewal, since the broker gets paid the entire commission at the time of binding your renewal.

Q: What are reinsurance triggers in healthcare?

A: Not sure, but reinsurance can trigger on a specific basis, meaning a defined deductible amount or it can be a quota share where the reinsurer takes a percentage of risk over a certain dollar amount.

Q: What does D and O insurance mean?

A: Directors and Officers Insurance protects the current and former officers, directors, managers and employees for claims arising from the operations of the company (not professional liability).

Example: an anti-trust claim or misuse of corporate assets or business interference.

Q: What does a statutory limit mean on a works comp policy?

A: Workers Compensation covers all employees for work related injuries at 100% of the medical bills. It has a disability benefit and life insurance. In return for these free benefits the worker cannot sue the employer for more than what the statute says. In CA this is $1 million. The only way to get more than this limit is if the worker can prove gross negligence.

Example: an employer knew he had a faulty machine and let an employee use it and he/she is severely injured or killed. This is why all employers, especially those who can have a big workers comp claim should buy umbrella liability insurance, since this is the coverage that may respond if you have a claim that exceeds the workers compensation statutory limit. General Liability will not respond.

Tuesday, January 15, 2013

The Best Whole Life Insurance Advice

Many Insurance Agents tend to make the field of Life Insurance a complicated field both directly and indirectly. This creates a problem for the consumer because with a lack of understanding they tend to stay away from what they do not understand.

Life Insurance or Whole Life Insurance really falls into a class of an essentials like food, clothing or housing. The lack of understanding makes people think that Life Insurance is a luxury. In times like these with the unemployment rates so high and the economy of the world in such a down-turn any-thing thought of as a luxury, most will stay away from.

Due to the lack of understanding people will just not seek out an expert to help them gain understanding. So people will end up going without and suffering the consequences when the times come when they should have had insurance. Many will buy the insurance sold in junk-mail or what is being advertised on TV and end up with very low-grade products.

The old fashion distribution channel for Life Insurance was the agent that sold and represented one company. Experts in their field and put a lot into their trade helping people to understand the various technical terms of Life Insurance. Agents of this caliber today are few and far between but they do exist.

Today you are more likely to run into the insurance broker that represents many companies. So as an insurance consumer understanding the technical terms has become something you must really learn on your own. To help the general public understand the importance of Life Insurance should be taught in the public school system. Classes on the technical terms of insurance should be required to graduate from High School.

Taking the time and effort to learn the various technical terms to gain a good understanding of what is needed is what far too many people will just not do. So if they buy at all it is from banks, stockbrokers and the far too innovative junk-mail and telephone salesmen.

What many people fail to realize that today with the use of the internet it has become much easier to learn the various terms to get a good understanding to the point of securing the right kind of life insurance for their needs? What is still needed is a method of helping the general public understand just how important it is to secure Life Insurance at the youngest age possible.

The best policies with the best benefits and the lowest costs are sold by agents. The problem is that most companies drive their agents with sales quotas and sales techniques for getting more sales rather than being the quality representatives they should be. It is far too difficult for the average person to tell the difference between a high quality Agent and the high pressure salesman making his quota.

Here is where the problem begins, far too many people think that all agents are just high pressure salesmen. This leaves far too many people without the insurance they really must have.

All Agents are licensed by states to sell insurance products and there is a screening process to weed out the bad apples. But like any process it is not fool-proof. This makes it far too important for the average person to learn the important facts about Life Insurance on their own.

Monday, January 14, 2013

Take a Time to Review Your Car Insurance Rate

If you have not reviewed your car insurance policy in the past year, it may be costing you more money than you should be paying. In addition, you might not have enough insurance to meet your needs in the event of an accident. Take time today to review your car insurance rate.

Start by evaluating current insurance needs. According to the place in which province you live in, you may not have enough insurance if you only have the state minimum amount of liability may not be enough to cover the expenses of an accident. Today's automobile costs have far exceeded the provinces minimum liability and even if you drive a clunker, you can be involved in accidents with newer cars that are very expensive. You should make sure that you have enough liability so that you can cover the replacement of a automobile.

Additionally, you may find yourself responsible for medical expenses of the other vehicle's occupants. Again, many provinces have a minimum liability that is much lower than current medical expenses of persons that are presonal injured seriously in an auto accident.

Make sure that you are not paying for too much auto insurance. A vehicle that has depreciated in value below two thousand dollars get different coverage insurance. Drop the coverage and put the difference in premium and rate costs in a savings account. You will have more money in the account than you would have received in a settlement if your vehicle had been totaled. Continue this for a few years and you may have a hefty down payment for your next vehicle.

After deciding the amount and type of motor vehicle insurance that is needed, you will want to contact a few companies to get the rates you need for comparison. Tell the agent you speak with what insurance you want and ask for their free quote. If the agent wants a fee before giving a quote, then find another agent to ask for the quote. Most insurance companies offer rates and quotes without fees.

Many consumers find that they get the easiest and best quotes for motor vehicle insurance over the internet. You will need to give some information in a form and submit that form to get the quotes. Some websites offer instant quotes and others offer more than one quote by submitting only one form. Using the internet avoids having to wait for call backs from insurance agents to get the price quotes. Additionally, these rates are easy to print for the comparison you need to do.

You will want to be sure that your new policy is written to become effective at the time the last policy expires. Provinces are cracking down on uninsured motorists and even one day lapse in policy may have severe consequences.

