NetVU Silver Partnership Annoucement

NetVu Partnership Announced

I am excited to introduce you to our newest Silver Corporate Partner – Simply Easier Payments.

Simply Easier Payments was created to focus on two issues:

1. The high cost of card payments for insurance agents, carriers and premiums finance companies
2. Navigate the maze of regulatory compliance requirements unique to the insurance industry relating to fees being charged in addition to premiums

Simply Easier Payments addresses:

1. The need to sign documents at the same time payment is accepted
2. The need distribute funds electronically to better manage cash flow
3. Recurring Billing
4. Invoicing

Simply Easier Payment's value goes beyond the processing of payments, their solutions can be used…

• Online through your website
• By phone to your staff or call center
• Mobile through phone apps they provide
• Mobile through your own phone apps
• Integrated into your billing systems
• Integrated with your IVR systems
• Integrated with chatbots and Voice Assistants
• To strengthen customer relations and enhance customer experience.

For a Demo or to Learn more  - contact Calvin Churchill at 800-768-0907 or cchurchill@simplyeasierpayments.com

------------------------------
Lynn Albertson
Business Development Coordinator
NetVU
(972) 409-6200
lynn@netvu.org

Car Insurance Rates by State

All 50 States Ranked by Average Car Insurance Cost

Insure.com recently released its 2018 study of the average car insurance premiums.

Here is the link...

https://www.insure.com/car-insurance/car-insurance-rates.html

The national average is $1,365.

Most expensive is Michigan at $2,239.

Least expensive is Vermont at $932.

My home state of North Carolina comes in at 42nd at $1,104. Oh the joys of the North Carolina Reinsurance Facility, our one of a kind rate suppressor.

Where does your state come in?

New NetVu Partnership Logo

NetVu Silver Partnership

I love the new NetVu Logo...

We are exceeding proud to be a NetVu Silver Partner!

Insurance Premiums, Credit Card Payments and Refunds

How to Refund a Card Payment

Insurance always has to be different. If you are in the business, you know what I mean.

How do you handle a premium refund if the premium was paid to your agency with a credit card?

What the Card Rules Say

Under the Rules, any payment accepted as a card payment must be refunded through a credit to the cardholders credit card account.

Why?

To protect you from refunding the money twice!

How Does A Double Refund Happen

Since the cardholder can always dispute and reverse the card payment they made to pay the premium originally, the cardholder can, in effect, get a refund without ever asking you about a refund.

The cardholder disputes the charges and the card company automatically credits the amount of the payment back to the cardholder and takes the payment amount out of your bank account. (Yes, you agreed to this when you signed your Merchant Agreement.)

NOTE:Disputes are rare for insurance premium payments.

If you make a refund that is not through a credit back to the cardholders card account, the credit card company has no record of any of this refund. Since they do not know you have done this, their software will allow your customer to dispute the charge and automatically provide a refund credit.

How Can You Prevent This

 If you have refunded this payment through the card network, the card company will see that reversal and will not allow a dispute of the charge since the cardholder has clearly already received a refund.

Simply Easier Payment's Refund Feature

Your Simply Easier Payments account lets you void a full payment or do a partial refund.

Your do this from the Report function. Check out our help section or call and ask us how if you need help in learning how.

AppliedNet and NetVu

Sliver Partners

I am extremely pleased to announce Simply Easier Payments is now a Silver Partner fro both NetVu and AppliedNet.

We are committed to the ongoing success of the independent agency channel.

Signed Forms and Payments

Requiring a Signed Form With a Payment

There are times as an insurance agent when you need your customer to sign a form in addition to making a payment.

The ACORD 37 Statement of No Losses comes to mind immediately.

Exclusive Feature

We have just added a feature to our invoicing system that allows you to add a form with a certified electronic signature on the form to your invoice.

When your customer clicks the link for the invoice the required, pre-filled form opens with the e-signature field prominently displayed telling your customer they need to sign the document before they can make the payment.

If they do not sign the document the payment screen is not accessible.

Once they do sign the document, the payment screen automatically appears.

Two Tasks with One Invoice

This new feature saves you time because you only need to send one email.

