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Volume 9, Issue 9 | November 2007

Industry Leads

Optima Health to expand

// Property-Casualty

School time is coverage time in Norfolk

Expansion into Fredericksburg area foreshadows more Va. growth next year

areas of Virginia next year. The insurance company, which services members in southeast Virginia and the Richmond and Petersburg regions, will also begin moving into the remainder of the state, with the exception of northern section of the state, Emma Inman, media spokesperson said. “The suburbs of Washington, D.C. are already saturated so Optima Health will focus on the rest of See “Optima” on p21

By Terri Reuter

The Norfolk school district will pay for accident insurance for each of its estimated 33,000 students. The policy covers care costing up to $25,000 for injuries during school hours. See page 3

Optima Health, a nearly 342,000-member Virginia-based health plan, operated by Sentara Healthcare, has expanded its group health coverage to include Fredericksburg and surrounding King George, Stafford and Spotsylvania counties and plans to enter other

// Financial Services

Dire predictions for health agents

ETFs growing in popularity, uses Increased interest and attention are being

An insurance industry lobbyist and a political pundit who worked

paid to exchange-traded funds, a more

with Sen. Hillary Clinton on her failed health reform efforts in

flexible instrument than available to

1993-94 sayd health agents will lose jobs if she wins the presidential

those who primarily rely on mutual funds

election. To read more about their dire predictions, turn to page 16.

P/C agents asked in new initiative to sell life products The Hartford launches new distribution channel for life, pension, group benefits The Hartford Financial Services Group Inc., with 10,000 independent agents nationwide selling its propertycasualty insurance, is launching a new initiative to tap that distribution channel for sales of pension products, group benefits and individual life insurance to business owners. “Most successful agencies and agents have been doing this for years all over the country,” said Brian Winfield, national committeeperson for the National Association of Insurance and Financial Advisors in Virginia. “The difference in this with The Hartford is that it is one the first See “Hartford” on p19

to manage wealth. See page 8

// Health Insurance

Anthem joins PPOs submitting to standards Virginia health insurer Anthem Blue Cross Blue Shield is among 14 preferred provider organizations in the U.S. who will submit to new health plan accreditation standards. See page 20

// Life Insurance

Virginia governor LTC insurance benefits Gov. Timothy Kaine promotes long-term care insurance for people between 50 and 52 with a letter and DVD. See page 14

Dangerous dogs Va. uninsured add bite to liability numbers lower insurance in Va. than most states

Americans not planning for disabilities Few workers are prepared for the 30% chance they will suffer some sort of disability during their lifetime.

By Terri Reuter

By Todd Karpovich

Virginia dog owners, whose pets are labeled dangerous, will need to obtain at least $100,000 in liability insurance, according to state lawmakers. In recent months, the state launched a dangerous dog registry so Virginia residents from each county may check to see if dangerous dogs, those with a history of biting, live in See “Dogs” on p14

Virginia is performing better than most states with the number of uninsured residents, according to a recent report. Research by Family USA, a health consumer organization, found that Virginia ranked 33rd with two million uninsured residents in the past year. Nationally, the report found that about 89.6 million Americans - more than one out of three people (34.7%) - under 65 years of age – See “Uninsured” on p17

All Americans

Men

Women

None of their income would be replaced if disabled

35%

31%

39%

Could maintain current lifestyle if disabled for 90 days

49%

54%

45%

Believe disability income would come from the government

31%

26%

35%

Topic

Source: Country Insurance & Financial Services.

Departments CALENDAR

23

LEGAL BRIEFS

COMPANIES

10

LETTER TO EDITOR

DEALS

12

LIFE/FINANCIAL

9 18 8

PEOPLE NEW PRODUCTS RECORD/FINES

13 6 22

The latest industry news, including Carrier Ratings, New Products, Videos and How-To Columns are available 24/7.

2 | Virginia

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November 2007

Norfolk schools add insurance for all students $25,000 coverage for injuries that occur to 33,000 students during school hours The Norfolk school division will pay for accident insurance for each of its estimated 33,000 students. The policy covers care costing up to $25,000 for injuries during school hours. The school policies, which are a courtesy, intend to reduce the number of claims filed, despite that school systems are rarely required to pay. Norfolk is the only South Hampton Roads division that will pay for accident insurance. Parents can purchase accident insurance through companies under contract with school divisions, and can serve as primary insurance or as supplementary insurance. Companies charge an annual fee that ranges from $12 to $172. The charge includes benefits that can include incidents at school or 24-hour accident coverage for costs as much as $500,000. These packages can include insurance for death, dismemberment, hospitalization, physician and dental services. Few families purchase the packages. Though schools are typically not liable for on-campus accidents because of a legal concept called sovereign immunity, school divisions are liable to pay for bus accidents. School divisions in Norfolk, Portsmouth and Virginia Beach have purchased accident insurance for students participating in interscholastic spots because of the higher risk of injury. This insurance is free to families. IFA // HEALTH INSURANCE

Employer health premiums increased 6.1% this year Premiums for employer-sponsored health insurance rose an average of 6.1% in 2007, less than the 7.7% increase reported last year but still higher than the increase in workers’ wages (3.7%) or the overall inflation rate (2.6%), according to the 2007 Employer Health Benefits Survey by the Kaiser Family Foundation and Health Research and Educational Trust. The 6.1% average increase this year was the slowest rate of premium growth since 1999. IFA

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November 2007

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Va. satellite company secures coverage Dulles, Va.-based GeoEye Inc., a producer of satellite and aerial imagery and geospatial information, has secured about $270 million of launch and firstyear on-orbit insurance for its next-generation GeoEye-1 satellite. This insurance was obtained at a rate that was less than previously anticipated, according to GeoEye. The launch of GeoEye-1 is slated for late first quarter or early second quarter of 2008 from Vandenberg Air Force Base in California. In addition, the company has received $40 million of insurance proceeds resulting from the loss of its OrbView-3 imaging satellite earlier this year. The payment

represents the full amount of the insurance claim and will be recorded as a gain in GeoEye’s third quarter financial results. In conjunction with GeoEye’s loan covenants, the company is required to offer to redeem up to $40 million of its senior secured floating rate notes due 2012 at par value, including accrued and unpaid interest. To the extent the full amount of the proceeds is not used to repurchase the notes, GeoEye would retain the cash for general corporate purposes. “The successful placement of launch and on-orbit insurance represents the completion of a significant milestone in the GeoEye-1 satellite program,” said Henry Dubois, GeoEye’s chief financial officer. IFA

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4 | Virginia

Pappas moves PIN offices out of D.C. The Potomac Insurance Network recently moved its offices to the Canton district in Baltimore City from its previous location near Washington, D.C. Jon Pappas, president and owner of PIN, said the move to 2360 Boston St. provides the company with easy access off Interstate 95 and will help “better serve” the company’s members, along with serving as the firm’s “Agent Center.” “Our agency members will have access to Jon Pappas our offices should they require assistance from us or need place to meet their clients,” Pappas said. Pappas has been president and partial owner of PIN since it opened 11 years ago. Pappas took over full ownership of PIN earlier this year when he purchased it from The McLaughlin Company. PIN is a master agency for SIAA, a national insurance agency alliance serving 2,300 independent property-casualty agencies nationally. PIN currently serves more than 60 members located inVirginia, Washington, D.C., Maryland and Delaware and provides independent P&C agencies access to national insurance carriers and agency related support, Pappas said. IFA

Virginia Edition

Tony Ondrusek Publisher

[email protected]

Bob Graham Executive Editor [email protected]

Todd Karpovich Senior Editor [email protected]

Sharon Schafer Advertising Sales Director [email protected]

Keisha Beckles Advertising Sales Associate [email protected]

Terri Reuter Assistant Editor [email protected]

Rachel Bernstein Editorial Associate [email protected]

Carlie M. Nason Office Manager [email protected]

Jonathan Herndon Graphics Manager [email protected]

// P/C NEWS

HRH acquires Banc of America Insurance Richmond-based Hilb Rogal & Hobbs Co., one of the world’s largest insurance and risk management intermediaries, signed an agreement to purchase all of the outstanding equity interests of Banc of America Corporate Insurance Agency LLC, a segment of Bank of America NA, and a middle market insurance intermediary in the northeastern United States. The transaction, which excludes the consumer insurance business of Bank of America, N.A., will be finalized before the end of the year, reports said. Terms of the transaction were not disclosed. Headquartered in Cranford, N.J., BACIA has 15 locations in seven states. Formed through the acquisition and integration of six independent agencies, BACIA has grown to become the 27th largest U.S. insurance intermediary and the 6th largest bank-owned insurance intermediary. IFA

Insurance & Financial Advisor

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Carol Ondrusek Circulation Manager [email protected]

• • •

Mission Statement To provide an objective and relevant report of news and issues that affect the business and success of local insurance & financial service professionals.

