IRMI Update—Issue #160
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
May 2, 2007
In This Issue
Colleague,
The public's perception of the industry makes many insurance professionals
feel like helpless underdogs. The actions or inactions (right or wrong) of a
company or even just a few bad apples often vilify the entire industry. We saw
this with the Spitzer probes, and we are seeing it again with Katrina claims.
Most insurance professionals are very ethical and work hard to do the right
thing for clients, but they feel helpless to change the much maligned reputation
of the industry.
I believe we are far from helpless. Each individual in our industry can help
change this image by working together toward that end. This calls for following
the highest ethical standards, requiring those with whom you work to do the
same, and continuously communicating this commitment to your clients and prospects.
Since they provide the critical mass to achieve a purpose, you should also
support industry organizations that are working to reinforce ethics in the industry
and showcase its good side. Recently I was saddened to learn that there are
10,000 or more actively employed CPCUs who are not dues-paying members of the
CPCU Society (membership in the Society is optional for those who achieve the
designation). Since it is one of the few industry organizations that is not
a trade association, the CPCU Society is uniquely situated to help educate the
public on the good things insurance professionals do, and its members and staff
are working diligently to do just that.
CPCU designees who are not Society members have absolutely no room to complain
about the industry's reputation. Membership is not costly, which eliminates
lack of employer support as an excuse. With that said, I would put employers
who do not support their CPCU employees as members of the Society in an even
leakier boat. This penny wise and pound foolish cost control decision makes
no sense.
Of course, the CPCU Society is not the only organization working for the
betterment of the P&C insurance industry (though I only know of one other, NAIW,
that requires its members to abide by a code of ethics). If you are not a CPCU,
look for one that trumpets the industry's good works and support it financially
and as a volunteer. You can make a difference in how people view your industry.
What do you think? Can insurance professionals change the industry's much
maligned reputation or are we indeed helpless? Do professional societies and
trade associations help? What can individuals do to showcase the good side of
the industry? Please [See reader responses.]
By the way, if you are a CPCU whose Society membership has lapsed, please
contact the Society about reestablishing your membership on its Web site.
Thank you for subscribing to IRMI Update. We are honored that you choose
to be part of our subscriber family.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Streamline Your MVR Process and Assure It Complies
with the Law—Obtaining motor vehicle records (MVRs) and using them to
help determine who will be allowed to drive on company business can be a very
effective risk control procedure. However, care must be taken to assure that
various privacy laws are not violated. Motor vehicle records and other underwriting
reports have been identified as consumer reports. As such, use of these MVR
reports must comply with Federal and State laws including the:
- Fair Credit Reporting Act (FCRA)
- Driver's Privacy Protection Act (DPPA)
- Gramm-Leach-Bliley Act (GLB)
The "Fair Credit Reporting Act," also known as the "Privacy Act," is designed
to protect private information from misuse by corporations. The law affects
many activities in the insurance business, including how claims information
and personal information such as MVRs are handled. The law allows use of MVRs
by the insurer for underwriting purposes but requires insurers (and brokers)
to protect the privacy of the information that they obtain about individuals.
Thus, sharing MVR information with an employer without the permission of the
employee could create liability for the insurer and the insurance broker.
For this reason it is advisable for companies to set up internal policies
and processes for acquiring and checking MVRs when hiring employees who will
drive on company business and include periodic checks in an ongoing written
and formal automobile safety and MVR program. Asking brokers to administer this
process adds little value and may actually lengthen the time it takes to obtain
MVRs. Employers can require that their employees obtain copies of their MVRs
from their state department of motor vehicles or may obtain it directly once
they have received written permission from the employees. Another option, particularly
when numerous states are involved, is to use a third-party provider of employee
screening services.
By: Nathan Rum
www.Overinsured.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for Nathan.
We have recently updated a number of the reference manuals in the IRMI library
and published new issues of The Risk Report and Captive Insurance Company Reports.
To make sure you don't miss any of this new information take 30 seconds to scan
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There are now over 900 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
Managing health and welfare benefits in today's environment is not an easy
task. It requires collaboration from top management, CFOs, risk managers, and
HR directors. You will get a clear understanding of the major steps in the process
and develop an effective strategy by attending the IRMI Construction Benefits
Conference. A dozen industry experts will lead the one-and-a-half days of practical
strategies for controlling benefit costs. If you do not work with employee benefits
programs, please pass this along with this link for more details.
Brent Cooper has written
13 articles on personal
lines courts and coverage since he began writing for IRMI.com in 2004, including
the article on ensuing loss clauses above. He is a named shareholder in the
Dallas office of Cooper & Scully,
P.C., where he practices appellate, insurance, business, and commercial
law, as well as personal injury trial law. For more information on Mr. Cooper,
see his full biography and
a list
of his articles.
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