It saves your insured time because they only need to respond to one email.

It saves you both the issue of only getting one or the other task done.

Convenience Fees and Surcharges

How do Surcharge Rules Differ from Convenience Fees

Visa allows most Merchants two ways to add charges to Visa card payment transactions to let the Merchant pass the cost of the card transaction on to the person making the payment.

1. Convenience Fees
2. Surcharges

I wrote about "convenience fees" in my last post...

https://simplyeasierpayments.blogspot.com/2018/09/visa-rules-on-convenience-fees.html

Rules for Surcharges

Surcharges differ from convenience fees on several major points.

• Only applied to credit card payments
• Cannot be applied to debit card payments
• Can be a flat fee or percentage
• Cannot be an additional revenue generator for the merchant
• Merchant must register with Visa stating they are charging surcharge in advance

Limits on Surcharge Amount

The amount of the surcharge is limited by the actual cost of the transaction...

"the US Credit Card Surcharge amount is not greater than the applicable Merchant Discount Rate for Visa Credit Card Transactions at the Merchant"


The surcharge can cannot be charged on any debit card transactions...

"surcharges are not permitted on debit Transactions regardless whether a Cardholder selects the "credit" or "debit" button"

It is up to the merchant to determine if the actual card being used is a debit or credit card. This is typically done by referencing BIN tables with the processing software.

The Visa Rules on surcharging can be found beginning on page 378, Rule 5.6. at this link...

https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf

Visa Rules on Convenience Fees

Can An Insurance Agency Charge a % Fee

In a seven or eight states there are no insurance specific laws or general business laws which prohibit an insurance agency from charging a convenience fee to their customers who pay by credit card or debit card.

In these states, insurance agents, like any other business, can charge convenience fees or surcharges. These two things - "convenience fees" and "surcharges" - are defined as different things by Visa. Today I will cover convenience fees. In my next post I will cover surcharges.

What an Agency Was Doing

Recently an agent mentioned they were charging a 3% convenience fee on card payments. They were not charging the fee on all lines of business.

2 Violations of Visa Rules

This situation creates the following violations of Visa Rules:

1 - Visa requires a flat dollar fee to be charged for all convenience fees regardless of the payment size

2 - Visa requires that all card payments be charged a fee or that no card payments be charged a fee.

Here are the Rules:

https://usa.visa.com/dam/VCOM/download/about-visa/visa-rules-public.pdf

Page 385 of the above document, rule 5.6.2.1

Refer to Table 5-7.

Visa prohibits percentage. Only flat dollar amount can be charged and that amount has to be the same for all payments - Whether a $10 premium payment or a $10,000 premium payment.

"A flat or fixed amount, regardless of the value of the payment due In the AP Region, an ad valorem amount is allowed as required by applicable laws or regulations."

Visa requires all payments made through the payment channel - electronic payments in this instance - be charged the same fee.

"Applicable to all forms of payment accepted in the payment channel"



I hope this is helpful in your understanding of the way you can charge fees in compliance with your Merchant contract.

Local Gas Stations and Electric Cars

Local Electric Charging Stations

My wife and I recently bought a Chevrolet Bolt. Our first electric car.

We bought the Bolt because it has great range - 250 miles on a full charge - and because it is priced in the range of most cars. After the Federal tax credit it cost us less than $30,000.

Before owning this car I was of a mind that local charging stations would start popping up the way local gas stations have. After all I see them in all the public parking decks in town. I was told by the car salesman that the Sheets gas stations are all putting in charging stations.

I even downloaded the ChargePoint and EVGo apps to be able to find charging stations.

After owning the car for a month I have radically changed my thinking.

Local EV Charging Stations Will Never be Like Gas Stations

We drive the Bolt 25 to 75 miles a day. We plug it in at home and get a full charge each night.

We will never have a need for a local charging station the way we do for a local gas station.

With our old timey internal combustion engine cars we buy gas only from gas stations. We do not have the option of filling up at home. I know farmers and a few others have their own gas pumps, but most people do not.

Everyone can "fill up" their electric vehicle at home because everyone has electricity at home.

