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    Two articles you have to read…

    With the NAIC Summer Meeting coming up this weekend and the Alliance Annual Meeting following quickly on its heels, there is just not much time for writing creative blog posts. Fortunately, I came across two terrific articles this past week that addressed two important topics better than I could have on my own. I wanted to share them with you because they provide such profound insights into our business.

    The first is a blog post written by my colleague Faye Lageu of the International Cooperative and Mutual Insurance Federation (ICMIF). The topic is “Corporate Social Responsibility” and the often overlooked role that insurers – life, health, and property-casualty – play in this arena. I know in my 25+ years in public affairs for the property-casualty industry, I was always a little miffed that the media (and a few self-serving politicos) seemed to seize on the opportunity to pillory the entire industry when a questionable claim was denied (such as the “wind vs. water” debate that occurs after almost any major storm), but failed to notice that the massive rebuilding efforts after any major disaster were financed almost entirely by insurance claim checks.CSRNow that I represent fraternal life insurers, “Corporate Social Responsibility” is even more relevant to me. Because for fraternal insurers and their millions of members, the simple act of purchasing a life insurance certificate or annuity helps secure a family’s financial future AND fund community engagement activities that improve the lives of others. It’s a dual benefit system: in the here-and-now and in the hereafter. Not a bad deal…

    The second is a more troubling piece that appeared in The New York Times earlier this month entitled “When Your Life Insurance Gets Sick.” If you didn’t expect The Times to write a glowing piece about the life insurance industry, you won’t be disappointed. But the article does point out one of the most vexing challenges facing every insurer – fraternal and commercial – operating anywhere in the world: low interest rates.

    low interest rates

    The compelling quote: “Interest rates are at near zero and in some places have turned negative – unprecedented until recent years. It is contributing to a crisis moment for a business once considered a bedrock of financial stability and an industry that supports the retirement of millions. In particular, companies that sell policies that run for decades…face a twofold challenge: how to fund policies that were sold back when their actuaries couldn’t envision a world of interest rates below 8 percent, and what to sell now, when those same actuaries can’t envision an appreciable rise in rates anytime soon.”

    I welcome your comments on either or both of these articles. Post a comment here or send me a personal email at jannotti@fraternalalliance.org.

    Next week’s post: a last minute primer on the Annual Meeting.

    Ten books and songs for summer…

    As you can imagine, things are just a little hectic around the Alliance as we prepare for the Annual Meeting next month in Nashville. But I’ve still made time to update my itunes file and squeeze in a few good books on those flights to member society conventions and regulator meetings. Here are the top ten additions to my playlist and reading list. Share your comments and suggestions by posting a comment at the end…


    I’m a California kid who loves the beach but is not crazy about the Beach Boys. However, there are a couple of tunes on “Holland” – and old and obscure album that did not sell well – that I just couldn’t live without: Funky Pretty and Sail On, Sailor.

    Dizz Knee Land – It took me forever to find this one because I forgot the name of the band (it’s Dada) and the spelling of the title is ridiculous (to avoid being sued by the Head Mouse, no doubt). But I remembered some of the lyrics (degenerate though they may be), and Googled them, and presto, there it was for only 99 cents.nils lofgren

    Many of you probably know Nils Lofgren as a member of the E Street Band, but I just love his first self-titled album, and have two favorite cuts: Back It Up, and Keith Don’t Go.

     Members of the Dead always had side projects and one of those that I was particularly fond of was Kingfish, a band that Bob Weir fronted. They only made one album and do a terrific cover of Big Iron, an old Marty Robbins tune.

    Nothing says summer of ’73 better than Linda Rondstadt. And the song that makes me want to pull over and just listen is Blue Bayou.

     Summer in the San Francisco Bay Area when I was growing up meant seeing Tower of Power just about every weekend. If there’s a better brass section, I haven’t heard it, especially on these two tunes: You’re Still a Young Man and Don’t Change Horses (in the Middle of a Stream)

    Boz Skaggs was another regular on the Bay Area concert circuit in my formative years. And by Boz Skaggs, I mean the pre-“Silk Degrees” artist who could really rock. My top Skaggs tune: We Were Always Sweethearts