• • • Insurance & Financial Advisor 10600 York Rd., Suite 203 Hunt Valley, MD 21030 phone: 703-807-2001 fax: 410-667-7977 Insurance & Financial Advisor VIRGINIA EDITION is published by New Horizon Group Inc. The paper is free for retail insurance and financial service professionals in Virginia. The publisher also owns Insurance & Financial Advisor – MARYLAND & WASHINGTON, D.C. EDITION and Insurance & Financial Advisor –SOUTHEAST PA-NJ-DE EDITION. Insurance & Financial Advisor and its content is protected by U.S. copyright law. Content may not be reproduced or copied in any form without permission. News, photos and articles are published free. Submissions may be edited or altered, and become the publisher’s property. The publisher assumes no liability for errors or omissions.

November 2007

VA. firm expands its annuity, life automation work

associationnews

Ball-Martin Insurance of Chesterfield is the recipient of the Accredited Customer Service Representative Agency of the Year award. The award is given each year by the Independent Insurance Agents of Virginia in recognition of a company’s commitment to education, the IIAV and the insurance industry. Wilford H. “Bill” Ball III is president of the company, which he purchased from his father, W.H. Ball Jr., in 1984 with help from USF&G. Ball-Martin Insurance was established in 1947 by the elder Ball, who retired in 1984, and Lewis Martin, who sold his interest in 1978. It was located in Richmond for 35 years before moving to Chesterfield in 1982. Pictured are (front row) Virginia M. Nauss, Deborah H. Morgan, Bobbie J. Smith, Sophia Groves, Elizabeth A. Sexton; (back row): Bill Ball (Wilford H. Ball III) , Jeri S. Ball, Kathy H. Ball and Jason E. Ball.

Herndon,Va.-based Finetre will expand its automation of online annuity sales on the firm’s AnnuityNet Platform. The Web-based annuity and life insurance automation platforms are known as AnnuityNet and LifeSpeed. These platforms will operate under a “Software as a Service” business model and enable annuity and life insurance distributors to automate the processing of transactions. Usually an annuity purchase is followed by premium payments. In addition to client-specific improvements, AnnuityNet’s release features improvements for processing subpay transactions. AnnuityNet also includes a software wizard that steers the user through subpay administration features, such as a 1035 Insurance Exchange feature, that recognizes payment assets made available through the liquidation of another investment device. IFA

Only One Virginia Health Plan Has What It Takes To Make The Top 50. O

Virginia company to insure Amtrak passengers Amtrak and Richmond-based Access America have formed a partnership to offer Amtrak rail passengers the option to purchase travel insurance protection for their trips. Confirmed passengers will be directed to the co-branded Web site, www.etravelprotection.com/amtrak, through a link in their Amtrak itinerary confirmation. Eventually, the insurance will be offered as part of the existing Amtrak booking Web site, www.Amtrak.com. “Access America’s travel insurance provides our passengers the products and peace of mind to protect their entire travel investment, and represents best practices in the transportation industry,” said Kathleen Gordon, senior director of e-commerce for Amtrak. Though it is a first for Amtrak passengers, Access America has been protecting millions of travelers, across the globe, for more than 20 years. For Amtrak, Access America developed three insurance packages based on the needs of rail passengers and the typical costs of rail travel. The travel insurance offered to Amtrak passengers provides coverage for circumstances such as lost baggage, travel delays or interruption and emergency medical or dental issues. IFA

Virginia

Ball-Martin wins ACSR award

nce again, Optima Health is making national headlines for outstanding quality care and member satisfaction. Optima Health‘s commercial plans have been ranked in the nation’s top 50 by U.S.News & World Report* and the National Committee on Quality Assurance (NCQA), a national health plan accrediting organization. This ranking places Optima Health in the top 10% among 684 health plans reviewed for the survey. Even more impressive, ours was the only Virginia health plan to make the top 50 list. As pleased as we are to be nationally recognized, our members are the real winners. These rankings represent Optima Health’s commitment to member satisfaction, to making care accessible, and to our prevention and treatment programs. For a copy of the rankings, please call 1-866-OPTIMA-0. Ask your broker or employer about an award-winning Optima Health plan.

www.optimahealth.com *U.S.News & World Report, November 6, 2006, pages 80-82. Optima Health is the trade name for Optima Health Plan, Optima Health Insurance Company and Optima Health Group.

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November 2007

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Insurers find ways to cut pharmacy costs Analysis finds that Aetna, CIGNA, Kaiser Permanente using different approaches saw their pharmacy costs increase in the mid-Atlantic anywhere from 8% to 14%, according to the report. Health plans are continuing to experiment with new ways to control members’ drug costs by focusing on co-pay waivers, strategies and technology. For example, Aetna introduced “Save a Copay,” a member incentive that waives the copay for cholesterol-lowering generic drug for six months. CIGNA has its own in-house mail-order operation, CIGNATel-Drug, which is tied to its drug cost comparison tool. Kaiser Permanente offers online ordering and uses robotics. IFA

A new report by HealthLeaders-InterStudy, which provides managed care market intelligence, found that health insurers in Virginia, Maryland and Washington D.C. are developing new programs to reduce pharmacy costs. Multiple strategies, including tiered pricing, no co-pays for generic drugs and robotic prescription fulfillment, are being employed to help control pharmacy expenses, according to the latest Mid-Atlantic Health Plan analysis. Average weighted pharmacy expenses for mid-Atlantic plans rose from $26 to $33 per member, per month, from 2004 to 2006. Most large commercial insurers

NEWPRODUCTS Insurance & Financial Advisor | IFAwebnews.com

New package has predetermined health plans Humana Inc. launched a series of new health insurance packages it said are designed to alleviate the financial stresses of increasing health insurance costs. Dubbed No Worry, these packages offer predictable health care expenses over a three-year period and plans that gradually transition passive health care users into informed and active health care consumers, according to the health insurer. Health Insurance

Available for businesses with 51-99 employees, employers may select one of several three-year No Worry packages. Each package presents a combination of predetermined health insurance plans for years one, two and three. For example, a No Worry package might include a traditional PPO plan in year one, Humana’s consumer-engaging CoverageFirst plan in year two, and a high-deductible health plan compatible with a Health Savings Account in year three.

Enhanced flexible-premium deferred VAs available Massachusetts Mutual Life Insurance Co. announced several new enhancements within its MassMutual Transitions Select and MassMutual Evolution flexible-premium deferred variable annuities. Expanded asset allocation, guaranteed living/income and death benefit features are now available where approved, subject to state availability. Guarantees are contingent upon the claims-paying ability of the issuing company. Life Services

Something to think about.

These developments follow a recent introduction of two new retirement income products, both of which are aimed at offering increased flexibility for consumers, the company said.

The IROQUOIS Group

®

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Delta Dental announced a new benefit feature that stretches dental coverage further as it rewards enrollees who obtain routine diagnostic and preventive care. Health Insurance

The D&P Maximum Waiver option lets enrollees seek covered diagnostic and preventive dental services without counting against their annual maximum limitation. In effect, this increases coverage for those whose dental needs might lead them to approach their annual maximum threshold – a limit typically set by employers when they negotiate group dental contracts.

D&O offering expanded to middle market cos. P/C Insurance

Zurich announced an expanded directors & officers liability insurance offering for middle market companies in North America.

The enhanced offering, which includes several management liability products under one form, now targets private and not-for-profit companies with up to $750 million in assets and fewer than 1,500 employees. Zurich has also incorporated core enhancements to its policy form, simplifying the underwriting process.

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Program encourages employee health, productivity Health Insurance

Aetna introduced Aetna Integrated Health Solution, a new program that is part of the Aetna Health Connections family of medical management programs and services, to help control health care and disability costs. With a focus on optimal employee health and productivity, IHS also provides employers with the tools to build an engaged and productive workforce.

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New dental waiver won’t count against annual max

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6 | Virginia

Insurance & Financial Advisor

For the latest New Products, go to IFAwebnews.com. |

IFAwebnews.com

November 2007

Sentara Healthcare president takes CEO job in Iowa

associationnews Local agents attend NAIFA’s D.C. convention

Kern oversaw Optima Health’s operations as health system president After serving 28 years with Norfolk, Na.based Sentara Healthcare, Howard Kern, president and chief operating officer, is leaving in January to become president and chief executive officer of Iowa Health System in Des Moines. Sentara operates Virginia Beach, Va.based Optima Health, which provides coverage to more than 341,000 people in Virginia through its consumer-driven, employee-owned and employer-sponsored plans, as well as plans for Medicare and Medicaid enrollees. “To say I’m sorry to see Howard leave us would be an understatement,” said David L. Bernd, CEO of Sentara Healthcare. “However, Howard has been offered a new challenge that will showcase his tremendous leadership skills.” ‘Enormous commitment’ Kern, 50, joined Sentara in 1980 as an administrative resident, shortly after he earned a Masters degree in healthcare administration from Medical College of Virginia. He served as administrator of Sentara Norfolk General Hospital, before being named COO in 1995 and president in 2003. “Howard has given Sentara enormous commitment and innovation,” Bernd said. “He’s been integral to our success over the years and the introduction of many regional firsts in health care.” Iowa Health System is a $2 billion organization operating an integrated network of 11 senior affiliate hospitals, 14 rural partner hospitals and 128 physician clinics in 70 communities throughout the state and in neighboring Nebraska and Illinois. “Iowa Health is a large system with tremendous potential,” Kern said. “Ill enjoy getting to know the state of Iowa as I learn about the system and I’m looking forward to the challenge.” Kern will remain with Sentara for a transition through the end of 2007. “Howard is known in the health care field as a champion of quality and system integration,” Bernd said. “I know he’ll do great things for Iowa Health System.” Sentara consists of more than 87 sites in southeastern Virginia and northeastern North Carolina. IFA

Virginia

Life insurance agents from across the U.S. descended on Washington, D.C., for the recent NAIFA (National Association of Insurance & Financial Advisors) annual convention. Agents from across the mid-Atlantic, representing many local chapters, as well as local vendors, were represented. Among those in attendance were, from left: Fateen Mousa of Northwestern, McLean, Va., and president elect of the NAIFA-Northern Virginia; Jane Leckert, executive director, NAIFA-Northern Virginia; and Steve Oriol, John Hancock, Vienna.

