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Bitcoin, Cryptocurrency and Blockchain

Posted By Chris Prewit, Tuesday, January 2, 2018

Article written by Robert Crosby, Executive Director of Independent Insurance Agents of San Antonio

Since this is the start of a new year, I wanted to write about something that has taken the nation and the world by storm. As I delved into the subject of Bitcoin, Cryptocurrency and Blockchain transactions, it became apparent became to me that there is a generational gap of understanding this new currency between the Millennials (Bulls) and Baby Boomers (Bears).

Let’s start with a history lesson.  Bitcoin is a new form of money, a digital currency created in 2008 during the financial crisis.  Blockchain is the tracking mechanism that facilitates any incoming and outgoing bitcoin transfers to and from any internet address at any given time.  During the financial crisis of 2008, people from all over the world felt its debilitating economic effect. As late as the end of 2016 and into 2017, many are still feeling the effects of the dwindling value of their fiat currency or the currency approved by a country’s government.   Satoshi Nakamoto, an unknown person or persons, created the bitcoin concept sometime in 2008.  A key component of bitcoin is decentralization. Decentralization allows us to cross currency barriers making us all a part of the bitcoin ecosystem.  This allows anyone, anywhere, to take part in transactions and contribute to it in our own way.  Rather than relying on a government, bank or middleman, bitcoin belongs to everyone in this “peer to peer” system, making all of us part of the bitcoin network. Bitcoin is driven by individual users and without individual users, there is no bitcoin. The more people that embrace bitcoin, the better it works.  Bitcoin needs an ever-expanding community actively using bitcoin as a payment method either buying goods and services with bitcoins or offering goods and services in exchange for bitcoin. Bitcoin can be used as an investment and traded like a commodity.

As I did a more in-depth analysis, I learned about some of the features and characteristics of bitcoin.   Bitcoin lets you exchange money in a different way than you would with a bank.  Bitcoin makes it possible to transfer value anywhere in the world via the internet in a very easy and quick way.  It allows you to control your money but it does come with great security concerns.  Bitcoin claims that it can provide very high levels of security if used correctly. Because of this, it is important for anyone interested in investing or utilizing bitcoin to take the time to inform yourself before using bitcoin for any transaction.  Bitcoin should be treated with the same care as your wallet, or even more so in same cases. Always remember that it is your responsibility to adapt good practices in order to protect your money. 

Bitcoin is treated as a commodity in the world market with the price of a single bitcoin unpredictably increasing or decreasing over a short period of time due to its young economy, novel nature and sometimes liquid markets. Consequently, keeping your savings with bitcoin is not recommended at this point.  Bitcoin should be seen like a high risk asset and you should never store money that you cannot afford to lose with bitcoin. If you do receive payment with bitcoin, many service providers can convert them to your local currency.

Here is a list of companies that accept Bitcoin. (Last updated on December 6, 2017)

Any transaction issued with bitcoin cannot be reversed.  A bitcoin transaction can only be refunded by the person receiving the funds. That means you should take care to do business with people and organizations that you trust, or that have an established reputation.

All bitcoin transactions are stored publicly and permanently on the network most commonly called a “blockchain."  Anyone can see the balance and transaction of any bitcoin address, however, the identity of the user behind an address remains unknown until information is revealed during a purchase or under some other circumstances.   For this reason, bitcoin transaction addresses should only be used once.  As mentioned before, always remember that it is your responsibility to adopt good practices in order to protect your privacy.

Bitcoin is an experimental new currency that is in active development. Each improvement makes bitcoin more appealing, but also reveals new challenges as the adoption of bitcoin grows.  During these growing pains you might encounter increased fees, slower confirmations, or other service issues. Be prepared for problems and consult a technical expert before making any major investments.   Keep in mind that nobody can predict the bitcoin future.

Bitcoin is not an official currency, but that having been said, most jurisdictions still require you to pay income, sales, payroll and capital gains taxes on anything of value including bitcoin. It is your responsibility to ensure that you adhere to tax and other legal or regulatory mandates issued by the U.S. government and local municipalities.

Next month we will be discussing a more in-depth analysis about “blockchain” and how it is used in the insurance industry.

A final commentary, investing or using bitcoin in commerce is a high risk adventure.   As with any investment, your appetite for risk will determine your willingness to jump into this new form of currency.  I have found that the millennials are willing to take the risk and have already been trading in bitcoin and blockchain.  The Baby Boomers are more conservative and are really struggling with the concept. Consequently, many have have no idea how it works. Whether you are a Millennial or a Boomer, just be careful what you wish for and research, research, research.

In just the last few days, the San Antonio Express News and MSN News have been writing warning articles about bitcoin. The Express-News reported that the Texas State Securities Board issued a cease and desist order this week against an overseas company selling investment contracts to mine bitcoin. For more information please review the December 29th issue of the Express-News. The article appeared in the Business Section, under the heading of “Texans warned about firm with ties to bitcoin”. MSN news reported on December 29, 2017, that we need to heed Warren Buffett’s warning: Bitcoin is pure FOMO” - the fear of missing out. Both of these articles are great reading regarding bitcoin.

