Industry News

More than a year ago, PIA began talks with the National Underwriter about joining together to conduct the most comprehensive and exhaustive survey of America’s independent agency force that has ever been attempted to date.

Results of the National Underwriter/PIA Independent Agent Survey have now been released in the March 2017 issue of National Underwriter. Here is a link to the results as they appear in the magazine. On PC360.com online, selected results will be updated daily for the next two weeks. The findings provide revealing insight into the demographics, books of business and industry challenges of independent Property & Casualty insurance agents, as well as rankings of their most highly rated carriers.

“This data will be useful to PIA, in developing our own strategies to help our members succeed, and to carriers in their dealings with their appointed agencies,” said PIA National Executive Vice President & CEO Mike Becker. “The scope, breadth and depth of this study are truly significant,” Becker said. “Importantly, it probes just what agents need from their carriers to ensure mutual growth and profitability.”

Life insurers and business groups have filed an appeal seeking to overturn a ruling by a Texas federal judge that upheld the U.S. Department of Labor’s fiduciary rule. Judge Barbara M.G. Lynn, of the U.S. District Court for the Northern District of Texas, Dallas Division, earlier this month rejected claims the rule was regulatory overreach and awarded summary judgment to the DOL. Federal judges in Kansas and Washington D.C. have also ruled in favor of the DOL. Plaintiffs include the American Council of Life Insurers (ACLI), the Insured Retirement Institute and the Financial Services Institute.

The rule, issued in April 2016, would change how retirement advisers conduct business, while ensuring transactions are in the client’s best interest. The fiduciary rule has an initial deadline of April 10. The Trump administration is working on a rule to delay and possibly repeal the mandates before they take effect.

The National Association Insurance Commissioners (NAIC) wants lawmakers in Congress to seek a new covered agreement with the European Union governing how insurance is regulated between the United States and the European Union (EU). A covered agreement, negotiated by the U.S. Treasury Department and its Federal Insurance Office (FIO), was reached with the EU and submitted to the House Financial Services Committee on January 13. The agreement is not subject to congressional approval and becomes effective after a 90-day review period before Congress.

On Feb. 16, the House Financial Services subcommittee on Housing and Insurance held a hearing to discuss the agreement, about which there was disagreement.

“This covered agreement is not the answer, and we urge the Trump administration to reopen negotiations with the EU to obtain a better deal for the United States,” said Ted Nickel, NAIC president and Wisconsin Commissioner of Insurance. “State regulators can support an agreement which achieves clear and permanent mutual recognition for our time-tested U.S. insurance regulatory system, includes meaningful state regulator input and transparency.” Nickel has said most state regulators were not allowed to participate in the process.

National Association of Mutual Insurance Companies (NAMIC) President and Chief Executive Officer Charles Chamness said the agreement could be better. He was critical of the section that removes U.S. collateral requirements for EU reinsurers, if they meet all the other qualifying requirements to do business in the United States, saying it “particularly disadvantages smaller insurers, which are more reliant on reinsurance” and that “the small insurance companies will not have the same negotiating power as larger companies.”

Former FIO Director Michael McRaith defended the agreement, as did the American Insurance Association (AIA). Lee Ann Pusey, AIA president and CEO, calling it a “win-win” that protects the industry and “the U.S. system of insurance regulation.”

Rep. Blaine Luetkemeyer (R-MO), a former insurance agent, criticized both trade groups for their differences over the agreement and congratulated McRaith for his work. “Today we have an example of the problem we have in the insurance industry. We have two groups representing two different groups of insurance companies that disagree,” he said. “I will tell you from my perspective they had better get on the same page. I am up to here with this dysfunctional infighting.”

PIA commented following the hearing. “The fact that two groups representing insurance companies disagree substantively on the value of the covered agreement demonstrates that the agreement can be improved,” said Lauren Pachman, PIA National counsel and director of regulatory affairs. “Such differences could have been reconciled in advance, had state insurance regulators been fully included in the negotiating process. Although the agreement appears to respect the Unites States’ state-based system of insurance regulation, the valid concerns expressed by smaller insurers should be addressed.”

PIA National was represented by Vice President of Government Relations Jon Gentile at a meeting with senior members from the Trump Transition Team in early January. The meeting’s focus was on financial services issues broken into three issue buckets: Dodd Frank, regulatory relief, and housing and insurance.

PIA National spoke of the importance of a long-term reauthorization of the National Flood Insurance Program (NFIP) that expires in September of this year, as well as the need to grow the private flood market. In addition, PIA was the only organization to call for the full repeal of the Federal Insurance Office. We will continue to engage with the Trump Transition Team leading to January 20 when President-elect Trump takes the oath of office.

Former Pennsylvania Insurance Commissioner Michael F. Consedine has been named Chief Executive Officer (CEO) of the National Association of Insurance Commissioners (NAIC), effective in early 2017.

Consedine will lead the NAIC’s Washington, D.C. office with primary responsibility over state and federal government affairs and international activities. He will work closely with NAIC members, representing their interests as an advocate and spokesperson for the association.

Outgoing NAIC President John Huff said the NAIC needed someone with Consedine’s experience with international, insurance industry and state regulatory affairs. “Mike brings valuable experience and energy to this role during a time of transition with a new administration and Congress,” said Huff. “He is highly respected by members of the NAIC and served this body with distinction when he was Pennsylvania’s Insurance Commissioner.”

