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Insure Thyself!

Fraternals provide protection, but how well protected are your society, your board, and your agents?

Protecting our members’ financial futures through safe and secure insurance and annuity products is a big part of what we do.  But operating a fraternal – that unique hybrid of financial services provider, membership organization, and community service activist – carries significant risk, as well.

Are your society executives and board members secure in the knowledge that they are protected against a lawsuit from members or outside groups?  Do you have a full understanding of your risk exposure and the types of coverage your society should have in place?  Are you offering your agents – independent or captive – access to the most cost-effective coverage as an incentive to place more business with your society?  Are you purchasing your professional liability coverage through a professional broker with a thorough understanding of a fraternal’s operations?

If the answer to any one of those questions is “yes,” then you can’t afford not to listen to THIS PODCAST featuring CalSurance’s Michele Gerace discussing the nuances of fraternal liability and the advantages of the Alliance-sponsored professional liability program for both directors and officers and agents and brokers.

Every Alliance member purchases D&O coverage.  Imagine the market clout we’d have if a majority of members took advantage of our sponsored program.  Over the next six months, I’d like to ask you to do one small favor for me:  ask the folks from CalSurance to review your current professional liability coverages – E&O and D&O – and provide you a quote through the Alliance’s program.  Even if you elect not to purchase coverage through the program – and my hunch is that the coverage enhancements and price will be too good for you to pass up – you’ll come away more knowledgeable about your society’s liability exposure and more aware of the gaps in your current coverage.  Either way, you can’t lose because the policy review is absolutely free. 

Find out how much you can save and how much better protected you can be by calling Michele at (201) 526-4628.

NAIC Update

Here’s the news from the National Association of Insurance Commissioners (NAIC) meeting here in Austin, Texas, that affects fraternals.  The Financial Condition (E) Committee adopted the recommendation of the Capital Adequacy Task Force to amend the existing life risk-based capital (RBC) model law to include fraternals rather than develop a new fraternal RBC model.  The Alliance supported this proposal and will work with regulators with whom we have solid relationships from Minnesota, Wisconsin, and Pennsylvania to ensure that the final amended language of the life RBC model incorporates the subtle differences in the fraternal RBC formula.  “Stand at the ready” on this because the NAIC indicated that it intends to begin collecting fraternal RBC data on the NAIC database as soon as possible.  The Committee also adopted a recommendation to increase the threshold for regulatory trend tests under which a life company will be considered in the Company Action level from 200-250 to 250-300 RBC percentage. The American Council of Life Insurers (ACLI) withdrew its initial objection to this amendment on the basis that the higher threshold makes the standard for life companies consistent with those for P&C and health insurers.

Looking Back on 2010 and Ahead to 2011

It’s the time of year for reflections and resolutions – and maybe a few predictions.  So here goes…

2010 was a very good year…

While an avid student of history, I make it a point not to live there.  Let’s celebrate our successes, learn from our failures, and put the knowledge from both to use today without any regrets.  Here’s a quick look at the major developments that affected the fraternal industry last year:

The American Fraternal Alliance was born – By a unanimous vote of the membership; the association adopted a new name and logo in 2010 (scheduled for rollout in January 2011).
Threats to the tax exemption defeated – Legislation that would have repealed the fraternal premium tax exemption (as well as those of many other nonprofit groups) was defeated in Hawaii and Washington.  Your trade association funded these efforts, which required us to retain local lobbyists in each state and muster member societies’ ground forces in order to convince lawmakers that repeal was poor public policy and a bad deal for taxpayers.

The Fraternal Advisory Committee’s hard work paid off when the NFCA launched the first comprehensive survey of fraternal activity, supplying vital information about how fraternals contribute to American communities.  Protecting the fraternal tax exemption starts with data-driven advocacy.

A merger made in heaven – The Catholic Knights/Catholic Family Life merger was completed and a new society – Catholic Financial Life – was created.  This was a strategic merger, driven by the forward-thinking management of both organizations, and it sets the tone for similar consolidations that provide more and better benefits to members through the creation of more efficient and responsive societies that can capitalize on the economies of scale so necessary in today’s business model.

RBC standards gain momentum – Minnesota becomes the second state to enact RBC requirements for fraternals.  Meanwhile, the NAIC abandons plans to adopt a national fraternal RBC model law, citing the progress that individual states and the NFCA are making as the prime reason why such a model is unnecessary.

New brands for mature societies – Catholic Aid Association became Catholic United Financial; Mennonite Mutual Aid Association became Everance Association; and Greater Beneficial Union became GBU Financial Life – all sweeter sounding names for the next generation of fraternal members.

Record membership renewal rate and an increase in membership – The number of societies in your trade association actually increased in 2010 thanks to a 100% membership renewal rate and the addition of three new members.  That’s a remarkable achievement in a year when most trade groups saw their memberships slip thanks to attrition, consolidation, and tough economic conditions.  We’ll do everything we can to make membership even more valuable in 2011.
Eenie beanie, chili beanie, the spirits are about to speak…

And now for a look into my crystal ball and some fearless predictions for the year ahead:

Brand identity – Thanks to a comprehensive communications campaign, more state and federal public policymakers will know who the American Fraternal Alliance is and what our societies do to enhance the quality of life for their members and the communities in which they live and work than ever before.

