Will New Cannabis Initiatives Result in Greater Opportunities for Insurers?

The division between state and federal statutes has made it difficult for legal cannabis businesses to receive all-inclusive, affordable insurance coverage and often leaves policyholders with restrictive plan options. According to the National Association of Insurance Commissioners (NAIC), conflicting state and federal laws, emerging standardization of business practices and rapidly evolving regulations have become formidable deterrents, discouraging many insurers from participating in this fast-growing and expanding market.

However, as federal prohibitions begin to ease, insurance carriers’ apprehensions will likely lessen. According to an article in Cannabis Wire, changes may come sooner rather than later with the Clarifying Law Around Insurance of Marijuana (CLAIM) Act of 2021. If passed, the CLAIM Act would:

  • Prohibit penalizing or discouraging an insurer from providing coverage to a state-sanctioned and regulated cannabis business, or an associated business.
  • Prohibit the termination or limitation of an insurer’s policies solely because the insurer has engaged in the business of insurance in connection with a cannabis-related business.
  • Prohibit recommending, incentivizing or encouraging an insurer not to engage in the business of insurance in connection with a policyholder, or downgrade or cancel the insurance offered to cannabis or cannabis-related business.
  • Prohibit the federal government from taking any adverse or corrective supervisory action on a policy issued to (a) an owner or operator of a cannabis-related business or (b) real estate or equipment that is leased to a cannabis-related business, solely because the owner or operator is engaged with a cannabis or cannabis-related business.
  • Protect employees of an insurer from any liability solely for engaging in the business of insurance with a cannabis or cannabis-related business.

According to Cannabis Wire, Sen. Bob Menendez of New Jersey, a senior member of the Senate Banking Committee and chair of the subcommittee that oversees the insurance industry, said, “Industries operating legally should have access to the same opportunities and basic products and services needed to do business.” A press secretary for Menendez, Steven Sandberg, also commented on the subject and told Cannabis Wire, “Very often insurance is also required for businesses seeking certain types of financing. It puts legal cannabis businesses at a disadvantage and their employees, customers and property at risk. This bill levels the playing field and will help the industry grow and thrive.”

The CLAIM Act, in addition to last year’s passage of the Marijuana Opportunity Reinvestment and Expungement (MORE) Act that removed marijuana from the list of scheduled substances and made small-business loans and services available to legal cannabis businesses, comes on the heels of the Secure and Fair Enforcement (SAFE) Banking Act, which is aimed at providing banks and federally regulated creditors with ties to state-legal cannabis businesses with legal protection.

At the end of the first quarter of 2021, approximately 30 surplus lines insurers and managing general underwriters currently service the cannabis industry, along with a limited number of admitted carriers, according to the National Law Review(NLR). As more carriers elect to expand their market capacity for property and casualty, product liability and workers’ compensation coverage, the NLR reports that it will become easier for licensed cannabis operators to find multiple coverage options at affordable pricing, including expanded coverage for commercial auto, indoor crop, pollution, crime and fidelity. It could also prompt carriers to offer larger cannabis operations increased limits on excess policies, directors and officers, errors and omissions, and cyber security coverages.

From dispensaries to growing and manufacturing, there exist today a large number of insurers that are already showing their support for the cannabis industry and offering quality and affordable insurance coverage. But if the above lobbying efforts tell us anything, it is that there will be even greater opportunities for insurers to better serve this emerging industry over the next several months. 

About FastrackCE

Need to complete your insurance continuing education credits? Let FastrackCE help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.  We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training.

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Pandemic Sparks a Renewed Interest in Life Insurance Careers and Coverage

Like many other industries, insurance was impacted by COVID-19’s recession-induced record unemployment. Today, as the economy begins to slowly recover, some sectors of the insurance industry continue to struggle, while others have experienced an uptick in growth.

According to research conducted by the Life Insurance Marketing Research Association (LIMRA), one market sector of the industry that has managed to come through the pandemic relatively unscathed is life insurance. In fact, at the height of the pandemic, LIMRA research showed that candidates’ interest in testing for field sales positions in 2020 increased 31%.