Send photos of your company events and happenings: [email protected]

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Increased interest and attention are being paid to exchange-traded funds, a more flexible instrument for those who have been using mutual funds exclusively to build their clients’ money. “”They’re definitely going to grow in importance,” said Mark Pankin, president of Arlington, Va.-based MDP Associates and a registered investment advisor. “If there’s something I want [to offer a client] that isn’t available in a mutual fund, I tell them we should look at ETFs.” Sam Fales, vice president of securities at First Financial Group in Bethesda, Md., has placed some assets in ETFs through Curian Capital, part of Jackson National Life Insurance Co. ‘Nice fit’ for clients

TransChoice® Presents A Good Fit For An Estimated 45.8 Million Uninsured Americans.1 benefits alternative for their uninsured full and part-time employees. TransChoice is an indemnity plan, as opposed to the usual benefit amounts used in other limited benefit medical plans. TransChoice represents an invaluable solution for vulnerable employees and stands to generate a sizeable revenue stream for you as well.

To say that there is a need for catastrophic health coverage for working Americans is an understatement. The number of Americans without health insurance was last reported to have reached a record high 15.7% of the total U.S. population.1 TransChoice is a limited benefit medical insurance plan designed to provide your clients with a cost-effective health

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If some of his 300 high net-worth clients in the Washington, D.C. area are looking for real estate investment trusts or international exposures, ETFs can be a “nice fit,” Fales said. Since the birth in 1990 of these funds, which are open-ended mutual funds tradable throughout the day, the number of these funds has increased dramatically. More than 325 of the ETFs exist now, with traditional mutual fund houses like Vanguard and others joining the growing list of ETFs. Some financial service professionals said they don’t understand ETFs and, therefore, don’t use them. “I don’t think people have spent the

Physical exams & diagnostic tests benefits Prescription benefits Surgical & anesthesia benefits Short-Term Disability Income and/or Group Term Life Insurance can be sold with TransChoice

For more information on this and other innovative products for the worksite, call or email Eric Yeager, Regional Vice President, Southeast Region at (804) 986-5243 or [email protected]. 1 U.S. Census Bureau, 2005. Use of statistics does not imply endorsement.

Underwritten by Transamerica Life Insurance Company, Home Office: Cedar Rapids, Iowa. Policy Form Series CP200100 ASL SEEY 0406

8 | Virginia

Insurance & Financial Advisor

time to understand them and how they can add value to portfolios,” Fales said. He likens the initial reactions to ETFs as similar to how mutual funds were first perceived when launched in 1924. “But there hasn’t been as much bad press about ETFs,” he said. Advantages, disadvantages seen ETFs offer advantages and disadvantages when compared to traditional mutual funds, most notably the flexibility and cost-effectiveness, said Pankin, who in 13 years has developed a client base all over the country. Pankin notes a number of advantages, including: • A wider range of investment areas is covered, including more focused overseas exposures. • ETFs trade like stocks and have no restrictions, unlike mutual funds, which may have substantial ones. • Lower expense ratios, with indexenhanced funds, usually under 0.5%, compared to 1% to 3% for mutual funds Tax benefits identified

Tax benefits because there are typically smaller or no distributions and they can be timed more easily due to no trading restrictions. Mutual funds can be bought or sold any day, but trading restrictions may prevent them, depending on other activity in the fund or result in charges that reduce the tax benefit. ETFs also tend to remain truer to their sectors and don’t turnover their holdings nearly as freAssets of Exchange-Traded Funds by Type quently as mutual funds. (millions of dollars) July ‘07 June ‘07 Dec. ‘06 Several drawbacks Total Domestic Equity Index 315,333 317,495 290,842 to ETFs exist as well. Domestic (Broad-based) 244,363 249,134 232,487 ETFs incur commisDomestic (Sector/Industry) 70,970 68,361 58,355 sions since they trade Global/International Equity Index 146,711 142,492 111,194 like stocks and in some cases have a Bond Index 26,782 25,901 20,514 wide bid-ask spread. All 488,827 485,888 422,550 Moving money can Source: Investment Company Institute take a day or two. IFA

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November 2007

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Insurance & Financial Advisor | IFAwebnews.com

Antitrust conspiracy dismissed for second time

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A federal judge dismissed an antitrust conspiracy case against large commercial insurance brokers and insurers from 2004, during a time of heavy investigation of bid rigging and account manipulation, according to reports. P/C Insurance

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By dismissing the antitrust complaint for the second time, Chief Judge Garrett E. Brown Jr. of the U.S. District Court for New Jersey said the plaintiffs had no proof of a conspiracy among insurers and brokers to covertly allocate accounts, refrain from competing, or pay incentive bonuses on commercial accounts.

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The plaintiffs alleged that the defendants had engaged in what is known as “hub and spoke” conspiracies in which brokers acted as hubs to coordinate illegal distribution of commercial insurance accounts among insurers. Defendants in the suit were cleared of federal antitrust charges included American International Group, The Hartford, Fireman’s, Liberty Mutual, American Re, Travelers, Chubb, Marsh, Willis, Aon and Hilb Rogal & Hobb.

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Court brief suggests how feds will regulate insurance A brief filed by the U.S. Department of Justice in a recent Supreme Court case reveals how the federal government might regulate the business of insurance, according to a new report. Financial Services

In the study, Robert Detlefsen of the National Association of Mutual Insurance Cos. examined the 2007 Supreme Court case that decided how Fair Credit Reporting Act should apply to insurers. While the case was ruled in favor of the defendant insurers, it revealed the dearth of basic understanding of the insurance industry by the judicial and executive branches, according to the study.

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“Insurers set premiums based on the level of risk they assume, which they determine based on their analysis of dozens of risk variables. The goal is to ensure that similar risks are treated similarly; it is not to create a zero-sum game that pits insurers against insureds. But apparently the U.S. Justice Department thinks otherwise,” the report said. “Its brief declares that ‘if an insurance company opts to use the credit reporting system and enjoy its benefits, it must also comply with the FCRA’s obligations.’ The implication that policyholders do not also enjoy the benefits of accurate pricing based on actuarially sound risk analysis betrays a glaring misunderstanding of the insurance enterprise.”

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The Colorado Court of Appeals in Denver ruled that a jury decided the accuracy of a State Farm database that was used to determine the reasonability of medical charges for an auto injury, according to reports. The finding overturned a trial court summary judgment the insurer obtained in a 2001 case.

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American International Group Inc. shareholders recently renewed claims P/C Insurance against the company’s auditor, PricewaterhouseCoopers, and nearly four dozen other individuals and companies, seeking to hold them liable for a financial restatement and a $1.64 billion regulatory settlement. The action was filed in Delaware Chancery Court.

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For the latest TempX, go to IFAwebnews.com. Virginia

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For agent use only. Not intended for consumer distribution.

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VA CE REQUIREMENT FOR LONG TERM CARE SALES EFFECTIVE 9/1/07

COMPANYNEWS Insurance & Financial Advisor | IFAwebnews.com

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AIG markets insurance and services under new brand The AIG Cos. is marketing its directors and officers, errors and omissions, employment practices, fiduciary and fidelity liability insurance and services under the new AIG Executive Liability brand. P/C Insurance

These offerings, which traditionally have been marketed under the National Union Fire Insurance Co. of Pittsburgh, Pa., name, will continue to be underwritten by the AIG Cos.

Hancock extends ad campaign to cable TV, magazines John Hancock Financial Services is extending its Promises advertising campaign. Hancock, a Boston, Mass.-based unit of Toronto-based Manulife Financial Corp., is spending about $25 million to $35 million on the current phase of the campaign, the company said. Financial Services

One of the three new 30-second television spots, “House,” shows a man who wants to take care of his aging parents. Another shows a business owner who wants to live his business to his daughter, and a third shows an architect who wants to become a teacher. The commercials will air on cable channels such as CNN, ESPN and Discover. The campaign also includes full-page, four-color ads in print publications such as Sports Illustrated and National Geographic, and it includes Web ads and ads on the front page of the Personal Journal section of the Wall Street Journal.