This article references bitcoin.org multiple times.

Tags:  best practices  business  cryptocurrency  industry  Insurance  InsurTech  Technology 

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Career Path

Posted By Chris Prewit, Wednesday, July 5, 2017

Few of us take the time to actually plan our careers. Too often, a career is something that just seems to happen to us. We take a job, and five years later we discover that we have a “career”. The career planning process is relevant and valuable whether you are in the first year of your first job, or 20 years into your career. A good career path can help you make your career happen instead of just settling for what shows up

Current thinking on career management emphasizes five possible career directions. Understanding these strategies can help you in your career planning process since some certain types of movement are available in some jobs and not others.

  • Upward movement-the traditional conception of career growth. Typically an option for larger companies with multiple layers of management.
  • Downward movement-sometimes a positive career move when you have been promoted or hired into the wrong role and you have a mismatch of values or competencies for a position.
  • Lateral movement-movement from one job type to another.
  • Moving on-sometimes career goals can best be realized by moving on to a position in another organization.
  • Enrich the current job-involves developing yourself and expanding the duties in your present job. This is a traditional path in smaller P & C agencies.

The following is a simple four step process to keep your career path on track.

  1. Setting my values compass is the first step. A good compass will help you find True North when there is no visibility. Likewise, having clearly articulated values that tie to your key life roles and goals allow you to identify what’s truly important and to orchestrate your activities into big accomplishments over the long run, such as completing the education and work experience required to obtain a more challenging and higher paying position.

  2. After you have established your value compass direction, then you set out to map a five year career path. Competencies are the underlying characteristics of a five year career path. Knowing what you are competent of doing will give you direction. Some examples of competencies are easily identifiable such as skills and knowledge. Less obvious examples of competencies include items like behavioral traits/preference, motives, social roles. They can be found in position descriptions, through personality and trait testing like the “Omnia Profile”

  3. Providing provisions for the journey. It’s time to really dig in and be with honest yourself. Which competencies have you mastered and which you need to develop in order to start you journey and to successfully navigate your five year plan.

  4. Staying the course, the following are development methods to keep your career compass pointed true North.

Here are a few recommendations on where to start:

  • Designations, for example CIC, CRM and CPCU.
  • Classroom and insurance company training classes
  • Online training
  • Coaching/Mentoring
  • Cross-Training
  • Challenging Assignments
  • Volunteer Projects
  • Reading

Best wishes and good luck on your career journey!

Tags:  advice  best practices  business  Career planning  careers  industry 

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TDI Issues Draft of Hail Litigation Report

Posted By Chris Prewit, Wednesday, November 2, 2016

An interesting article by Bill Kidd appeared in the latest issue of The Insurance Record


There is growing involvement from attorneys and public adjusters in the litigation of Texas hail damage claims. The Texas Department of Insurance (TDI) staff revealed their initial findings to the Senate Business and Commerce Committee on October 5, 2016.  Lt. Governor Dan Patrick has directed the committee to monitor “the number of lawsuits related to property claims filed as a result of multiple hailstorms and weather-related events across Texas”.  The committee was directed to examine “negative consumer trends that may result in market disruption such as higher premiums and deductibles, less coverage, non-renewals, and inability to insure coverage due to insurance carrier withdrawal from the state”.  The committee was to then make recommendations on legislative action that is needed. TDI issued a data call on May 20, 2016 to collect information on hailstorm residential property claims litigation with response due August 19, 2016.  Approximately 140 separate insurance companies submitted responses. The data highlighted the following information. Before 2012, known attorney or public adjuster representation “was about 0.4% (one in 250 claims)”. “After 2011, known attorney or PA representation was about 4 to 4.5 % (one in 22 to 25 claims), or an increase of about 10 times or 900%. The data also revealed that the rate of lawsuits increased.  Before 2012, the lawsuit rate was about 1.5 to 2% but after 2011, the lawsuit rate increased by 1,400%. The TDI warned that “the results should be considered preliminary.” The TDI’s results are based on 40,000 randomly sampled windstorm and hail claims.

 

The data also indicated a majority of claims with attorney or PA involvement are in South Texas. “South Texas accounts for 4% of all sampled windstorm and hail claims and about 53% of claims with known attorney or PA involvement” TDI reported.  Seven insurers stated that they “intentionally reduced, limited, or stopped writing policies in Texas as a direct result of increased claims litigation from weather related perils.”  Two of those companies also opted not to renew policies.  Counties affected include Hidalgo, Maverick, Potter, Randall and Webb. One company increased its minimum wind deductible for new business policies statewide. “Twelve companies stated that they have increased rates for residential lines of insurance as a direct result of claims litigation” TDI Reported. TDI plans to finalize its analysis before the 2017 legislative session.

Tags:  articles  blog  business  hail  industry  Insurance  litigation 

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