Change Happens Over Time, But It Still Happens

I know I am an early adopter. I know the move away from most cars being gas powered cars is a decade or more away. But that change is coming.

The future is always farther than the past. However, the future is where we are going.

What will be the downstream effects of people not needing to go to the local gas station to buy gas?

What do you think?

Bank Loans and Car Warranty Premiums

How Does the Insured Get the Cancellation Refund

I was standing in line at the bank this week when I overheard a customer asking the teller when the bank was going to give her the refund on her Car Warranty she purchased when she recently bought a new car.

Here is what she had done:

1. Bought a new car
2. Bought the new car warranty coverage from the dealership
3. Paid for the car and the warranty with the loan from the bank
4. Cancelled the warranty coverage
5. Asked the car dealer who sold her the warranty coverage for the refund
6. Car dealer told her she would have to get the refund from the bank since they had the loan

Where did the refund money from the warranty company go?

If the bank had been a premium finance company, the insurance / warranty company would have a record of that and would have sent the refund back through the premium finance company.

But the bank is not a premium finance company. That raises the question...

"Should a bank loan money to pay for a warranty policy - essentially an insurance policy?"

Is the insured just trying to scam the bank loan?

The loan customer supposedly borrowed say $20,000 for the car and $3,000 for the warranty. The loan customer is now trying to get part of that loan back as cash.

Presumably the loan amount is not reduced by the cancellation of the warranty policy. If the loan customer had cancelled the purchase of the car - meaning sold the car - the loan would have to be settled.

Seems kinda tricky to me.

Do you know the answer?

I do not, but I am interested. Please leave a comment to explain.

Thanks.

Does Insurance Agent or Broker Relationship Control in Nevada

Which Relationship Controls in Nevada

In Nevada it is possible for a licensed insurance agent to act as a broker. Nevada rules allow a broker to charge fees under a written agreement for consultation services. Agents are not allowed to charge fees. This means it is important to understand which set of rules apply.

Agent Relationship Controls Broker

https://law.justia.com/codes/nevada/2017/chapter-683a/statute-683a.321/https://law.justia.com/codes/nevada/2017/chapter-683a/statute-683a.321/

"6. A producer who is acting as an agent may also act as and be a broker with regard to insurers for which he or she is not acting as an agent. The sole relationship between an insurer and a broker who is appointed as an agent by the insurer as to any transactions arising during the period in which the broker is appointed as an agent is that of insurer and agent, and not insurer and broker."


Generally speaking the ability to charge fees in Nevada is addressed under the Illegal Dealing in Premiums law. Find that law here...

https://law.justia.com/codes/nevada/2017/chapter-686a/statute-686a.230/

This is a common area of insurance law where additional fees are addressed in many states.

Here is an outside legal opinion published on this issue...

http://www.forc.org/Public/Journals/2015/Articles/Summer/Vol26Ed2Article3.aspx

Virginia Insurance Agents and Fiduciary Accounts

Premium Trust Accounts for Virginia Insurance Agencies

Virginia does not require a Premium Trust Account for insurance agents, instead Virginia does require a fiduciary account separate from all other business and personal funds.

Here is a link to the law...

https://law.lis.virginia.gov/vacode/title38.2/chapter18/section38.2-1813/

§ 38.2-1813. Reporting and accounting for premiums.

A. All premiums, return premiums, or other funds received in any manner by an agent or a surplus lines broker shall be held in a fiduciary capacity and shall be accounted for by such agent or surplus lines broker. 

The Big Exception

Section D of this same link shows the one exception...

"D. This section shall not require any agent who is a duly appointed agent of an insurer and who has a written contractual relationship with such insurer which includes provisions regarding remittance of funds to maintain a separate fiduciary account for the funds. Such funds shall be held separately from any personal or nonbusiness funds and shall be reasonably ascertainable from the books of accounts and records of the agent."

You still need to funds kept in a separate account, but it does not have to be a "fiduciary account".

Insurance Agency Fees in Michigan

What Fees Can Insurance Agents Charge in Michigan

Insurance producers are not allowed to charge or pass a service fee to consumers for insurance policies sold in the admitted market.