Marsh Inc. call center recognized by J.D. Power The Marsh Inc. insurance brokerage call center was recognized for customer satisfaction excellence by J.D. Power and Associates under its Certified Call Center Program. Health Insurance

J.D. Power in Westlake Village, Calif., an information services firm which conducts customer satisfaction surveys, said that five lines of Marsh’s call center business were recognized for providing “An Outstanding Customer Service Experience.” The services that were recognized were Professional Liability Insurance Services, Auto and Home Choice Services, Program and Franchise Insurance Services, Voluntary Benefit Services and Life and Health Affinity Services.

Phila. executive named for Phoenix Cos. subsidiary LIFE Insurance

A Philadelphia insurance executive has been named to the leadership team for The Phoenix Cos. Inc.’s new subsidiary.

John K. Hillman, CEO of Phoenix’s Philadelphia Financial Group subsidiary, will direct the new Life Solutions Unit while still retaining his current role, the company said. One area the new unit will explore is the emerging life settlement market, the Hartford, Conn.-based firm said. Hillman, who lives in Blue Bell, Pa., has been involved in the life insurance industry for more than 25 years, initially as a member of the national insurance practice group at Arthur Andersen & Co., an international accounting firm. In 1996 he founded Philadelphia Financial Group, which provides private placement life insurance products for high-networth clients. Philadelphia Financial became a wholly owned subsidiary of Phoenix in 2003.

Reinsurance Solutions entities to change names Guy Carpenter & Company LLC, a global risk and reinsurance specialist and a part of the Marsh & McLennan Companies, announced that Reinsurance Solutions International and ReSolutions International Limited, its US subsidiary and UK affiliate, respectively, specializing in providing tailored insurance and reinsurance services, together have changed their names to Reinsurance Solutions LLC and Reinsurance Solutions Limited, respectively. P/C Insurance

For the latest Company News go to IFAwebnews.com. 10 | Virginia

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November 2007

A plan that improves employee health? It’s just what the small business ordered. Anthem’s Lumenos plans are specially designed to help improve the health of small business employees. Using features like online tools and personal health coaches, Lumenos plans combine preventive care with traditional coverage and fifinancial nancial health accounts that employees oversee themselves. They even offer fi financial nancial rewards to employees who make an effort to improve their health. Plus, all preventive care services are covered at no expense, so employees are more likely to see their doctors. By encouraging employees to take a proactive role in their health, Lumenos is a tool to help build a healthier future for small business employees. Find out more at anthem.com or call your Anthem sales representative at 1-800-543-8919.

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DONEDEALS Insurance & Financial Advisor | IFAwebnews.com

DHL provides NAIFA members with more benefits The National Association of Insurance and Financial Advisors and DHL, an express delivery company, have expanded their agreement to provide members with special association pricing on DHL’s ShipReady prepaid envelopes. Life Insurance

NAIFA and DHL joined forces in February to offer NAIFA members exclusive savings on all their shipping needs through the DHL Partner Savings Program, which offers a discount of up to 25% off standard rates on DHL’s full suite of shipping services.

Morgan Stanley adds Lincoln National to 401(k) list Morgan Stanley has added the employer markets division of Philadelphiabased Lincoln National Corp. to its list of approved 401(k) providers, according to reports. Financial Services

Morgan Stanley will offer the Lincoln American Legacy Retirement product, a multi-manager group variable annuity that features 51 investment fund options, through its own advisor force, according to Lincoln.

The Hanover completes Professionals Direct acquisition P/C Insurance

The Hanover Insurance Group Inc. has completed the previously announced acquisition of Professionals Direct Inc. for $23.2 million.

“We are very excited to add this outstanding lawyers professional liability product capability to our commercial lines portfolio,” said Frederick H. Eppinger, chief executive officer of The Hanover Insurance Group. “This acquisition is all about helping our independent agent partners meet more of their customers’ needs and expand their businesses.”

Have you met our weekly edition? And its twin? Twice-weekly, Email News Alerts bring you desktop access to local and national industry news to give you an edge. Each alert includes more than 20 headlines linking to stories on IFAwebnews.com, including important local news stories, along with coverage of national property-casualty, health insurance, life insurance/financial service and new product announcements.

Brown & Brown acquires two Security companies P/C Insurance

Insurance broker Brown & Brown acquired Nashville, Tenn.-based Security Insurance and Security Risk Managers Inc, according to reports.

Terms of the deal were not released. Security Insurance is a retail insurance agency providing general commercial property and casualty insurance for clients throughout Tennessee. Security Risk Managers is a wholesale brokerage specializing in builders’ risk and construction-related products offered to retail agents throughout the United States. The company will remain in Nashville. C. Roy Bridges, regional executive vice president of Brown & Brown, will be responsible for these operations, according to the company.

OneBeacon sticks foot into podiatrists’ coverage OneBeacon Insurance Group announced that its OneBeacon Professional Partners business will begin offering medical malpractice coverage tailored for podiatric physicians. P/C Insurance

The product will be offered on an excess and surplus basis, with limits available up to $1 million/$3 million. The product will be offered exclusively through Fox Point Programs, an affiliate of Rockwood Programs, Inc. A securities firm will be offering 401(k) services from an insurance company through the firm’s 8,000 financial advisors, according to reports.

Aetna completes Goodhealth Worldwide deal Aetna has completed its acquisition of Goodhealth Worldwide, a managing general underwriter for international private medical insurance that offers expatriate benefits to individuals, small and medium-sized enterprises, and large multinational clients around the world. Goodhealth Worldwide will be a unit of Aetna Global Benefits, the company’s international business for expatriates. Health Insurance

Required reading—and surfing—for insurance and financial service professionals.

For the latest Deals, go to IFAwebnews.com. 12 | Virginia

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November 2007

Markel expands social services program

PeopleNews

Community housing, health care clinics, substance abuse recovery among new classes

Insurance & Financial Advisor

The following were nominated for the “Young Agent of the Year” award presented by the Young Agents Conference in Richmond: Jason Ball, Ball-Martin Insurance Agency, Richmond; Jennifer Bolduc, S.L. Nusbaum Insurance Agency Inc., Norfolk, Va.; Dawn M. Dotson, Robins Insurance, Richmond; Eric S. Edwards, Middle Peninsula Insurance Agency, Williamsburg, Va.; Mark D. Horton, Towne Insurance Agency, Chesapeake, Va.; Crystal Miller-Johnson, Associated Insurance Systems Services Inc., Richmond; Michael E. Moore, London & Norfolk Ltd., Norfolk, Va.; Michael Partlow, Partlow Insurance Agency, Winchester, Va.; George G. Phillips, Thomas Rutherfoord Inc., Richmond; Brock Reynolds, The Business Benefits Group Inc., Fairfax, Va. Lucia A. Tompkins joined Eastern Alliance Insurance Group as regional business executive for the southeastern states, which includes Virginia. Tompkins previously worked for Brick Street Mutual Insurance. The Foundation for Financial Service Professionals in Newton Square, Pa., awarded nine 2006-2007 Paul S. Mills scholarships to C. Kevin Jones of Falls Church, Va. David G. Simmons joined The Harford Mutual Insurance Companies of Bel Air, Md., which operates in Virginia, as vice president of marketing. Simmons previously worked for Penn National Insurance David G. Simmons and Donegal Mutual Insurance Group. Leonard S. Cohen was awarded the designation of Accredited State Planner by the National Association of Estate Planners & Councils. Cohen practices in Gaithersburg, Md. Michael Miller joined Max Specialty Insurance Co., based in Richmond, Va., as chief underwriting officer of the newly formed marine division. Previously, Miller was senior vice president and chief underwriting officer of Fireman’s Fund Insurance Co.’s specialty business unit. Allstate Insurance Co. opened a new office in Fairfax, Va., owned and operated by Kamini Narang. The office is located at 3921 Old Lee Highway.

Virginia

Monica L. Villalta joined Rockville, Md.,based Kaiser Permanente of the Mid-Atlantic States as director of diversity programs. Tammy Alderson, Bankers, Danville, Va., earned the Accredited Customer Service Representative designation through the Independent Insurance Agents of Virginia. Celeste Cardin joined Protective Life Insurance Co. as senior account manager for the Northeast and mid-Atlantic regions. Cardin previously worked for Allmerica Financial.

Glen Allen,Va.-based Markel Insurance expanded its social services program to include the following classes: • Community housing: Housing facilities for the physically/mentally handicapped, seniors and supervised and independent living. • Healthcare clinics: Neighborhood free clinics, non-emergency outpatient clinics, drug screening and testing, family planning/pregnancy, health assessments, HIV testing, immunizations and physical rehabilitation. • Substance abuse recovery clinics: Counseling, halfway houses and group homes, and substance abuse recovery on

an outpatient or inpatient basis. The company covers a wide range of social services classes, including youth organizations, counseling services, family service agencies, food banks, shelters, grant making foundations and senior activity centers. Auto, accident medical, business income, crime and inland marine are among the coverage highlights. For liability, coverage is now available for sexual abuse/molestation, professional, child abduction, special events, D&O and volunteers. For property, Markel covers commercial property extension endorsements, systems breakdown and key employee replacement. IFA

Celeste Cardin

Richard C. Zoretic was promoted to chief operating officer of AMERIGROUP and will oversee health plans in the mid-Atlantic. Zoretic previously worked for CIGNA Dental Health. Mary McCluskey was named chief medical officer for AMERIGROUP; McCluskey previously worked for Aetna Inc.

