Independent Insurance Agents of Illinois > Communications > e-Weekly May 18, 2017
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May 18, 2017
Significant Progress Made, But We’re Not There Yet…
The Illinois State Senate on Wednesday afternoon passed several components of a “Grand Bargain” budget plan. The legislative measures included a spending base of approximately $41 billion. However, three key components were not advanced. SB 42, the Budget Implementation component, included a vast majority of $3.8 billion in proposed budget cuts.

This legislation failed to pass by a vote of 27-24-5 (30 needed).

Additionally, SB 478 which contained Governor Rauner’s demand for a four year (Governor actually wanted five year) property tax freeze, failed to pass by a vote of 33-11-13 (36 needed). Therefore, Senate Democrats stopped short of calling SB 9 for a vote, which contained the vast majority of approximately $5.7 billion in tax increases. However, the rest of the Grand Bargain passed to the House, where many of the initiatives are expected to be amended.

Below is a rundown of what did pass the Senate:
SB 3 – local government consolidation Passed 37-6-13
SB 7 – gaming expansion Passed 33-24-1
SB 8 – procurement reform Passed 55-2-0
SB 4 – borrowing to pay unpaid bills Passed 36-15-6
SB 6 – Spending: ½ of FY17 & all FY18 Passed 31-21-3
SB 1 – school funding Passed 35-18-3
SB 16 – pension reform Passed 31-21-0
SB 42 SA #1 – BIMP bill Failed 27-24-5
SB 478 SA #1–property tax freeze Failed 32-11-13 (needed 3/5 vote)

Additional information on the budget package can be found
Federal Proposal Would Cut Insurer and Agent Compensation
As Congress seeks to reform the NFIP before it expires on Sept. 30, Republicans on the U.S. House of Representatives Financial Services Committee released a summary of the key provisions to be included in flood insurance reform legislation. One provision would establish a mechanism for capping compensation for WYOs at no more than 25%. 

Currently, WYO companies receive 31.9% of policyholder premiums before various federal fees and surcharges are added to administer the NFIP. From that amount, WYOs pay about half to agents, in addition to paying vendors, state premium taxes and other costs. (
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Trump Refusal to 'Bail Out' Insurers Might End Up Making Policies Cheaper
President Trump has been saying in recent weeks that the Affordable Care act, or Obamacare, is "dead."

So he's threatened to cut off crucial payments to health insurance companies that help low-income customers pay day to day health care expenses.

That plan, however, may just end up bringing more people into the Affordable Care Act insurance markets. (
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Insurer Harken Health Shutting Doors
Insurer Harken Health is closing its doors in Illinois and Georgia, ending an experiment to combine health insurance and care.

The insurer, which operates five health clinics in Chicago, Skokie and Des Plaines, began selling plans in Illinois and Georgia in 2015. A subsidiary of UnitedHealthcare, Harkenoffered its members unlimited free doctor visits at its health centers, which also offer wellness programs, such as acupuncture, yoga and meditation. (
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AIG teams up with Hamilton, Two Sigma
American International Group has agreed in principle to acquire Hamilton USA, which is the US arm of Hamilton Insurance Group, as part of a three way memorandum of understanding (MOU) to boost the companies’ mutual presence in data-driven underwriting.

The MOU covers AIG, Hamilton, and Two Sigma Insurance Quantified to expand their footprint in the small and medium sized commercial insurance market.  They will broaden their coverage of the market, providing protection for firms with annual revenues of as much as $35 million with their Attune platform. Trade publication Market Watch reported that Attune was launched in 2016 to tap the $150 billion small and medium enterprise market. (
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Six Ways Companies Can Protect Employees on Business Travel
In an uncertain world­­, traveling can feel like a big risk.

From medical emergencies to terrorist attacks, the challenges that occur while traveling are vast. When you are responsible for protecting your employees and team when they travel, the risks can feel even more ominous.

Even the most minor gaps in security can be considered negligence. (
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Road Rash: Why Personal Auto is a Bit of a Wreck
For those in the insurance industry and those who observe it, the reasons behind the poor results for personal auto in recent years are no mystery: more cars on the road driving more miles, higher medical costs, higher repair costs for newer vehicles and - while difficult to estimate its precise effect - distracted driving.

The degree of impact these factors have had on frequency and severity trends, however, has perhaps caught many insurers off guard. Jim Lynch, chief actuary and vice president of research and information services at the New York City-based Insurance Information Institute, says the industry enjoyed a long period of low claims frequency and mild severity. As the U.S. emerged from the Great Recession, claims frequency began to increase. Insurers reacted by raising rates, but then, more recently, severity spiked. (
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Insurance Regulators Exploring Ways to Protect Consumers in Age of Big Data
The incorporation of “Big Data” from Internet-based sources is a defining feature of underwriting and rating in today’s property/casualty insurance market.

In light of that, the National Association of Insurance Commissioners (NAIC), through its Big Data Task Force, is exploring what role that body should play in protecting consumers against abuses and in upholding rates that are fair, adequate, and not excessive. (
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Fitch Urges Insurer Caution as Cyber Insurance Demand Grows
The recent ransomware attacks in more than 150 countries are likely to increase demand for related insurance protection as they reveal the widening scope of corporations’ cyber risk exposures.

But Fitch Ratings says insurers should take a cautious approach to adding cyber exposures as there is considerable uncertainty in pricing and underwriting this risk. Aggressive expansion by individual underwriters into the segment could be credit negative, Fitch warned. (
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Congratulations to the following IIA of IL member agencies on their recent anniversaries.

120 years - Schwartz Agency, Libertyville, Illinois
60 years - J. L. Hubbard Co. - Decatur
50 years - Stassen Agency, Woodstock, Illinois

If your IIA of IL member agency will be celebrating an anniversary in the near future let us know. Contact Kirsten Davis at