What comes as an even bigger surprise is that, historically, life insurance candidates are typically sourced from the financial services sector. In 2020, however, LIMRA research showed that a higher proportion of life insurance candidates came from a number of industries outside of financial services, including some of those hit the hardest by the pandemic, such as hospitality, transportation, construction, and health care.

“Typically, the largest subset of new field sales candidates are drawn from financial services,” said Margaret McManus, Ph.D., assistant vice president, research and predictive analytics, Talent Solutions, LIMRA and LOMA. “In comparison to other industries, the life insurance market remains relatively stable. This may have attracted many people looking to find a new career.”

But a career in life insurance isn’t for everybody. To be successful requires not only an in-depth understanding of what life insurance is, but also a comprehension of the ins and outs of individual products and how to properly assess the specific needs of customers. Due to these factors and because so many initial applicants in 2020 came from more-nontraditional industries, there has been an 18% drop in the number of candidates at the end of last year, compared with 2019’s non-pandemic year. LIMRA research shows that out of these nontraditional industries:

  • Thirty-three percent of applicants admitted to knowing nothing or very little about a career in life insurance, compared to just 17% of applicants with a financial services background.
  • Forty-six percent of applicants said they had very real concerns about their ability to answer questions from prospects and clients.
  • Three in 10 applicants said they were worried that prospects and clients won’t view them as a trusted adviser and, consequently, cost them sales opportunities.

“Life insurance is a multifaceted and complicated industry. Effective salespeople have to be knowledgeable about a vast array of products and how they fit into a client’s financial plan,” said McManus. “These nontraditional candidates may need more information about the industry, its culture and its practices.”

In addition to being an employment opportunity during hard times, another pandemic-related driver behind the increased interest in a life insurance career can also be attributed to more consumers being interested in buying coverage. In fact, LIMRA research shows that 32% of consumers who applied for coverage in 2020 did so because of COVID-19-related concerns. Research also showed that during the pandemic, there was a 35% increase in consumers’ choosing to purchase coverage online compared with 14% in 2019. 

Conclusion

Being a life insurance agent is a rewarding career in that it allows the ability to help prospects and clients obtain a sense of security knowing their family is financially protected in the event of the policyholder’s untimely death. Today, it’s uncertain whether the trend in the increase in candidates or sales in the life insurance field will continue during the process of recovery from COVID-19. What is certain is this: In 2021, with only 54% of Americans owning a life insurance policy, there remain vast opportunities in the life insurance sector.                  

Now you can get all your life and health and property and casualty continuing education credits done in one place and at your convenience. At FastrackCE, we offer online courses in most states, covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training. For more information, call 800-544-3605 or visit us at fastrackce.com.

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COVID-19 a Year Later: The State of Workers’ Compensation in 2021

Last year, COVID-19 affected nearly every sector of the insurance industry – including workers’ compensation(WC). As we near the end of the first quarter of 2021, it’s important that your employer clients be aware of changes and issues in WC insurance that could very well continue to impact insurers, and in turn policyholders, well into the new year.

Here’s what we know so far about the state of the WC market.