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Jamie Danner joined Kelly Benefit Strategies, a division of Hunt Valley, Md-based Kelly & Associates Insurance Group, as an account executive. The brokerage, which operates in Virginia, also appointed Brandon Luckett as vice president of new business development. Linda Nablo was named commissioner of the Virginia Department for the Aging. Nablo serves as director of FAMIS, Virginia’s children’s health insurance program. William E. Burgess joined the Rockville, Md.-based Physician Insurers Association of America as vice president. Burgess previously served as vice president for NCRIC Inc., a ProAssurance company.

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13

Gov. Kaine promotes LTC planning ‘Own Your Future’ campaign includes letters and DVDs being sent to about 200,000 residents Residents of Virginia are encouraged to take steps in owning their futures as Gov. Tim Kaine launched an effort to encourage people nearing retirement to think about long-term care. The governor held a press conference announcing his statewide “Own Your Future” campaign, which has an insurance component. Kaine further promotes long-term future planning in a letter and free DVD his office will send to about 200,000 Virginia residents, ages 50-52, according to the Independent Insurance Agents of Virginia.

“Most of us have strong opinions about what we want for ourselves as we age, but many of us have not taken the steps to address these needs,” Kaine said. “Planning for your future allows you to make these important life decisions yourself, instead of leaving them to others or waiting for a crisis that could limit your options.” A national study found that almost 70% of people turning 65 will need some long-term care for one year or longer. Long-term care refers to a broad range of supportive medical, personal and social services needed by people who are

unable to meet their basic care needs for an extended period of time. The mailing includes information on Medicaid, Medicare and the Virginia Long-Term Care Partnership. Citizens may also order or download the states’ “Own Your Future” Long-Term Care Planning Tool Kit, with information geared specifically to Virginia services. The Virginia State Corporation also reminds residents how long-term care insurance assists individuals with some of the costs for medical and personal care, and how to shop carefully, while avoiding potential pitfalls. IFA

BenefitMall, the nation’s largest smallgroup employee benefits General Agency, is proud to announce our 6th annual sales incentive program, The San Diego Grand Del Mar Getaway.

Ready to plan your getaway? Here are all the details: Reach the Goal: Sell $675,000 of new, annualized premiums with a minimum of five new cases with effective dates of July 1 through December 31, 2007. Enjoy Your Trip: You and your guest will join us for a four-day, three-night trip for two to The Grand Del Mar Resort, May 1 through 4, 2008. Double Your Reward: Sell $1,400,000 of

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14 | Virginia

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Dogs: Liability issues have bite From Page 1 their areas. This online database allows residents to monitor where threatening pets live. Mandated by Virginia’s General Assembly in 2006, the Web site requires local officials to provide information about pets if the animals are ruled dangerous. Along with registering their dogs, owners must also maintain liability insurance for the animals and provide renewed insurance information to the state every year as long as the dog is alive. In addition, owners need to post signs and confine their animals. The legislation was spurred by events where people and animals were killed or seriously injured in dog attacks in Virginia, according to the Virginia Department of Agriculture and Consumer Services. A “dangerous dog” means a canine or canine crossbreed that has bitten, attacked, or inflicted injury on a person or companion animal that is a dog or cat, or killed a companion animal that is a dog or cat. However, when a dog attacks or bites a companion animal that is a dog or cat, the attacking or biting dog is not deemed dangerous if no serious physical injury as determined by a licensed veterinarian has occurred to the dog or cat as a result of the attack or bite. According to the Insurance Information Institute, dog owners in 33 states and Washington, D.C., are liable for deaths or injuries caused by their dogs. Although some states are targeting specific breeds as dangerous, in Virginia, Pennsylvania and New Jersey, laws prohibit municipalities and counties from doing so. Virginia’s insurance law does not require liability for dangerous dogs, according to Katha Treanor, senior information resource specialist for the State Corporation Commission, of which the Department of Insurance is part. An individual insurance company determines the amount of liability. Homeowners and renters insurance policies typically cover dog bite liability, according to the institute. Most policies provide $100,000 to $300,000 in liability coverage. If the claim exceeds the limit, the dog owner is responsible for all damages above that amount, including legal expenses. IFA

November 2007

LTCFocus

By David B. Hillelsohn

New LTC Partnerships in Virginia require agents to complete special course Financial advisors should not write another Long Term Care Insurance policy in Virginia without completing the eight hours of LTC Partnership Continuing Education. Some states, Virginia included, have begun to launch their LTC Partnership programs, and these programs include new educational requirements for agents who wish to sell LTC. Whether or not you intend to sell a Qualified LTC Partnership policy, the top LTC carriers are requiring the training for consumer protection. A Qualified LTC Partnership policy is the same contract you’re selling now…and the same priced plan you’re currently selling. Agents will be required to complete eight hours of LTC CE, which must include at least two hours of LTC Partnership training. This training is designed to highlight the relationship between LTC plans and Medicaid qualification, and to outline the required inflation protection in order for a

Ages 60 and Under - Annual compound inflation protection Ages 61 to 75 - Some form of annual inflation protection (simple or compound) Ages 76 and Over – No Inflation adjustment required The Guaranteed Purchase Option or Future Purchase Option will not meet the guidelines for inflation protection in the first two age groups. Additionally, the compound inflation requirement in the 60 and under age category is not required to be 5% compound. The age-based inflation chart tends to

What does this mean? If you plan to sell Long Term Care Insurance in the state of Virginia, you should secure the LTC CE immediately. Training can be completed on-line or in a classroom. I believe the vast majority of LTC purchasers will not become eligible for Medicaid assistance. Still, having the added endorsement and incentive to purchase LTC coverage may increase many

about the author: David B Hillelsohn is the Brokerage Manager for The Haslett Management Group, Inc., a long-term care insurance brokerage firm. He can be reached at (888) 840-6977 or [email protected]

clients’ willingness to take some responsibility in the planning process. And other advisors are talking about it as well. If the client’s estate planning attorney has suggested a Qualified LTC Partnership policy is a good idea, are you prepared to respond? So take my advice, get ready, get set, and go get your LTC CE. IFA

Individual Disability Insurance for federal and state government employees.

“Agents will be required to complete eight hours of LTC CE, which must include at least two hours of LTC Partnership training.” LTC contract to be considered a Qualified LTC Partnership policy. Now allowable as part of the 2005 Deficit Reduction Act, many states are moving forward with LTC Partnership programs. Under this initiative, consumers who purchase a Qualified LTC Partnership policy will be allowed to protect assets that would otherwise be required to be spentdown prior to Medicaid qualification. The amount of asset protection provided is equal to the amount of benefit paid from a Qualified LTC Partnership policy. Sept. 1 was the launch date in Virginia, with some carriers having already received approval for partnership language to be added to LTC contracts. The wording acknowledges that the policy will be deemed a Qualified LTC Partnership policy if the policyholder purchases a plan with the mandated inflation protection. To be considered a Qualified LTC Partnership policy, the applicant must select the following inflation protection based upon their age at policy issue:

Virginia

be consistent with the recommendations of the majority of advisors so you’re likely already selling plans that would comply with these Partnership guidelines. To date, only a few carriers have received approval for the release of their Partnership plans in the state. Some advisors may take the approach to only sell carriers, which have received the applicable states approval of their LTC Partnership policies. Other advisors may believe they don’t need the certification, and they’ll sell other carriers. Neither approach is fundamentally sound. Advisors should secure the training now to become knowledgeable with the issues, and to allow an unbiased approach to carrier/product recommendation. But more importantly, should the client purchase a plan with the mandated age-based inflation requirements, and later the policy is approved by the state as a Qualified LTC Partnership policy, clients may be grandfathered if the advisor was qualified to sell the Partnership policy prior to solicitation.

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15

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If health insurance agents don’t start explaining to their clients the value they provide in the health system, then their jobs will probably be eliminated in the next few years. That was the message from political analyst Dick Morris and Janet Trautwein, CEO and executive vice president of the National Association of Health Underwriters, and other speakers at the recent Greater Philadelphia Association of Health Underwriters Annual Conference. “For those about to die, we salute you,” Morris said to about 400 agents, brokers and carrier representatives meeting outside Philadelphia. Predicting Clinton as president

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Morris, a Fox News Channel analyst credited with leading Bill Clinton’s comeback victory in 1996, said his dire opening was necessary because he thinks Hillary Clinton will be the next president (beating Republican Rudy Guiliani) and that means universal health care, with a delivery system not using agents, is imminent. Morris worked with Clinton on her failed health reform efforts in 1993 and 1994. “She doesn’t believe you should exist,” Morris told the audience of about 400. “She’s using these people who don’t sign up for [insurance coverage] to recast the health system the way she wants.” With the lessons she learned in the 1990s, Clinton is likely to seek reform that would lead to cost control, rationing and government funding “with disastrous results,” Morris predicted. “In the end, it will end up looking like it did in ’93 and ’94,” he added.

