Industry News

As expected, President Obama on Friday Jan. 8 vetoed legislation that would repeal much of the Affordable Care Act (ACA), including a provision repealing the upcoming 40% excise tax on so-called “overly generous” health plans—commonly known as the ‘Cadillac Tax’. Congressional Republicans say they will attempt to override the veto, but admit that they don’t have the votes to do so.

H.R. 3762 was advanced as a political statement. In addition to repealing much of Obamacare, it would also defund Planned Parenthood. The bill was passed by the Senate in December under the reconciliation process, meaning it required only 51 votes instead of 60 to pass and could not be filibustered. The House then passed it on January 7, on a party-line vote of 240-181.

While full repeal of the Cadillac Tax will die along with the broader bill, a budget agreement reached by lawmakers and enacted on December 18 included a two-year delay in its implementation, pushing it from 2018 to 2020.

PIA continues to strongly support repealing the Cadillac Tax entirely, and has endorsed S. 2045 by Sens. Dean Heller (R-NV) and Martin Heinrich (D-NM) in the Senate and a companion bill in the House (H.R. 2050) by Rep. Joe Courtney (D-CT ), who issued a call for repeal in an article he wrote for PIA Connection. The effort to repeal the excise tax on health benefits has attracted broad, bipartisan support.

PIA has praised Congress for reversing a $3 billion cut to the budget of the Federal Crop Insurance Program (FCIP). Restoration of the funds came in the form of an amendment to a highway spending measure that was approved by the House and the Senate on December 3. The legislative action delivered on promises made by congressional leadership to reverse the cuts, which had been included in the Bipartisan Budget Act of 2015 (H.R. 1314).

“This is a significant victory for America’s farmers and for our nation’s entire agriculture sector,” said PIA National Vice President of Government Relations Jon Gentile. “PIA insurance agents around the country engaged in an active campaign of advocacy to get these cuts restored, which contributed to this success.”

On October 30, Congress passed and the president subsequently signed a budget deal to raise the nation’s debt limit. Part of that deal—which had been negotiated in secret between President Obama and former House Speaker John Boehner—included the severe cut of $3 billion to the federal crop insurance program. When this came to light, PIA members inundated Congress with messages urging that no cuts be made to the crop insurance program. House and Senate leaders then quickly pledged to reverse the cuts.

“We are very pleased that Congress delivered on its promise,” Gentile said. “House and Senate leaders quickly responded to the calls from their constituents by pledging to make the crop insurance program whole again. These cuts would have seriously jeopardized the private sector delivery of crop insurance.”

PIA has joined with a coalition of 163 cosigners in sending a letter urging members of Congress to contact Administration officials, and urge them to reconsider proposed changes to overtime pay requirements. On June 30, 2015, the U.S. Department of Labor proposed to amend overtime regulations under the Fair Labor Standards Act (FLSA). The changes would be made to the exemptions for executive, administrative, and professional employees (the “white collar exemptions”).

The Department proposes more than doubling the salary level required to qualify for the white collar exemptions, from $455 per week/$23,660 per year to $970 per week/$50,440 per year. DOL also proposes automatically increasing this minimum salary going forward on an annual basis and publishing the increased minimum salary only 60 days before it becomes effective, with no opportunity for comment or input from employers who will have to comply. The Department is expected to finalize the rule in mid-to-late 2016.

What It Means to Agents: PIA is concerned that the proposed regulations will have unintended consequences for insurance agents and agencies. The proposed regulation, while well intentioned, will be unnecessarily burdensome for PIA member agencies leading to decreased opportunity and flexibility for agency employees.

Ben Nelson, CEO of the National Association of Insurance Commissioners (NAIC), said the U.S.’s state-based system will not become subservient to Solvency II regulations. Nelson made the remark in an interview with A.M. Best during the NAIC’s fall national meeting. The U.S. Trade Representative and Treasury Department are going to negotiate a covered agreement with the European Union E.U. and Nelson said that in achieving some measure of equivalence, “the state-based system is not going to become subservient to Solvency II. It’s not.”

During a wide-ranging interview for an article in an upcoming PIA Connection, Sen. Nelson told PIA National senior vice president of industry affairs Patricia A. Borowski that the bigger threat to state-based insurance regulation these days comes from the E.U. in the form of Solvency II.

“They [the E.U.] are now in a position that they feel they can dictate that you have to be equivalent,” Nelson said. “But there’s a difference between equivalent results and equivalent structure. Each group is comfortable with their own system because they know how it works. That I understand, but to try to export Solvency II to the United States is a failed effort because the different scope of what the protection is, is monumental. They protect the entity, we protect the public. So, if you can’t recognize and accept that difference, then you could be easily misled thinking that it wouldn’t hurt us to adopt their system. Well, yes it would. Yes it would.”