  • At the end of 2020, new business submissions were down 10% overall for most industries; 17% in public administration and similar services industry segments; and 23% in the arts, entertainment and hospitality industries, according to a recent report by Insurity, a leader in insurance technology solutions, and the Valen Data Consortium. The report cites certain industries that may continue to be distracted amid COVID-19-related challenges and won’t actively be shopping for coverage or pursuing quotes anytime soon. However, industries that naturally withstood the impact of the pandemic, such as agriculture, manufacturing and mining, will likely continue to shop WC rates and coverages.
  • According to the National Council on Compensation Insurance, WC rates in 2021 will be based on pre-COVID-19 data and losses. However, for new business that is more difficult to underwrite and rate than renewal policies, carriers will likely use current data and analytics.
  • Policy retention rates for renewals in September 2020 were 97% of what they were in September 2019. Once again, the Insurity report shows that shopping for insurance isn’t top of mind for policyholders due to more pressing pandemic priorities. In 2021, retention rates are predicted to remain relatively steady.
  • The average reported payrolls through the third quarter of 2020 remain consistently flat from pre-COVID-19 levels. However, with payrolls holding steady, insurers will likely have to make up significantly more premium this year than they have in the past. According to the Insurity report, underwriting profitability is paramount, and insurers will be hyper focused on selecting the right new business risks so as not to miss out on opportunities to put quality new business on the books.
  • Insurance Journal reports that 17 states have passed laws or orders that extend WC benefits for employees who contract COVID-19 on the job. In addition, federal employees may also receive workers’ compensation if they’ve contracted COVID-19 at the workplace. As compensability legislation continues to make adjustments to WC benefits, we may see an increase in loss severity for certain sectors such as health care or other service industries where COVID-19 is assumed to have been contracted during the course of employment. Of course, compensation for a COVID-19 illness will depend on how individual WC policies are written, the type of business and the state in which the business operates.
  • Employees who have been placed in new roles for the duration of the pandemic could be assigned new class codes. According to NCCI, a change in classification could occur when the employer’s operations have changed to a different classification, or when an employee’s occupation for the employer has changed to a different classification that may be applied to the employer’s policy (e.g., when an employee receives a job promotion). Moving forward, employers must maintain separate payroll records for any change in the operations or wages earned for an employee whose occupation has changed. If records are not kept up to date, their entire payroll will be assigned to the highest-rated applicable class code.
  • Identifying where a worker may have contracted COVID-19 has been an ongoing legal challenge for employers and their employees and has created an influx of lawsuits. In many cases, it was determined by carriers that employees were likely to have become infected outside the workplace. According to the Wall Street Journal and as reported by Fox Business, the data also suggests that a significant percentage of claims related to COVID-19 are being denied — even in states with the so-called presumptive-eligibility rules. Amid the pandemic, this will likely become an ongoing issue as more COVID-19-related claims are denied and head to the courtroom.

Conclusion

At the one-year mark, COVID-19 continues to bring change and uncertainty to businesses and the insurance industry. As an insurance professional, it’s critical to discuss and proactively address key WC issues that could impact your employer clients today and throughout the year.

About FastrackCE

Resolve to get your continuing education credits done early this year. At FastrackCE, we make completing your continuing education credits fast and easy, and at a time when it’s convenient for you. We offer online courses in most states and covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training. For more information, call 800-544-3605 or visit us at fastrackce.com.

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3 Positive Ways COVID-19 Has Impacted the Life Insurance Industry

The uptick in online life insurance searches and applications since the pandemic began suggests that COVID-19 has more people thinking about their mortality. As a result, many Americans are considering the importance of life insurance and no longer putting off purchasing this vital coverage. With all the bad news about COVID-19, the following are three positive ways the pandemic has impacted the life insurance industry.

1. More people are thinking about and applying for coverage. According to the MIB Group, an insurance data sharing service, Google searches for life insurance jumped 50% from March to May 2020, compared with the same period in 2019. Moreover, U.S. individual life application activity was 3.7% higher in December 2020 than in December 2019, with the number of applications from individuals under the age of 44 increasing by 7%. Overall, there was a 4% increase in life insurance applications — the largest full-year increase since 2011.

2. The volume of online applications has increased. The insurance industry may have been a slow adopter of technology, but since the pandemic began, the industry has seen more applications moving online. According to MSN Money, as the volume of life insurance applications picked up early in the pandemic, many brokers pressed carriers who were holdouts regarding digital life insurance tools to consider online technologies that would streamline the application process — more specifically, the adoption of electronic signatures.

3. No-exam life insurance has become a more sought-after alternative. The pandemic has prompted more individuals to apply for life insurance policies that don’t require having to undergo a lengthy application process or medical exam. By simply answering a few medical questions, these no-exam or guaranteed life insurance policies will allow individuals to secure coverage in an expedited manner — albeit at a higher rate and typically with lower face amounts. Since the start of the pandemic, Forbes Advisor notes that many life insurers are recognizing the appeal of these types of policies and learning how to adapt and expand their no-exam policy offerings with rates that are more comparable to standard contracts.