If your car insurance coverage lapses, the insurance company is required by many province laws to make an electronic report to the DMV. You will get a letter that must be responded to proving that you have insurance or your registration and driver's license could be canceled.

Sunday, January 13, 2013

Reinsuring The Agent-Owned Captive Insurance Company

The insurance agent has been given very little exposure to and education in the world of reinsurance. Most agents only become aware of reinsurance when an insurance company underwriter tells the agent that they cannot write that risk because our insurance company's treaty reinsurance agreements prevent us from writing that type of business.

Since reinsurers over the years have been the traditional risk-taking company, their influence in determining underwriting philosophy for primary insurers has grown significantly. Many reinsurers today, because they are taking a larger amount of exposure on a particular insurance company's individual risk, now dictate the primary pricing, the amount of the deductible, the amount of the credit or debit. Reinsurers now have to know a great deal more about the primary insurance business.

The agent should consider the purchase of a reinsurance program for its agent-owned captive insurance company. Many of the approaches to buying reinsurance are similar to what a traditional insurance company uses. The agent needs to be familiar with the various types of reinsurance:

1. Quota Share Reinsurance

2. Excess of Loss Reinsurance

3. Catastrophic Reinsurance

4. Aggregate Excess of Loss Reinsurance

5. Stop Loss Reinsurance

6. Finite Risk Reinsurance

Although the capital requirements for starting agent-owned captive insurance companies, particularly those in the offshore domiciles, are comparatively small, careful consideration should be paid to the structure of a comprehensive reinsurance program. Gone are the days when aggregate stop loss reinsurance could be easily ascertained to guarantee underwriting profits for the agent-owned captive.

Bearing this in mind, the net retention of the agent-owned captive should be compared to its financial structure and the agent owner's risk taking philosophy. Most agent-owned captive insurance companies operating today have too great a new retention when contrasted with traditional insurance companies, and also taking into consideration their financial structure.

Whether the agent-owned captive purchases only quota share reinsurance or uses a combination of several types of treaty reinsurance agreements, the reinsurance program must be monitored and consistently evaluated. The degree of difficulty increases dramatically when designing a reinsurance program for a newly formed agent-owned captive insurance company.

Reinsuring the Policy-Issuing Company
with Your Agent-Owned Captive

A policy-issuing arrangement in your agency-whether it be a retail agency, wholesale agency, or managing general agency-is when a policy is issued by a licensed property/casualty insurance company, whether admitted or non-admitted. Then it is reinsured up to 100% by the traditional reinsurance company market that would include the agent-owned captive insurance company. This type of arrangement is sometimes referred to as "fronting" and is almost always used when the agent has formed an agent-owned captive.

The policy-issuing company is paid a "fronting fee," and is reinsured 100%. Some property/casualty insurance companies have had as their franchise model offering their "A" rated carrier as a "frontier," thus transferring underwriting risk for financial risk. Fronting companies must consider state premium takes, residual mods, government schemes and assessments, and that is why the agent needs to be trained in negotiating a fronting fee. Experience with this type of fee shows that the pure profit margin on a fronting fee can vary from 3% to 7.5% depending upon the fronting insurer.

For example: An agent-owned captive insurance company operating in the Florida restaurant insurance marketplace reinsures the first $75,000 of underwriting loss behind the policy-issuing company. In addition, the reinsurer also owned by the same financial group that the policy-issuing belongs to, writes the excess of loss reinsurance above $75,000 up to $500,000, at a rate of 17.5% of GNWPI. The excess of $500,000 up to $1,000,000 of limit for the restaurant program has another rate, as a percentage of gross net written premium income. The reinsurer is a direct writing reinsurer, and negotiates its excess of loss treaty reinsurance agreement directly with the policy-issuing insurance company, since they also have other treaty reinsurance agreements in place with each other, none of which has to do with the agent-owned captive insurance company.

To have a successful agent-owned captive insurance company, the agent has to understand the negotiating process when buying reinsurance either in the direct reinsurance market or through the reinsurance intermediary market. The agent will also get a better understanding why the underwriting cycles exist in the property/casualty insurance industry, and be able to take advantage of these underwriting cycles. When policy-issuing insurance companies take very little underwriting risk, and the actual underwriting risk is transferred to the traditional reinsurance market (as well as the agent-owned captive insurance company), the agent will begin to need to negotiate with reinsurers.

Using Quota Share Reinsurance Provided
Only by the Agent-Owned Captive

Here is another example: The Cayman Island agent-owned captive insurance company originally started to write horse mortality insurance, and was capitalized substantially by a bank, using the collateral of the agency. On the basis of this substantial capitalization, the agent-owned captive was able to write 100% of the quota share reinsurance of the policy-issuing insurance company. Policies originally written in the agency were issued in the policy-issuing insurance company, 100% reinsured to the agent-owned captive, who in turn purchased an outgoing going reinsurance program, consisting of a combination of quota share reinsurance and excess of loss reinsurance.

The accumulation of profits in the Cayman Island agent-owned captive insurance company was used to purchase a "shell" property/casualty insurance company which went on to be an "A" rated specialty niche program insurance company after several stock offerings.


The owner of a retail insurance agency (i.e., program administrator) the owner of a wholesale, excess and surplus lines insurance agency, and/or the owner of a managing general agency need to explore the feasibility of implementing an agent-owned captive insurance company. Recapturing investment income and underwriting profits gives the agent-owner significant returns on investment.