    1. American Heiress – The story of the Patty Hearst kidnapping and trial byamerican heiress Jeffrey Toobin. Just started it and literally can’t put it down.
    1. No Way Down – Terrific mountaineering book about an ill-fated expedition to the summit of K2.
    1. The Last Campaign – 82 days on the campaign trail with Bobby Kennedy in 1968. Moving, thought-provoking, insightful look into what might have been.
    1. I Am Pilgrim – While I prefer non-fiction, this is a page-turner and a great beach read.
    1. ISIS: Inside the Army of Terror – If you want a better understanding of what’s going on in Iraq, Iran, and Syria, this is the book for you.bad days in history
    1. Bad Days in History – An interesting and sometimes humorous compilation of the worst things that happened on every day of the year from the dawn of recorded history.
    1. The Unraveling – Another book on the Middle East situation written by Emma Sky (who seemed to be everywhere, influencing every decision for the better part of two years). Not my favorite.
    1. Target Tokyo – Jimmy Doolittle was one of my mother’s heroes, and this accounttarget tokyo of his famous raid on the Japanese home islands is gripping. But the story of what happened after the mission – and how the aviators got back home – is what really moved me.
    1. Going Clear – If you’ve ever thought of becoming a Scientologist, read this, and you won’t.
    1. The Oregon Trail – One man’s account of his modern day ride in a covered wagon across one of the routes that shaped the nation.


    Eight random thoughts on the Olympics…

    I’m not a huge fan of the Olympics. For the most part, I think the purity of competition between amateur athletes – which I’ve always felt was the cornerstone of the Games – has been transformed into a jingoistic commercial behemoth comprised of professional athletes whose job it is to win medals. Nonetheless, I can’t escape watching some of the competition, some of which I love (track and field) and some of which I love to hate (see below). Here are some random thoughts on the first few days of competition:

    • Beach volleyball consists of two players – and no substitutes – per team. So why is it necessary for the athletes to have numbers (almost invariably 1 and 2) in addition to their last names on their jerseys?beach volleyball uniform
    • The Russian Paralympic team was banned from the Games. Really? Their Paralympic athletes – the ones you would think are most likely to compete for the sheer joy of it – are part of a state-sponsored cheating program? Downright unbelievable…
    • I watch diving for about 30 minutes every four years. And about the only acrobatic move I can do off a diving board is a cannonball. Yet that does not prevent me from becoming an expert at judging pikes, twists, and somersaults within 30 seconds of turning on the TV. “Did you see the Chinese diver over-rotate that entry?”
    • If athletes are required to wear make-up, carry a prop, or have uniforms with sequins to compete, it shouldn’t be considered a sport. Sorry synchronized swimmers and rhythmic gymnasts, you’re terrific entertainers but don’t qualify for the medal stand in my book.swimmers makeup
    • Why are the 100m and 200m swimming races contested in four separate strokes when it’s clear that the freestyle is by far the fastest way to get from one end of the pool to the other. By that logic, we should be running the 100m and 200m dashes backwards, sideways, and hopping on one leg.
    • McDonald’s is the official restaurant of the Olympics; Coke is the official soft drink; and United is the official airline. It’s a wonder that our team got to Rio at all and wasn’t horribly obese when they arrived.
    • How about those Italians ranking eighth on the total medal count – with three gold – through Tuesday! Va bene!!!
    • If you weren’t touched by first time Olympian and gold medal winner Ryan Held crying on the medal stand with his relay teammates when the National Anthem was played, you have no heart.ryan held crying

    Got a favorite Olympic observation?  Post it here…


    Joe knows Nashville…

    Joe knows nashville

    In less than a month, hundreds of fraternal leaders will head to Nashville for the Alliance’s Annual Meeting. It’s shaping up to be one of the largest meetings in recent history. Representatives from nearly 50 of the Alliance’s 63 member societies have registered and the room block at the Omni Hotel is on the cusp of selling out. (But don’t worry, there are several hotels within walking distance that can accommodate our overflow easily!)

    In addition to the terrific lineup of keynote speakers and workshops, the Music City has an endless supply of attractions and activities for almost anyone. It’s one of my favorite places to visit, and here are a few of my absolute favorites. Enjoy and see you in Nashville in September!

    1) Nashville and music are an inseparable combination. Here are some serious venues for fans of country music…

    a. Bluebird Café
    b. Station Inn
    c. Ryman Auditorium

    2) Not a country music fan? Not to worry. Check these out

    3) For artful cocktails in a unique setting, try “The Patterson”…

    2Bacon Bourbon

    4) Want to combine exercise with your happy hour? Then Nashville Pedal Tavern is the answer…2 Pedal Tavern

    5) Hungry? Here are 18 essential Nashville restaurants to consider…

    6) Here’s a place to purchase a one of a kind memento during those 30 minute breaks between speakers…

    2 Hatch prints

    2 Hatch Show Print






    7) Are you ready for some football? Stay an extra day and watch the opening game of the NFL season between the hometown Titans and the Minnesota Vikings? (Use the promo code: Alliance for a discount.)

    Got a local favorite that I missed? Post a comment or link here or send me an email so I can list it in next week’s post.