Michigan is a non-broker state; therefore, insurance producers act as agents on behalf of their insurance companies instead of their clients.

The only exception applies to licensed surplus lines producers who may charge a fee not exceeding the statutory limit for surplus lines policies only.

Here is the link to a document on the Michigan rules...

https://www.michigan.gov/documents/difs/Market_Conduct_Agency_Audit_News_2017_560214_7.pdf

Can an Illinois Insurance Agent Pay Card Transaction Costs from their PFTA

Illinois and Insurance Premium Trust Accounts

In Illinois insurance premium payments accepted by the agent must be deposited into a PFTA - premium trust account.

Here is the link to the relevant law...

ftp://www.ilga.gov/jcar/admincode/050/050031130000400R.html

If the premium payment is accepted as a debit or credit card payment, is it legal for there to be a withdrawal from your agency PFTA account to pay the transaction cost of those premium payments?

Probably not. Read on....

Limitations of Withdrawals

Here are the things for which you are allowed to withdraw funds from the PFTA.

"Withdrawals can be made for the following reasons:

h)         The following disbursements may be lawfully withdrawn from the PFTA:

1)         Net or gross premium remittances due other licensees or insurers. Claims payments or reinsurance premiums when offset at the direction of the insurer may be transferred to another account;

2)         Return premiums due insureds;

3)         Commissions due the licensee, net of any financial institution fees or service charges, or commissions due another licensee only when the commission withdrawal is matched and identified with premiums previously deposited into the PFTA;

4)         Non-premium monies when matched and identified with prior non-premium PFTA deposits;

5)         Interest or other revenue which the licensee is authorized to retain.

6)         Withdrawals pursuant to subsections (h)(3), (4) and (5) must be made payable to the licensee or another licensee."

I look at this like a named peril insurance policy as opposed to an all-risk insurance policy. If the action is not specifically allowed, then the action is not allowed.

Under this list of reasons I see no permission to withdraw funds to pay the transaction cost to the bank for you credit and debit card payments.

What do you think?

43 States Limit or Prohibit Insurance Agency Fees

Can Your Insurance Agency Charge a Fee in Addition to Premiums

Having read through all the state insurance codes, bulletins, advisory opinions, notices, regulations and related material I can find - don't I know how to have fun - I have complied an extensive list on how an insurance agency needs to operate to be in compliance with its state's insurance regulators.

43 states have one or more specific rules or laws regarding insurance agency's ability to charge any fee in addition to the insurance premium.

The basic reason for these rules is to require the actual insurance rate to be meaningful. When insurance rates have to be filed and/or approved, allowing additional charges to be added on to the customer bill defeats the purpose of the regulation of the insurance rates. In today's jargon, it provides a hack of the insurance regulatory process.

We Know and Care About Your Compliance

At Simply Easier Payments we spend a great deal of effort understanding your business so we may provide our service in a way that never puts you or your business at risk.

We will never be perfect, but we will work hard and diligently.

We believe any long term business relationship requires this of us.

Premium Payments Deposited to Bank in Your State

Nine States Require You to Use a Bank in Their State

When an insurance agent accepts a premium payment from a customer it always creates a fiduciary responsibility for the insurance agent.

Most states have laws outlining many specifics of how these premium payments must be handled.

These states all require that the premium payments be deposited in a bank or other depository institution with a physical presence in the agent's state or at a minimum regulated by the agent's state's banking regulators.

States Requiring Bank Account in Agency’s State

1. California – see note
2. Hawaii
3. Illinois
4. Maryland
5. Nevada
6. New York
7. Utah
8. Washington
9. Wyoming

NOTE: California requirement is limited to cash payments received at agency. Checks and card payments can be out of state.

Minnesota Insurance Agency Fees Charged to Customers

Minnesota is Wide Open for Insurance Agency Fees

Here is the link to the pertinent law...

https://www.revisor.mn.gov/statutes/cite/60K.46

I have read every state's insurance code with a particular focus on what fee insurance agents can charge their insureds in addition to the policy premium. Minnesota is about as accommodating as any state.

Minnesota does require written disclosure, but the disclosure does not require the insured's signature.