And finally, because many life insurance agents/brokers also serve their clients with other life-related products and financial services, another positive is that more consumers aren’t putting wills and trusts on the back burner. In fact, according to a recent article published by CNBC, since the pandemic began, there has and continues to be a sharp spike in individuals rushing to establish wills, trusts and end-of-life directives. CNBC goes on to report that a survey conducted by LegalZoom.com indicates that 32% of people ages 18 to 24 have already drafted their wills and another 21% have begun the paperwork because they know someone who became ill or died from the virus.

Conclusion

These are challenging times for the insurance industry as a whole. But the good news is, despite COVID-19, life insurance remains readily available and the industry doesn’t foresee carriers pulling out of the market anytime soon. As an insurance professional, you can confidently assure clients who already own a life insurance policy that insurers remain financially strong and that COVID-19 will have no effect on their policy’s payout in the event of a virus-related death, provided their policy.

Need to complete your insurance continuing education credits? Let FastrackCE help you get all your life and health and property and casualty continuing education credits done in one place and at your convenience.  We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training.

For more information, call 800-544-3605 or visit us at fastrackce.com.

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New Guidelines Published on Classifying Independent Contractors

Recently, the ability for businesses to properly classify employees has been a top priority for the U.S. Department of Labor (DOL). This has become even more of a pressing issue as changes in the economy and the COVID-19 pandemic have significantly propelled the growth in the number of gig economy workers. Businesses often use independent contractors because they can hire them for certain jobs or special projects without incurring the typical expenses associated with hiring full-time company employees. Simply put, the business gets the work it needs done without having to pay for things such as training, overtime and sick pay, workers’ compensation insurance and other benefits typically afforded full-time employees.

But within the past few years, issues have come about as to whether a worker is actually acting in the capacity of an independent contractor or in more of an employee role in which he or she would be entitled to workplace benefits. As a result, the DOL developed guidelines and tests for states to use under the Fair Labor Standards Act (FLSA) rule to assist businesses in making this determination. One such bill that gained nationwide attention in 2020 was California’s Assembly Bill 5 (AB5), also known as the gig worker bill. AB5 required companies that hire independent contractors to reclassify them as employees. However, after much controversy regarding AB5 and after several lawsuits were filed, the California legislature in September 2020 passed a revised bill that goes on to include a long list of job categories that are to be specifically excluded from AB5.

What’s new for 2021

Just a few weeks ago, the DOL further relaxed its interpretation of the FLSA’s classification provision.  On January 7, the DOL issued a new and final version of the FLSA rule that serves as a guide for employers to distinguish independent contractors from employees. As outlined by the DOL, the final rule reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA-defined employee).

The rule, set to go into effect on March 8, explains how states are to use the economic reality test for classifying a worker as an independent contractor. The test lists the following five factors that businesses must consider:

1. The nature and degree of the individual’s control over the work.

2. The opportunity for profit or loss based on initiative, investment or both.

3. The amount of skill required to do the job.

4. The degree of permanence of the working relationship between the employer and worker.

5. Whether the work is part of an integrated unit of production.

To help businesses with the determination, the final rule presents six fact-specific examples for applying the five factors.

Conclusion

Although the final rule is set to go into effect on March 8, employers should stay updated on any subsequent changes or adjustments to the rule that may occur over the next 12 months and because certain state and local laws regarding the issue may still apply. It should also be noted that guidelines and laws can differ widely from state to state, so employers should understand what is applicable to where they do business. Your business clients can read more about the changes in the final rule and in the classification of independent contractor status by visiting the Federal Register archives and reading the January 6 U.S. Department of Labor press release.

Resolve to get your continuing education credits done early this year. At FastrackCE, we make completing your continuing education credits fast and easy, and at a time when it’s convenient for you. We offer online courses in most states covering a broad range of topics, including most of the state-mandated courses such as ethics, flood, long-term care and annuity training. For more information, call 800-544-3605 or visit us at fastrackce.com.

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