    This Year’s Community Service Project

    This year our partner is Music Health Alliance (MHA), mHAmusic’s resource for healthcare solutions and access. MHA is the first non-profit organization to merge Nashville’s two leading industries, Healthcare and Music. With MHA’s unique model of healthcare support, over 3 million dollars in healthcare resources was secured last year to improve the health of the makers of music. MHA was created by removing the profit motive from a traditionally profit driven model. This enables them to provide personalized solutions and a seamless flow through what is seen by many in our industry as a fragmented healthcare system.

    Representatives from MHA will be onsite at the Omni Hotel Nashville in the Alliance’s registration area to accept cash and checks made out to Music Healthcare Alliance. Please stop by their table and support this worthy cause. MHA also helped us secure some great local musicians for our receptions which will be a real treat.  Make sure to thank them by making a donation onsite!

    From the mouths of babes…

    From the outside looking in, it’s easy to characterize fraternals as being old-fashioned, archaic, unimaginative, or a combination of all three.

    But dig just a little deeper and you’ll find an incredible pool of talented young professionals who understand the magical business model on which fraternals are based and who are helping their societies shape the future for the next generation of members.

    At the Alliance’s 2016 Annual Meeting, we’ll provide these movers and shakers the opportunity to share their ideas – and passion – with you and your peers at the Innovation Forum on Saturday morning, September 10. Like the leaders who will be the featured presenters, the Innovation Forum will move quickly from topic to topic in an effort to send you home with as many practical ideas as possible in just 60 minutes.

    Want a taste of what you’re in for? Check out these videos from three of our presenters – one of whom already has her eye on the corner office…





    See you in Nashville!

    What do PBR and Leif Erikson have in common?

    In last week’s blog, I highlighted the Alliance’s major political advocacy victory as we recruited the 100th co-sponsor for House Congressional Resolution 19 – the “Fraternal Resolution.” This week, I’d like to showcase another successful policy initiative that may have an even greater impact on fraternals and other small life insurers.success

    As many of you are aware, enough states have enacted Principles-Based Reserving (PBR) enabling legislation to permit PBR to become effective nationally on January 1, 2017. With the three-year phase-in period, insurers can defer the actual implementation until January 1, 2020. PBR regulation has been in the works for almost a decade. The PBR methodology has been supported by most large life insurers because under PBR rules these insurers would likely have to allocate fewer assets to their reserves to meet regulatory standards. Fair enough.

    Because PBR methodology was not as applicable to smaller insurers, regulators agreed to include a Small Company Exemption(SCE) from PBR rules for insurers with less than $300 million in annual life insurance premium and a Risk-Based Capital (RBC) ratio of 450%. The Alliance supported the application of RBC for larger insurers and agreed with notion of a small company exemption. But the 450% RBC threshold to qualify for the exemption had us concerned that the new regulation could result in many small insurers – fraternal and commercial – having to comply with PBR rules which were never intended for them.

    For the past year, Alliance staff and Board members have been meeting with key regulators to point out that current RBC ratio expectations in most states is 300% and that a 450% RBC standard to qualify for the PBR exemption would, in effect, raise the minimum RBC ratio requirements by 150% for no good reason. You can learn more about the details of the Alliance’s advocacy efforts in our most recent CEO Bulletin. Long story short, regulators agreed with our position and have drafted an amendment to the SCE provisions that would exempt all insurers with less than $50 million in annual life insurance premium from the 450% RBC requirement when seeking an exemption from PBR rules. This amendment is likely to be adopted in 2018, well in advance of the January 1, 2020, effective date of PBR rules.

    This is a significant accomplishment for the Alliance and its members. This initiative enhanced our credibility with regulators in key fraternal states and among NAIC leadership. It also improved our standing with our commercial insurance company peers as our policy position and the amendment being proposed by regulators impacts all insurers – not just fraternals. ‘Nuf said…

    If Leif Erikson ran into these problems he would have never left Norway!


    You think complying with insurance regulation is expensive? Try navigating a tall ship through the Great Lakes! The Drakan Harald – the world’s largest modern Viking ship – sailed across the Atlantic on its way to the Tall Ships Challenge Great Lakes 2016 without a hitch. But when it arrived in North America, the crew discovered that it needed $430,000 to cover “pilot fees” to help the ship navigate the locks and channels of the Great Lakes. You read that right — $430,000.

    What’s the captain of a Viking sailing ship to do? Call the Sons of Norway to the rescue!

    The Sons of Norway, an Alliance member society headquartered in Minneapolis (where else?) has partnered with the Drakan to raise money to help the ship reach its destinations. You can learn more about – and participate in – the Sons of Norway’s effort by CLICKING HERE. You can also take a look at some of the media coverage of this ship’s journey HERE and HERE. I made a contribution to the cause last week (which was difficult for an Italian who was raised on the belief the Christopher Columbus got here first) and I’m hoping that gets me a tour of the ship when it docks in Chicago next month!!!

