March 30, 2011Fraternals 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.