RBC train keeps on rolling – At least two states will enact new laws applying RBC standards to fraternals.  The American Fraternal Alliance tests the feasibility of creating a new RBC formula for fraternals as part of the NAIC’s overall effort to recalibrate RBC formulas for all segments of the insurance industry.

State fraternal alliances incorporate and engage – As a result of the American Fraternal Alliance name change, state fraternal organizations incorporate under the Alliance banner, join forces with state FIC groups, and become more engaged in political advocacy activities designed to educate state legislators on the powerful economic and social impact fraternals have across the country.  It’s a good thing, too, since more than a dozen states could consider repealing nonprofit tax exemptions in 2011.

Data be the day – A record number of member societies participate in the American Fraternal Alliances fraternal activities survey.  The results are compiled into an impressive collage of community service projects, financial contributions, and membership benefits that further validates the value of the fraternal tax exemption.

Fraternals charge the Hill – CEOs from nearly every American Fraternal Alliance member society converge on Washington, DC on May 3, 2011 for the first every “Fraternal Day on the Hill.”  Armed with compelling anecdotal and statistical data on the social and economic impact of the fraternal system, these ambassadors help convince members of Congress to keep the fraternal tax exemption out of the discussions over reform of the U.S. Tax Code.

Merger mania – At least three mergers will be initiated in 2011 – either driven by the point of a regulator’s bayonet as a result of solvency concerns, or spearheaded by fraternal executives and board members who want to see their organizations stop living hand-to-mouth and prosper over the long-term.

OK, it’s your turn.  Let’s hear from you…

Looking back on 2010… and ahead to 2011

It’s the time of year for reflections and resolutions – and maybe even a few predictions.  So here goes…

2010 was a very good year…

While an avid student of history, I make it a point to not to live there.  Let’s celebrate our successes, learn from our failures, and put the knowledge from both to use today without any regrets.  Here’s a quick look at the major developments that affected the fraternal industry last year:

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A little something for everyone…

It’s been awhile since I’ve posted a blog, and I’ve been collecting items that I just know you’ll love.  I’ll save the big thought pieces on the future of fraternalism and the procedure for rolling out the association’s new name for later in the month.  In the meantime, I hope these interesting bits of tid will whet your holiday appetite for making a difference in your society, in your community, and in the nation…

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Keystone State Sets Example for Regulatory Relationships

Fraternal leaders in the Keystone State – led by the Pennsylvania Fraternal Congress (soon to become the Pennsylvania Fraternal Alliance!) – set the standard for developing positive relationships with state insurance regulators.  I had the privilege of attending my third PFC meeting this week and the highlight of the session was the three-hour presentation by four representatives from the state Department of Insurance (DOI), including Deputy Insurance Commissioner Steve Johnson and Director of the Bureau of Financial Examinations Dave DelBiondo.  Here are links to the PowerPoint presentations:  Update on Regulatory Topics and Market Analysis – September Series.

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Why it’s better to be the sausage maker than the ingredients

You’ve all heard the old saying about legislation and sausage – you know, that you don’t want see either one being made.  But when you are an organization whose members are significantly impacted by the decisions of public policymakers – be it on tax laws or insurance rules – you just can’t afford to sit on the sidelines and ignore the sausage-making process.  If you do, you run the risk of being tossed into the grinder.

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Report from the NAIC Meeting

The National Association of Insurance Commissioners (NAIC) met in Seattle from August 13-17.  I was on hand for most of this meeting, and here’s a quick look at some of the key developments:

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Financial Exams, Ft. Hood Memorial, and a Father’s Wisdom…

NAIC Plans Review of RBC System – Don’t know if you’ve seen the article in today’s National Underwriter, but the NAIC is planning to conduct the first thorough review of the risk-based capital (RBC) system in nearly two decades.  Regulators use the RBC ratio to adjust the value of an insurer’s holding to reflect the estimated level of risk and, after the adjustments are made, to determine whether the insurer has enough capital to meet its obligations.  Regulators may step in when an insurer’s RBC ratio falls sharply or falls below a “regulatory intervention” level – typically 300% or lower.  The NFCA provides members a worksheet to calculate their RBC ratio and submit it to those state regulators who require fraternals to file such data.

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Joe’s Special

Here is a grab bag of items I’ve been meaning to share with you – some monumental, others less so.  Hope you find them interesting…

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Treating “Like Like Like”

Any time a group of businesses or its trade association takes the lead on working with public policymakers to enact stricter regulatory guidelines on how those organizations are run, it’s bound to spur controversy.  Some members of the trade group may bristle at being subjected to rules they think are unfair or discriminatory.  Others may think the proposed standards don’t go far enough. 

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