    “Smells like…victory”

    Alliance members overwhelmingly cite political advocacy as the primary benefit of association membership. And last week, after months of effort, the Alliance experienced two major wins in the advocacy arena, one on Capitol Hill and one at the NAIC.

    The initiatives that resulted in these victories and the tactics employed to achieve them were as different as the issues themselves. The first involved the long-standing fraternal tax exemption and the second, a much more recent debate about the application of Principles-Based Reserving regulation to small insurers. The fact that the Alliance can effectively impact the public policy debate on these wildly divergent issues speaks volumes about the organization’s ability to utilize advocacy strategies that are appropriate to the issue being addressed and the policymaking forum in which debate is taking place.

    Of course, there is still work to be done on both issues – political advocacy rarely results in a permanent success. But, for now, let me tip my hat to the Alliance members, along with our professional advocacy consultants and staff, who made both of these victories possible. This week, I will take a look at the factors that contributed to our federal victory; next week I’ll explore our efforts to impact the outcome of the PBR debate.

    House Congressional Resolution 19 – The 2015-16 session of Congress marked the Alliance’s second attempt at introducing and generating broad-based support for HCR 19, the “Fraternal Resolution.” In the 2013-14 session of Congress, we recruited 53 co-sponsors for the measure – which we thought was quite an accomplishment. This time around, we set a goal of securing 100 co-sponsors. As I mentioned last week, more than a few folks (me included) thought this might be just beyond our reach. Nonetheless, we set our minds to the task and began an initiative that included broad-based participation from member societies through the online “Race to 100” grassroots campaign, combined with personal visits to legislators and their staffs (commonly referred to as “grasstops” advocacy) from Alliance member society CEOs and executive staff. The third-leg of the stool was the day-to-day work done on Capitol Hill by the professional advocates retained by the Alliance; the government affairs staff and advocacy counsel of our largest member, Thrivent Financial; and the Washington, D.C.-based government affairs staff of our second largest member, the Knights of Columbus.

    This multi-faceted effort worked flawlessly. Thousands of individuals from Alliance member societies – employees, field representatives, local chapter leaders, and rank-and-file members – emailed their Representatives urging them to sign-on as a co-sponsor. Armed with the information about the number of constituent emails each Representative had received, the professional advocates from the Alliance and Thrivent, along with KofC staff, took to Capitol Hill virtually every day to follow-up with legislators and staff urging them to join the fraternal movement. Before we knew it, we had 60 co-sponsors, then 70, then 80…

    We suddenly realized that our goal of 100 just might be achievable after all – which gave us all the incentive to double-down on our efforts, generate more grassroots contacts from members, and continue to deliver our message to lawmakers who we knew had heard from their constituents. On Friday, July 8, Rep. Brad Sherman (D-Calif.) became HCR 19’s 100th co-sponsor. Since that time, Rep. Bob Dold (R-Ill.) and Rep. Mike Bishop (R-Mich.) have also signed on. The complete list of co-sponsors can be found here. It’s a glorious combination of Republicans and Democrats, conservatives and liberals, which only demonstrates the universal appeal of the fraternal model and the fraternal message.

    Securing 102 co-sponsors for HCR 19 – almost 25% of the House of Representatives – is a terrific accomplishment. But it’s not the end of the debate on tax reform. After the elections, a new Administration and a new Congress is almost certain to put tax issues front and center. We’ll need to sharpen and expand our ability to communicate with lawmakers at every level. More than three thousand individuals participated in the incredibly successful HCR 19 “Race to 100” campaign. Yet, there are more than 8 million fraternalists in the U.S. In retrospect, having only 3,123 participate in a grassroots campaign on this most important of issues is…disappointing. On the bright side, with just a little effort I think it’s possible to generate 100,000 emails to members of Congress in a future campaign. Imagine the impact we could have on Capitol Hill if that were the case.

    Getting to that point, however, will take some effort on all of our parts. Fraternals must make the commitment to collect email addresses for all their members. Online campaigns just don’t work if they are promoted in newspapers or magazines. Fraternals also have to be willing to educate their members about the tax exemption issue and the need to engage in political advocacy efforts to promote awareness of and support for the exemption. This means conducting training sessions at your conventions, regional meetings, and local chapter meetings. It means having the willingness to use those email addresses you worked so hard to collect to communicate information on your society – including information on public policy issues that affect your organization and its members.

    Advocacy is not a “voluntary” exercise. It should be an involuntary and life-sustaining component of your society – like breathing. And advocacy should not be outsourced to your association or its professional consultants. Yes, the Alliance staff and our retained advocates play an important supporting role. But unless members are willing to take the lead on telling our story to public policymakers, all the lobbyists in the world won’t be able to get the job done.

    So, great work to all those who participated. Take a minute to relish our success. Then start thinking about ways we can go from 3,000 grassroots participants to 100,000, one member at a time.


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