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16 | Virginia

What is most alarming about the continued move toward universal health is how it will affect consumers. “With the new health care, people will hear ‘No’ for the first time, and ‘No’ is a word people do not hear much…People will not take kindly to that,” Morris said. Trautwein, who lobbies Congress on

Insurance & Financial Advisor

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behalf of NAHU, said agents need to become active in efforts to stem the health care reform tide. “If we don’t do what we can do, I think you may be pushed out of the system. And I don’t want to see that,” she said. “But if you can show you provide value, then you will not be pushed out.” Because the health insurance industry does vote and support candidates, and Congress and the White House realize it, there is still hope, she said. “We

“If we don’t do what we can do, I think you may be pushed out of the system. And I don’t want to see that, but if you can show you provide value, then you will not be pushed out. - Janet Trautwein are not just say-no people; we are part of the solution.” Trautwein said many proponents of universal health care fail to recognize the “huge chunk of the health care system” private carriers fund. With a government-run system, an already stretched government will have to find additional funds to cover health care or accept rationing of services, and no out-of-hospital prescriptions being filled, she said. In his opening comments, Scott Crane, legislative chair for the Pennsylvania Association of Health Underwriters, told agents that “we are not crying wolf. Later, Michael McCormack, GPAHU vice president, said, “We have as a major responsibility as employee benefit providers to educate our clients…. There is power in our numbers.” IFA

November 2007

Uninsured: Va. better than most states From Page 1 were uninsured at some point of time during the past year. “The huge number of people without health coverage over the past two years helps to explain why health care has become the top domestic issue in the 2008 presidential campaign,” said Ron Pollack, executive director of Families USA. “The expansion of health coverage in America is no longer simply a matter of altruism about other people but a matter of intense self-interest.” The number of states where more than one-third of non-elderly people went without health insurance for all or part of a two-year period more than doubled—rising from nine states in 1999-2000 to 20 states and Washington, D.C. in 2006-2007. Texas had the highest rate with 45.7% of the non-elderly population uninsured. The other states are: New Mexico (44.3%); Arizona (41.8%); California (40.5%); Florida (40.1%); Mississippi (38.7%); Nevada (38.4%); Louisiana (38.1%); Oklahoma (37.7%); Georgia (37.6%); South Carolina (37.4%); Arkansas (37.2%); Utah (35.2%); Alabama (35.1%); the District of Columbia (35.1%); West Virginia (35.1%); Alaska (34.8%); North Carolina (34.6%); Oregon (34.6%); Colorado (34.2%); and Montana (33.9%). Although nearly half of the uninsured were non-Hispanic whites, the report found that there were huge disparities in the uninsured rate based in race and ethnicity. Among people under 65 years of age, about 26.% of non-Hispanic whites were uninsured in the past two years, compared to 44.5% for non-Hispanic blacks, and 60.7% for Hispanics. Other findings of the report include: • Of Virginia’s two million uninsured residents, 1.2 million did not have insurance for six or more months. • Virginia was able to decrease the annual percent of children under 200% federal poverty level enrolled in Medicaid/SCHIP from 77.9% in 1999 to 76.6% in 2000, according to the report. IFA

Virginia

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17

Letter to the editor Thoughts on banks buying insurance agencies Editor,

The insurance industry is slow to change...

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October’s $100 winner!

Vince Basciano ADP Statewide Agencies, Cedar Knolls, NJ

I just read your bank/insurance article (“Banks’ buys of agencies show mixed results”) in the October issue. We believe we have advised more insurance agency deals with banks in Maryland area than anyone, thus I’ll add a few comments based on Garland McPherson & Associate’s experience. The Sterling/ Corporate Healthcare Strategies LLC sale transaction occurred after Sterling had taken a substantial write down on its investment in the agency and had terminated the joint venture it had long held with Murray Risk Management and Insurance Services. From an analytical perspective using public information, we believe Sterling overpaid for Corporate initially, and the investment was further weakened when Corporate lost a major market within the first 18 months of ownership by Sterling (thus, the goodwill write down). At GM&A we do not believe employee benefits is a good foundation upon which to start a bank owned insurance agency endeavor for several reasons. Furthermore, we believe Sterling never gained the proper traction with Murray simply because it was a joint venture and not an outright purchase (thus neither party was truly invested). Very simply, we believe the Sterling insurance effort was not well structured at the front end and did not meet expectations due to internal and external forces. We have initiated transactions over the past several years involving the sale of Chesapeake Insurance Group, AvonDixon Agency, and Russell Insurance Group, among others, and each of these transactions continue to be accretive to the earnings of the banks having purchased the agencies. While there are numerous reasons these acquisitions continue to work well, there are fundamental agency traits and requirements, which we believe are important to make a good deal for both the bank and the agency. They are:

Vince subscribes to the email news alerts for the New Jersey channel at IFAwebnews.com

1. Acquire a multi-line agency with strong commercial P/C for a platform acquisition 2. Seek experienced management and producers that will stay and lead the agency 3. Acquire sufficient staff (back office) to accommodate internal and external growth

Each reader who registers for customized email news alerts can enter to win a $100 cash prize to be awarded each month through 2007. Once registered, you remain eligible for each month’s drawing! We NEVER rent or sell your information.

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4. Integrate the agency into the bank and its customer base (cross sell) slowly 5. Structure the purchase price based on adjusted historical EBITDA and payment over time 6. Seek an ROI of not less than mid teens and reach for higher numbers 7. Commit to the insurance agency business and grow the agency internally and externally 8. Buy/own the agency; do not enter into a joint venture 9. Leave the agency alone and let it sell products; the bank must not “manage” the agency Kevin McKechnie’s comments are right on for those banks seeking to enter the insurance agency business, especially when buying an established agency, and for those banks with interstate operations. Add-ons are a little different (e.g. the owner is exiting the business or you are purchasing a book), but the fundamentals must remain. Furthermore, as you noted, since commission income is up only slightly year over year (due primarily to a soft market), a bank owned agency must continue to control expenses and seek add-on acquisitions so as to sustain a proper return on investment. Where do banks go in the future regarding insurance agencies? First, those already in the business are looking to expand their footprint and will make acquisitions. Second, while the rush might be over, numerous banks are cautiously examining the business option and for many it’s a timing issue. Those potentially entering the business remain concerned about target agency fundamentals, the direction of contingent income, management depth, state involvement in mandated health care, which could negatively affect employee benefits (Maryland is examining the Massachusetts model), and determining how to cross sell insurance into the customer base, all of which will impact value. But just remember there is value in the agency. Unlocking that value is the issue and with whom is the task. Garland McPherson II Garland McPherson & Associates Inc. Baltimore, Md.

November 2007

In Memoriam

Hartford: P/C agents to sell employee benefits From Page 1 companies to promote this particular package among its agents.” Greg Boyko, president and chief executive officer of Hartford Life Insurance K.K. in Japan, will lead The Hartford’s new cross-selling initiative. In the near term, the initiative will focus on helping appropriately licensed property-casualty insurance agencies grow revenues from sales of 401(k) retirement plans, group benefits and individual life insurance products.

Virginia legislator with life ties dies The legislator who as her first piece of legislation sought to increase government life insurance benefits paid to military members killed while on duty died recently. Virginia Rep. Jo Ann Davis died recently after a two-year battle with breast cancer. She was 57. The Republican representative saw her military life insurance bill pass in the House in 2001. She represented southeastern Virginia and was a member of the House Armed Services Committee and the Foreign Affairs Committee, after serving in the House of Delegates for four years. Gov. Timothy Kaine will schedule a special election before the end of the year to fill the remaining year of her term, according to reports. She was diagnosed with breast cancer in 2005 and had a recurrence this year. IFA

Growing business In his new role, Boyko will report to Ramani Ayer, chairman and chief exec-

Virginia

between The Hartford’s property-casualty, investment, group benefits and life insurance businesses to make specific products more readily available to property-casualty agencies and their business customers. “Cross-selling is a concept used by most agents having more than one product line to offer,” said G Jane Thornhill, president of NAIFA Virginia. For example, property and casualty agents cross sell life, health and retirement products to their existing clients. IFA

NEW PLANS, REDUCED RATES, AND BIG INCENTIVES MAKE YOUR 4TH QTR CHOICES EASY Take a fresh look at Kaiser Permanente small group plans We’ve just introduced the new, small group plans you’ve been asking for at rates your groups won’t be able to pass up. And with a special bonus incentive plan for all small groups effective October 1, 2007 through March 15, 2008, it’s an opportunity you can’t afford to miss.