Consedine will fill the post left open since former U.S Sen. Ben Nelson left on Jan. 31, 2016. Nelson reflected on his insurance career in an interview in PIA Connection [“Mr. State Insurance Regulation”] conducted by PIA National Senior Vice President Patricia A. Borowski. Nelson will continue as a consultant to the NAIC through January 2017.

Despite all the hype about how online sales may “disrupt” the independent agent’s hold on the small commercial market, it just isn’t happening, points out PIA National President Gary Blackwell in an op-ed in the December issue of the National Underwriter [“Resilience in a Digital Age”].

“Survey after survey continues to show that the owners of small and midsize businesses want to work with their insurance agents, much to the ongoing frustration of various direct writers,” Blackwell says. “Clearly, the best strategy for carriers is to continue to support their agency force in providing their customers with what buyers want.”

PIA National is running an “Open Letter to Carriers” in the December issue of the National Underwriter. In it, PIA notes that the relationship between an independent insurance agency and its multiple carrier partners is designed to achieve mutual benefit, accomplishing together what the parties cannot alone. We offer to every carrier an open door to be a sounding board for changes they may be contemplating. “Such communication can foster more successful results,” we note. You can read PIA’s ad here.

A federal judge has issued a preliminary injunction blocking implementation of the U.S. Department of Labor’s (DOL) overtime rule. The injunction, issued by Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas, puts a hold on implementation of the rule nationwide. The final rule was to go into effect on Dec. 1.

The rule would expand the pool of employees eligible for overtime by doubling the salary threshold to $47,476. A preliminary injunction is not a permanent order and is subject to modification (including an order making it permanent), or it could be vacated entirely. The DOL issued a statement saying it disagreed with the decision and was “currently considering all of our legal options.”

Prior to the injunction, PIA issued a FAQ on the impending changes.

PIA National has strongly opposed the rule due to its negative impact on small businesses, including independent insurance agencies. We are pleased with the granting of the preliminary injunction before the rule was to take effect. After the injunction was issued, PIA distributed this analysis.

PIA will continue to urge Congress to pass legislation to permanently stop implementation of the overtime rule, and we will continue to monitor judicial activities out of the Eastern District insofar as they affect the future of the rule.

(PIA) is proposing that the Federal Insurance Office (FIO) be repealed.

The election of Donald Trump as president and a Republican majority in both houses of Congress will bring about a unique opportunity to reexamine the regulatory framework for insurance. As part of regulatory reform, PIA is calling on policymakers to fully repeal the FIO.

PIA opposed the creation of the FIO from the outset. In 2010, advocates of federal insurance regulation succeeded in getting the FIO established as part of the Wall Street Reform and Consumer Protection Act (Dodd-Frank)—but PIA, along with the NAIC, fought back attempts to give this office broad authority. In the end, a prohibition on the FIO acting as a regulator of the business of insurance was included.

While over the years the FIO has adhered to this restriction, there have been repeated indications that it favors more federal involvement. Former NAIC CEO Ben Nelson once felt compelled to state that “the FIO does not speak for insurance regulators.” Former Connecticut Insurance Commissioner Thomas Leonardi recently observed, “Since its creation, the FIO has often taken positions in direct contradiction to the views of the state regulators.”

FIO Director Michael McRaith once gave a speech saying that the insurance sector should be treated the same as the banking and securities sectors, prompting a strong rebuke from PIA.

“One should never forget that all insured risks will always be local,” commented PIA National Senior Vice President Patricia A. Borowski at the time. “The United States has an effective and efficient state-based insurance regulatory system that protects policyholders and offers them a broad array of competitive choices from many insurance carriers. To those who want a different system, we simply say they are woefully misguided.”

“If the goal is to eliminate unnecessary federal regulation, getting rid of the FIO makes good sense,” said PIA National Vice President of Government Relations Jon Gentile. “Doing so would reaffirm that regulation of insurance should continue to be the responsibility of the states. PIA will remain vigilant in its efforts to ensure that no new paths to the federal regulation of insurance are created as part of any Dodd-Frank rollback.”

The election of Donald Trump as president and a Republican majority in both houses of Congress will bring about a unique opportunity to reexamine the regulatory framework for insurance. As part of regulatory reform, PIA calls on policymakers to fully repeal the Federal Insurance Office (FIO).

“With Congress poised to significantly roll back key provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), we ask that they repeal the FIO,” said PIA National Vice President of Government Relations Jon Gentile. “A June 2013 report issued by the Government Accountability Office (GAO) found the state-based system of insurance regulation helped to mitigate the negative effects of the financial crisis on our industry. This report highlights the unnecessary bureaucracy that the FIO represents.  Our longstanding and robust state-based insurance regulatory regime does not require this level of federal oversight.”

“If the goal is to eliminate unnecessary federal regulation, getting rid of the FIO makes good sense,” Gentile said. “Doing so would reaffirm that regulation of insurance should continue to be the responsibility of the states. PIA will remain vigilant in its efforts to ensure that no new paths to the federal regulation of insurance are created as part of any Dodd-Frank rollback.”

With control of both houses of Congress and the White House, Republicans are likely to concentrate on the broad goals of reducing regulations, cutting taxes, and generally pursuing business-friendly policies that promote economic growth. PIA looks forward to working with President-elect Trump and the 115th Congress to achieve these goals.