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Thursday, July 21, 2016

ABIA Submits Comment Letter re Incentive-based Compensation Arrangements

In a letter to regulators yesterday, the American Bankers Insurance Association expressed its opposition the Federal Reserve Board’s proposal to apply its incentive-based compensation rule to persons providing insurance. ABIA pointed out that the proposal is “inconsistent with joint rulemaking and unenforceable,” and urged the board to exclude insurance providers from the rule.

The incentive-based compensation rule was mandated by the Dodd-Frank Act, which notably leaves out any reference to insurance firms, ABIA pointed out. While the OCC’s and FDIC’s version of the proposed rule includes an exclusion for persons providing insurance, the Fed’s definition of “covered person” does not, making it contrary to the terms specified by Dodd-Frank.

The association added that the incentive-based compensation rules are to be enforced under the Gramm-Leach-Bliley Act, which explicitly states that the Fed does not have enforcement authority over insurance providers. Therefore, the Fed lacks the authority to enforce the rule, ABIA concluded. Read the letter. For more information, contact ABA's Sarah Ferman.

Thursday, July 14, 2016

Court Decision in Texas case vs CFPB

On Tuesday, July 12, a federal district court in Washington, D.C. ruled in a case that questions the constitutionality of the CFPB’s structure and the authority of the CFPB’s director to act before he was confirmed by the Senate (State Nat’l Bank of Big Spring v. Lew (D.D.C. No. 12-1032)).

There were two issues before the court:

1. Whether the CFPB is constitutional as it is currently structured, which raises a separation of powers issue: The district court deferred a decision on this issue until a federal appellate court in Washington, D.C. decides the same issue in an important case pending before that court (PHH Mortgage v. CFPB).

2. Whether CFPB Director Richard Cordray’s actions taken while he was a recess appointee (before the Senate confirmed him) were valid: The district court held that Director Cordray’s actions while a recess appointee were valid, because after he was confirmed by the Senate, he ratified his earlier actions in a notice filed in the Federal Register.

While the second issue was a loss for the banking industry, the decision on the first issue is yet to be decided, which makes the PHH Mortgage vs. the CFPB case filed last October a important case to continue to monitor.

If you are interested in or have any questions about the above cases, please join the monthly ABIA CFPB Task Force call.

Wednesday, July 13, 2016

Nichols Brings Message of Fintech Innovation, Partnership to the Hill

Banks are aggressively innovating and partnering with financial technology startups, but Congress and regulatory agencies could do more to promote “innovation-forward” policies, ABA President and CEO Rob Nichols told the House Financial Services Committee yesterday.

As the only representative of the banking industry testifying at the hearing, Nichols explained that banks continue to build on their history of technological innovation, and that many are currently partnering with nonbank fintech companies to bring their customers the latest tech through trusted and secure bank channels.

“When banks innovate and partner with startups to deliver new technologies, their customers win,” he said. “Banks have a long history of serving customers' needs and have established trusted relationships. These relationships are backed by a culture of compliance and regulatory oversight that ensures customers are protected.”

Nichols emphasized the win-win nature of fintech partnerships for banks, nonbanks and customers alike. Banks provide a trusted customer relationship, strong community presence and stable deposit funding, while customers get access to the most innovative technologies -- whether or not they emerged from a bank.

To help foster these partnerships, Nichols urged Congress and regulators to ensure that regulation is focused on activities, not charter type; to update laws and rules to reflect present-day and future technologies; and to provide a regulatory “greenhouse” for testing new fintech products.

Read the Testimony.

Tuesday, July 12, 2016

President Obama Nominates Additional Directors to the NARAB Board

President Barack Obama has nominated three additional individuals to sit on the board of directors of the National Association of Registered Agents and Brokers (NARAB). NAIC President John Huff, Alaska Insurance Director Lori Wing-Heier, and Amica Mutual Insurance Company Senior Vice President and General Counsel Robert Suglia have been nominated to the governing board, which will streamline licensing of nonresident insurance producers. The three nominations this month bring the total of Obama's nominations to 10, which his still short of the 13 needed for the NARAB board to operate. Once established, ABIA will work with the board and the National Association of Insurance Commissioners (NAIC) to implement NARAB II.

Thursday, July 7, 2016

Learn to Love Millennials – And How to Hire Them at Your Agency

By Guy Weismantel, Vice President of Marketing at Vertafore

Did you know that by 2018, a quarter of professionals in the insurance industry will be retiring?
That's 25 percent of the workforce— gone. Agencies are asking: How do you make a job with your insurance agency look appealing to a Millennial?

#1. Complete a Digital Upgrade
Take a hard look at the tech resources available at your agency. Perhaps you need to conduct some internal surveys of your employees, young and old, to find out what changes or software upgrades they would like to see. Visit tradeshows or conferences and find out what's new in the realm of technology and software for insurance agencies. With the help of your IT department, design a plan for replacing old machines and installing fresh software.

Read more about completing a digital upgrade.

#2. Engage with Social Media
If you want to recruit Millennials, you have to go where they live: Online. The most important thing to remember here is that Millennials have been trained to maintain and manicure their digital presence. They put a lot of time and effort into it and automatically assume the same from you. College classes suggest graduates should open a LinkedIn profile to connect with prospective employers, so wouldn't it makes sense for a company to start a page to connect with prospective employees?

Read more about engaging Millennials with Social Media.

#3. Improve Your Company Culture
Insurance agencies are heavily regulated by necessity; but that doesn't mean you have to eliminate all the fun and excitement from the job. To entice Millennials to work for you, you need to be willing to embrace change. It might seem painful or anxiety-inducing at first, but maintaining the status quo means losing 25 percent of your people in 3 years and limping along with a skeletal workforce.
Increase company flexibility. Maybe you can allow your employees to work from home a day or two during the week, or shift their work schedules to better accommodate their personal lives.

Create a path for advancement. Create ways for high performers and dedicated staff to move up in the ranks or to earn special benefits.
Read more about improving your company culture.

Making the Choice
When those Millennials start turning in their resumes and applying for a job with your agency, you might still feel tempted to hire the older, wiser, more experienced job candidate. You're not alone in that urge— in fact, 55 percent of all producer hires in the last five years were veteran agents. Just remember that the insurance veterans are probably in their late fifties, and they most likely have their eyes on retirement. Chances are, you've already got some veterans on board. Now is the time to hire those young, eager candidates with the energy that makes up for inexperience.

If you're interested in perpetuating your business, crossing the generational gap and making your agency the go-to employer for a new generation of insurance experts, download Vertafore's e-Book Managing Your Agency in the Digital Era to glean more helpful tips and ideas.

Vertafore delivers cloud-based insurance software and services that transform the business of insurance. With the largest customer-base in the industry, more than 20,000 agencies and carriers leverage Vertafore’s insurance solutions that are built on today’s most advanced cloud, mobile, and information technology platforms. Learn more and contact Vertafore.