Va. bank acquires N.C. insurance agency A Virginia-based bank has expanded its insurance market with the recent purchase of a North Carolina insurance company. First Community Bancshares Inc., of Bluefield, Virginia, purchased High Point, N.C.-based GreenPoint Insurance Group Inc. for $2.9 million, reports said. GreenPoint Insurance is the first insurance agency that First Community has bought in its 133-year history. GreenPoint, founded in 2001, is a full-service agency that provides commercial, personal insurance lines, employee benefits, and life and health insurance. The agency will operate as a wholly owned subsidiary of First Community and keep its name. IFA

utive officer for The Hartford. Jack Kennedy, director of the cross-sell initiative, will report to Boyko. “Serving as a primary source for a business customer’s multiple insurance and investment needs helps our agents sell more products and, in turn, grow their own businesses,” Ayer said. “Research by The Hartford indicates that 78% of businesses with 21 to 100 employees wish they could turn to a single source for all of their financial needs. We want that single source for P&C, life and investment products to be The Hartford.” In his new role, Boyko is being asked to foster the necessary collaboration

Fourth quarter rates are significantly lower on select HMO, DHMO, and POS plans, and we’ve reduced rates on all HSA-qualified High Deductible Health Plans (HDHPs). Our suite of product solutions continues to expand. New Kaiser Permanente Flexible Choice POS and HDHP plan designs have been introduced in Maryland, Virginia, and the District of Columbia. Four HDHP plans feature zero copays after deductible.* Also, three new HMO plans are now available in Virginia and the District. Don’t plan your fourth quarter without us. For details about our new plans and rates, plus a special broker bonus incentive plan, contact Patrick Durbin at 301-816-6509 or your Kaiser Permanente sales representative. *Excludes ER, fertility, and network pharmacy

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November 2007

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Va. PPO to submit to NCQA standards Anthem, 13 other providers agree to meet requirements Anthem Health Plans of Virginia Inc., which operates as Anthem Blue Cross Blue Shield in Virginia, is among 14 preferred provider organizations in the U.S. that will submit to evaluation under NCQA’s new Health Plan Accreditation standards. The program evaluates PPO and managed care plans under a common set of standards, allowing consumers, employers and other purchasers of health care to make understandable,

reliable comparisons among different types of health plans to better inform their health care choices. While PPOs cover more than 6 in 10 Americans, they have not historically engaged in systematic clinical quality reporting efforts. “The millions of Americans enrolled in PPO plans deserve information about how well their plans help protect and promote their health,” said NCQA President Margaret E. O’Kane. “That information hasn’t traditionally been available, but these PPOs are at the vanguard of change. I look forward to other plans fol-

lowing their lead.” Beginning July 1, 2008, PPOs seeking NCQA Accreditation will be required to report clinical quality results through NCQA’s Health Effectiveness Data and Information Set, the nation’s most widely used set of clinical quality measures. The results of those measures will account for nearly 40% of the plan’s accreditation score. PPOs will also be reviewed on a set of standards common to managed care organizations including an assessment of their complex case management and disease management programs as well as how well they ensure continuity and coordination of patients’ care. IFA

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WellCare Health Plans Inc. will continue offering Virginia Medicare beneficiaries, after winning its Medicare Part D bid. Medicare Signature and WellCare Classic both feature no generic drug copays and low premiums, as well as no premiums for individuals who are eligible for both Medicare and Medicaid. “WellCare is pleased with its successful Medicare Part D bid results, and looks forward to continue serving the prescription drug needs for Medicare recipients in Virginia,” said Todd Farha, chairman and chief executive officer of WellCare. “Both of WellCare’s PDP plans offer our members $0 generic drugs – a significant benefit to our seniors. We are optimistic that even more seniors will find our plans attractive in 2008.” The Tampa, Fla.-based company will continue offering its prescription drug plans in all 50 states and Washington, D.C. WellCare is one of the nation’s largest Medicare Part D providers, with 971,000 members nationwide reported, as of June 30 WellCare Health Plans Inc. provides managed care services exclusively for government-sponsored healthcare programs, focusing on Medicaid and Medicare. IFA

Genworth executive to help new Phoenix Cos. unit

office: 877-370-2226 cell: 703-906-8625

• Affordable plan designs in PPO, HMO, POS and HSA (HDHP) • Extensive physician and hospital network • Excellent commission schedule

Provider to keep offering its drug plans to Va.’s Medicare, Medicaid recipients

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Joel H. Bernstein

–Available as of July 1 in Fredericksburg–

WellCare continues its Medicare Part D

Insurance & Financial Advisor

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A Lynchburg,Va., insurance executive has been named to the leadership team for The Phoenix Cos. Inc.’s new subsidiary. Frank T. Gencarelli, formerly executive vice president of business development at Richmond-based Genworth Financial, was named senior vice president of its new Life Solutions Unit. One area the new unit will explore is the emerging life settlement market, the Hartford, Conn.-based firm said. “Frank’s deep experience with the high net-worth and their advisors makes him particularly well-suited to lead this effort,” said Philip K. Polkinghorn, senior executive vice president and president of life and annuity for The Phoenix Cos. Gencarelli has spent much of his career in the insurance industry developing relationships with advisors who serve the high-net-worth market. IFA

November 2007

Optima: Plan to expand in Va. From Page 1

First person with...

Alan Schulman Name: Alan Schulman Title and company: President of Insurance Benefits & Advisors in Silver Spring, Md. Education, certifications and memberships: CFP NAHU LPRT MNCBIA Average number of voice messages daily? 20 Average number of emails received daily? 50 What goal or goals that you set for this year are you still trying to reach? Hiring 2 additional employees What has been the key to past successes? Sticking with it, persistency Who was a mentor? Dave Dixon What’s the hardest part of your job for you? When a client leaves for another broker. Professionally, if you could do one thing over again, what would it be? Start right off into the employee benefits business without first entering the stocks, bonds limited partnership business. What would you say has been the best decision you made professionally? Partner with a property-casualty firm. What was the toughest decision you had to make during your career? Leaving a career agency to go on my own.

If you could give a newcomer a piece of advice, what would it be? Join the National Association of Health Underwriters and your local chapter, and get educated and involved. How do you keep expanding your business/client base? Referrals

the state,” she said. These areas include the northwest quadrant such as Augusta, Winchester and into Charlottesville, which Optima is launching the first part of next year. The company will also focus its commercial products into the southwest quadrant of Virginia, including Lynchburg and Roanoke. “Our overall plan is to be statewide,” Senior Vice President and Chief Operating Officer Darleen Anderson said. Optima is the only health plan in Virginia ranked in the nation’s top 50 commercial health plans based on clinical quality, member satisfaction and ac-

What is the biggest challenge facing the industry? Universal healthcare, Maryland mandates, new legislation, unethical agents Where do you see the most potential in the industry? Medium- to large-sized groups What is the favorite car you have owned? My current car, a Nissan 350 Z Roadster

When it comes to your agency’s E&O coverage, you need teamwork.

What do you listen to when you drive? Various radio stations What is one of your guilty pleasures? Chocolate Name the last book you read? Harry Potter No matter what, each day I .... ? Smile and laugh, enjoy my wife and children

The Big “I” Professional Liability Program offers a team approach to protect your most valuable asset - your business. It’s 4th and goal and your agency has to have a touchdown. Who do you want blocking for your agency’s E&O needs? SWISS RE, through the Big “I” 3URIHVVLRQDO/LDELOLW\3URJUDPKDVWKH¿QDQFLDOVWUHQJWKWRZLQWKHJDPH

What would you write on your tombstone? Dedicated husband and father Alan Schulman, President Insurance Benefits & Advisors 10010 Colesville Rd, Suite A Silver Spring, MD 20901 [email protected] 301-681-9645

• The largest national independent insurance agents E&O program in the US. • First Dollar Defense and full prior acts available. • Coverage for sale of both P&C and L&H products. • Various premium credits. • Specialized experience in claims settlement. • Industry leading coverage form. • Limits to $15 million available. ‡$¿QDQFLDOO\VWURQJ$([FHOOHQW UDWHGFDUULHUWKDWLVFRPPLWWHGWRSURYLGLQJ you with comprehensive coverage at a reasonable and stable price. Ratings assigned by A.M. Best. • A comprehensive loss-control program designed not only to help avoid and minimize the impact of claims but to improve business processes and revenue.

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Long and Foster Insurance offers eDental Program to agents Alexandria,Va.-based Dominion Dental Services Inc. is teaming with Long and Foster Insurance to offer Dominion’s eDental program to nearly 17,000 real estate agents in Virginia, Washington, D.C. Maryland, Delaware, New Jersey and Pennsylvania. The eDental program offers triplechoice coverage to groups looking for a voluntary group benefit, but is unable to

Virginia

creditation scores from the National Committee for Quality Assurance and U.S.News & World Report, according to reports. It was also recently named the top health plan in the state for member satisfaction, according to a study by the National Research Corporation, a recognized leader in healthcare performance measurement. “We’re a regional plan covering nearly 342,000 members in Virginia,” said Michael M. Dudley, president of Optima Health. “We offer a new option that brings exceptional quality and customer service to the area.” FA

administer the plan for their members. The addition of Long and Foster Insurance follows Dominion’s announcement in May regarding the eDental program reaching one million eligible members just after launching the program late last year. The cornerstone of the program is a customized dental plan Web site created specifically for Long and Foster. IFA

Insurance & Financial Advisor

Learn more today at www.iiav.com or contact Marie Toney ([email protected]) with VFSC/IIAV at 1-800-288-4428; 8600 Mayland Drive, Richmond, VA 23294

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November 2007

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FOR THE RECORD Virginia agent & carrier fines

SYNOPSIS: Long failed to report to the commission an administrative action that was taken against him by the state of Pennsylvania.