The final clause that "all fees charged are reasonable in relations to the services rendered" may also create some theoretical upper limit on the dollar amount.

Here is the text of the law as of this writing.

"Subd. 2.Fees for services.

No person shall charge a fee for any services rendered in connection with the solicitation, negotiation, or servicing of any insurance contract unless:

(1) before rendering the services, a written statement is provided disclosing:

(i) the services for which fees are charged;

(ii) the amount of the fees;

(iii) that the fees are charged in addition to premiums; and

(iv) that premiums include a commission; and

(2) all fees charged are reasonable in relation to the services rendered."

Kansas Insurance Department Ahead of the Times in 1995

Kansas Insurance Department Policy on Credit Card Payment

On November 6, 1995 the Kansas Department of Insurance issued what I believe to be the VERY FIRST in the nation statement on accepting credit card payments for insurance premiums.

Here is a link to the Bulletin

file:///C:/Users/Duke/Desktop/Card%20Fees%20Summary%20June%202018/Kansas/1995-19%20Accepting%20Credit%20cards%20for%20Premiums%20Bulletin.pdf

The Department was responding to the complaint that the transaction cost of accepting a card payment constituted a REBATE since a significant portion of the premium went to the credit card transaction cost.

I find this to be a wonderfully creative approach to the issue of the high cost of card transactions.

Apparently some agencies and carriers felt it was a marketplace advantage for some companies to offer to accept credit card payments but resisted accepting cards themselves because of the reduction in NET PREMIUM received after the transaction cost.

Looking back on this argument I would suggest they should have taken the position that the rewards points created by payment with a credit card could be considered a rebate since those points can be used as funding to pay for a wide variety of benefits - like airline tickets.

Insurance Agency Fees in Tennessee

Tennessee and What Are Services Associated with an Insurance Policy

The Tennessee law regarding fees an insurance agent can charge an insured brings up the most common issue related to agents charging fees.

Here is a link to a Bulletin from 1998...

https://www.tn.gov/content/dam/tn/commerce/documents/insurance/bulletins/1-08-98.pdf

The issues revolve around what are services that the insured should expect to be included in the premium?

Here is the text of the Bulletin

"“A fee which is not connected with the sale, solicitation, or negotiation of a policy of insurance, and which therefore, would not be included in the term “rate”, may be charged by an agent. Some factors which may be useful in analyzing whether a fee is connected with the sale, solicitation, or negotiation of a policy of insurance are:

1 – Whether the services performed by the agent are associate with the sale, underwriting, issuance, or servicing of a policy of insurance;

2 – Whether compensation is dependent upon the purchase of a policy of insurance;

3 – The date of payment of the fee in relation to the date a policy of insurance was issued.

Although these factors are provided for guidance, the department will continue to review each transaction on a case-by-case basis."

What do you think should be included in normal policy services?

Florida Insurance Agency Fees and Car Insurance

What Fees Can Be Charged in Florida on Car Insurance

Florida allows two fees to be charged by Licensed General Lines Agents related to car insurance policies.

• The agent / agency can charge the cost of obtaining a motor vehicle report - with limitations
• The agent /agency can charge $10 a policy with only PIP and Property Damage - with limitations

The rules for both are at this link...

http://www.leg.state.fl.us/statutes/index.cfm?App_Mode=Display_Statute&Search_String=&URL=Ch0627/Sec7295.htm&StatuteYear=1998

Cost of MVR

This rule is in Section 5(b). The key take away is your cost for the MVR cannot not be "otherwise compensated". In other words, the insurance company your place this business with cannot reimburse you for the cost.

You cannot charge more than the actual cost of the MVR.

You cannot include in the cost subscription or access fee you may pay.

PIP and Property Damage Only Policies

This rule is in Section 5(a). there are two important issues.

1. The "policy covers only personal injury protection coverage as provided by s. 627.736 and property damage liability coverage as provided by s. 627.7275 and if no other insurance is sold or issued in conjunction with or collateral to the policy."
2. "The per-policy fee must be a component of the insurer's rate filing and may not be charged by an agent unless the fee is included in the filing."

It is your responsibility to know if your carrier's rate filing includes this fee.