In the week since the release of research results compiled by The PIA Partnership, the findings are getting noticed in the industry. The National Underwriter/PC360 did an article on how small business owners strongly prefer independent insurance agents, but that agents must take steps to continue to demonstrate their value and also be more engaged online.

Carrier Management, a publication targeted to P/C insurance executives, also reported on the PIA Partnership research results. "Research findings determined that agents offered great value to small business clients, who sought relationships with those who understood their business, offered quick service responses, personal attention and could reassure them that they were making the right insurance decisions," the publication said. Insurance Business America also covered the news.

For more detailed research results, see the project website at www.voiceoftheclcustomer.com/.

Agents Win: Groundbreaking Research by The PIA Partnership (PIA 08/13/15)

Born roughly between 1980-2000, Millennials are often portrayed as preferring texting to talking and online to real life. The truth is that they prize face-to-face meetings as much as previous generations. That's one of the conclusions of a report by the Meetings Mean Business Coalition (MMBC) and Skift, an industry intelligence and marketing platform in travel.

The report says there is a significant body of research supporting the importance that Millennials place on face-to-face meetings and goes on to cite examples. The report asserts that the top motivating factors to attend meetings and conventions revolve around considerations regarding destination, people, content and the overall meeting experience. One primary takeaway shows that Millennials desire to attend live meetings and events even more than older generations. Download the report here.

This is the time of the year when forecasters issue predictions of how many tropical storms will be formed and how many will make landfall in the United States. The problem with this is people may only read a headline and conclude that there's not much to worry about.

PIA National President Richard "Richie" A. Clements points out that, "When it comes to hurricanes, it only takes one to cause massive death and destruction. The fact that it may be one of only a few storms during a season does not matter a whit." Read Richie's full President's message about the start of the hurricane season here.

The date May 4, 1989 will be etched in Gene Galligan's memory forever. On that day his home town Monroe, Louisiana was hit by a catastrophic hail storm. Soon after, Gene's agency was hit by carriers pulling out. But his agency survived, thanks to his PIA colleagues lining him up with a new carrier, when he needed it most.

"Because of our PIA affiliations, we were able to continue in business; from there we were able to plant with other companies," said Galligan "Twenty-six years later, we are still in business and still a member of PIA! From those acts, I realized that PIA agents are not just competitors but part of a family, and I needed to be an active member in that family." Read Gene Galligan's compelling story here.

My PIA Family Helped Me Save My Agency (PIA Connection April 2015)

The picture of millennials as wanting to do everything online continues to be challenged by what they say in surveys. Nearly 40% of the 2,122 people ages 21 to 48 surveyed by a retirement investment firm, Topeka, Kansas-based Security Benefit, say an adviser is a major source for financial information—more than twice the amount who listed the internet as their go-to resource. And people born between the mid-1960s to the early 1990s want in-person education.

Recently, another myth was exploded. It turns out that millennials don't all prefer to do their reading online. A University of Washington study of digital textbooks found that a quarter of students still bought print versions of e-textbooks that they were given for free. Pew studies show the highest print readership rates are among those ages 18 to 29, and the same age group is still using public libraries in large numbers.

Younger Workers Want In-person Education (Employee Benefit News 4/22/15)
Digital Natives Prefer Reading in Print (Washington Post 2/22/15)

PIA National has released testimony for three congressional hearings on insurance matters held over three days this week on Capitol Hill.

On Tuesday, April 28, the Senate Banking Committee held a hearing entitled, "The State of the Insurance Industry and Insurance Regulation." Then, on Wednesday, April 29, the House Financial Services Committee Housing and Insurance subcommittee scheduled a hearing entitled "The Impact of International Regulatory Standards on the Competitiveness of U.S. Insurers." Finally, a hearing was set for Thursday, April 30, in the Senate Banking Committee on Securities, Insurance, and Investment subcommittee on "Examining Insurance Capital Rules and FSOC Process."

PIA's testimony states our support of a modernized state-based insurance system and opposition to any federal regulation or international standards that would destabilize or supplant state-based regulations. In addition, PIA comments in support of transparency, especially by the International Association of Insurance Supervisors (IAIS), which recently voted to close many of its meetings to stakeholders.

PIA expresses concern with the level of transparency in the decision-making process of the Financial Stability Oversight Council (FSOC), as it has the power to designate "systemically important financial institutions" (SIFIs). PIA also cautioned against applying bank-centric standards to insurance companies.

"While banks and other financial institutions profit by actively seeking out risk, insurance companies profit by insuring against risk. Therefore, it is not prudent to attempt to apply bank centric standards to insurance entities, as they are completely different," the PIA testimony states.

Full text of PIA testimony to:
Senate Banking Committee (Apr. 28, 2015)
House Financial Services Committee (Apr. 29, 2015)
Senate Banking Committee (Apr. 30, 2015)