The following summaries are based on information obtained from the State Corporation Commission, Virginia Bureau of Insurance (BOI).

• ANTHONY G. WITTIG Lynchburg, Va.

sion within thirty days an administrative action that was taken against him by the state of Mississippi.

ACTION: Wittig is ordered to pay a settlement of $1,000. SYNOPSIS: Wittig failed to implement a comprehensive written information security program that includes administrative, technical and physical safeguards for the protection of policyholder information. INS-2007-00118

INS-2007-00152

INS-2007-00169

• CANDY SHAVAUN FISHER Huntsville, Ala.

INS-2007-00145

ACTION: Revocation of Fisher’s license. SYNOPSIS: Fisher failed to report to the commission and to every insurer for which she is appointed any change in her residence or name.

• DANIELLE TAMARRA JOHNSON Euclid, Ohio ACTION: Revocation of Johnson’s license. SYNOPSIS: Johnson failed to report to the commission within thirty days an administrative action that was taken against her by the state of New York.

INS-2007-00153

• CHERYL DENISE WILLIAMS Orlando, Fla.

INS-2007-00148

• JOSEPH W. SCHUTT Mayfield Village, Ohio ACTION: Revocation of Schutt’s license. SYNOPSIS: Schutt failed to report to the commis-

ACTION: Revocation of Williams’ license. SYNOPSIS: Williams failed to report to the commission within thirty days an administrative action that was taken against her by the state of Georgia.

• SCOTT WILLIAM LONG Jersey Shore, Pa. ACTION: Revocation of Long’s license.

ACTION: Revocation of Whittenberg-Farrar’s license. SYNOPSIS: Whittenberg-Farrar provided materially incorrect, misleading, incomplete or untrue information in her license application filed with the commission.

Q:

INS-2007-00139

• ISAAC JERKUTHIAL BROWN Anniston, Ala. ACTION: Brown is ordered to pay a settlement of $500. SYNOPSIS: Brown provided materially incorrect, misleading, incomplete or untrue information in his license application filed with the commission.

and

K:

Give yourself and your clients 24/7 access to benefits information. Online tools educate and

improve administrative accuracy.

INS-2007-00130

• ESSICK & BARR, LLC Reading, Pa. ACTION: Essick & Barr, LLC, is ordered to pay a settlement of $500. SYNOPSIS: Essick & Barr, LLC, failed to report to the commission within thirty days an administrative action that was taken against it by the state of New York. INS-2007-00142

• MATTHEW C. WALTERS Virginia Beach, Va. ACTION: Walters is ordered to pay a settlement of $1,000. SYNOPSIS: Walters made, published, disseminated, circulated or placed before the public an advertisement, announcement or statement containing an assertion, representation or statement relating to the business of insurance which was untrue, deceptive or misleading. INS-2007-00147

The cost of benefits. The value of benefits. How do you keep them in balance? As the region's premier employee benefits administrator, KELLY has the experience, the technology, the alliances and - best of all - the ideas to help you make the right decisions, for your clients and their employees. Call us today, and everyone will benefit.

• JOHN R. KENNEDY Idaho Springs, Colo. ACTION: Kennedy is ordered to pay a settlement of $500. SYNOPSIS: Kennedy provided materially incorrect, misleading, incomplete or untrue information in his license application filed with the commission.

The Answer is KELLY.

22 | Virginia

ACTION: Revocation of Mastbrook’s license. SYNOPSIS: Mastbrook failed to file timely with the commission a 2006 Annual Gross Premiums Tax Report. INS-2007-00177

• MARK J. ELLIOT Trafford, Pa. ACTION: Revocation of Elliot’s license. SYNOPSIS: Elliot failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00178

• KATHRYN LEIGH ALGEE Mableton, Ga. ACTION: Revocation of Algee’s license. SYNOPSIS: Algee failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00179

• THOMAS G. TODD Saint Joseph, La. ACTION: Revocation of Todd’s license. SYNOPSIS: Todd failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00180

• ANTHONY SCOTT CONVERY Southlake, Texas ACTION: Revocation of Convery’s license. SYNOPSIS: Convery failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00181

• CHIA-LU JEFF PAN Plano, Texas ACTION: Revocation of Pan’s license. SYNOPSIS: Pan failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00182

• M & O AGENCIES, INC. Casa Grande, Ariz. ACTION: Revocation of M & O Agencies’ license. SYNOPSIS: M & O Agencies failed to file timely with the commission a 2006 Annual Gross Premium Tax Report. INS-2007-00183

• PAULA LEJEUNE CUELLAR Norfolk, Va. ACTION: Cuellar is ordered to pay a settlement of $500. SYNOPSIS: Cuellar made false statements or representatives on or relative to an application for an insurance policy for the purpose of obtaining a fee, commission, or other benefit, and acted as an agent of an insurer without first obtaining a license in the manner and form prescribed by the commission. INS-2007-00150

INS-2007-00151

Call 1-800-972-7227 or 703-847-6572 / www.kaig.com E-mail a question regarding your business benefits to [email protected] and it may appear in one of our future ads.

• SHARON ANN MASTBROOK Forth Worth, Texas

INS-2007-00135

• CARMEN CHYRISSE WHITTENBERGFARRAR Hutto, Texas

Helping my clients manage their healthcare benefits can be overwhelming. Is there any way to make things simpler?

SYNOPSIS: Lindsey failed to report to the commission within thirty days administrative actions that were taken against him by the states of Iowa, South Dakota and Nebraska.

A Division of Kelly & Associates Insurance Group

• VICTOR A. LINDSEY Torrance, Calif.

Insurance & Financial Advisor

ACTION: Revocation of Lindsey’s license.

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November 2007

Calendar of Events NOV. 1-2 – ETF SYMPOSIUMNAAIM. Hyatt Rosemont, Rosemont, Ill. Contact: Gerry Wisz, 201-280-2816. NOV. 2 – MINI-COURSE- SFSPRichmond. 8:30-10:30 a.m. Mass Mutual. Contact: Ginny Crenshaw, 804-741-2043. NOV. 7 – ODU FOUNDERS DAY LUNCHEON-SFSP Norfolk-Tidewater. 11:30 a.m- 1:30 p.m. ODU Webb Center, Hampton/Newport News Room Webb University Center, Old Dominion University. Contact: Jane E. Martin, 757-363-7345. NOV. 8 – CAREER PROFESSIONAL DEVELOPMENT-FPANCA. 7 a.m.-1 p.m. Westwood Country Club, Vienna, Va. Contact: Peggy Nelson, 703-620-1712, or email, [email protected]. NOV. 8 – MEMBERSHIP MEETINGSHENANDOAH VALLEY AIFA. 10:15 a.m. Mrs. Rowe’s Restaurant, Mt. Crawford. NOV. 13 – MONTHLY NETWORKING & EDUCATION MEETING – FPAHampton Roads-Peninsula. 7:30-9 a.m. The Point Plaza, Newport News, Va. Contact: Emily Roussos, 866-360-6845, or email, [email protected]. NOV. 13 – CE CLASS AND LUNCHEON-Richmond AIFA. 9:30 a.m. Westwood Country Club, Vienna, Va. Contact: Ginny Crenshaw, [email protected], or 804-741-2043 NOV. 14 – MONTHLY NETWORKING AND EDUCATION MEETING-FPAHampton Roads. 7:30-9 a.m. Cypress Point Country Club. Contact: Emily Roussos, 866-360-6845, or email, [email protected]. NOV. 14 – NOVEMBER ANNUAL DINNER - FPA-Central Virginia. 6-9 p.m. Westwood Club. Mila Spaulding, 804-749-8149. NOV. 15 – CONFIRMENT DINNER FOR 2007 DESIGNEES – CPCUTidewater. 6-9 p.m. Steinhilber’s, Virginia Beach, Va, Contact: 757-340-1156 or email, [email protected] NOV. 16 – CE PROGRAM: EMPLOYEE STOCK OPTIONS PLANS-FPA-Hampton Roads. 11-1 p.m. Virginia Beach Central Library. Contact: Emily Roussos, 866-360-6845, or email, [email protected]. NOV. 29 – FINANCIAL EDUCATION SEMINARS: “HEALTH INSURANCE AWARENESS MONTH”-DISB. 3 p.m.4:30 p.m. Martin Luther King Jr. Memorial Library, Washington, D.C. Contact: 202-727-1171. DEC. 5 – DECEMBER LUNCH AND LEARN-Young Agents CommitteeIIAV. 10 a.m.-1:30 p.m. IIAV Office, Richmond, Va. Contact: www.iiav.com, 800-288-4428.

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The Benefits of Experience

Phone: 703-807-2001 Fax: 410.667.7977 Email: [email protected]

Virginia

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