Big “I” Association News


         

P-C Trends
Consumers Cite Agents as Most Credible Insurance Resource
Survey finds agents rank above newspapers, Congress and the president as reliable source of information about insurance industry issues.

Despite the fact that the media is filled with members of Congress, President Barack Obama and pundits talking about insurance every day, consumers are more likely to trust what they hear from their local insurance agent. More than 64% of respondents in a recent study said they trusted their insurance agent for credible information about insurance industry issues – the highest ranking in the survey.

The study, recently conducted by the Property Casualty Insurers Association of America (PCI), looked at the attitudes of registered voters and opinion elite (30+, college degree, household income of more than $50,000 and significant consumers of news) on the financial crisis and insurance-related topics.

Agents topped the field of sources that consumers trust most for insurance information, followed by insurance companies (61%), local newspapers (52%) and President Barack Obama (51%). Members of Congress and U.S. Treasury Secretary Timothy Geithner ranked at the bottom of the list at 39% and 37% respectively.

Although the survey found property-casualty companies are less likely than others to receive blame for the financial crisis, significant numbers do believe home/auto and commercial carriers played a major role. For example, 87% of national survey participants thought mortgage lending companies played a “major role” in the crisis, while 46% thought commercial insurance companies played a major role. Interestingly, respondents said home and auto carriers, at 29%, ranked below consumers themselves (38%) as a source of blame. Many focus group respondents lumped banks, mortgage lenders, insurance companies and other bad actors (such as Bernie Madoff) together in their views on the economic crisis.
 
To prevent a future economic crisis, 61% said “determining which sectors of the marketplace caused the financial crisis and fix the gaps in federal oversight” was the solution, rather than imposing comprehensive regulation on the entire sector. Study participants stressed the importance of enforcing regulations already in place. While the focus groups were largely unaware of how p-c companies were regulated, 57% thought p-c companies should be regulated at the state level.

Katie Butler (katie.butler@iiaba.net) is IA editor in chief.



On the Hill
VIEW: Big “I” Chairman David Daniel Goes to Washington
Chairman gets first-hand look at how the Big “I” is protecting the independent agent system on Capitol Hill.

Recently, I had the opportunity to visit Washington D.C., to meet with several members of Congress from my home state of Louisiana and watch our Capitol Hill team in action.

Although I have met with members of Congress in the past for our annual pilgrimage to Capitol Hill during the Big “I” Legislative Conference, this trip was different. This time I was there to introduce myself as the newly-installed chairman of the Big “I” and I couldn’t help but feel pride in knowing I was representing 22,500 independent agency members and 300,000 agents, brokers and their employees.

I was keenly aware of the great responsibility this association has bestowed upon me as I sat across the table from Senators Mary Landrieu (D-La.) and David Vitter (R-La.), and Representatives Bill Cassidy (R- La.) and Charles Boustany (R-La.), stressing how the independent agency system plays a very important role in protecting America’s families and small businesses in a myriad of issues that are currently up for debate in Congress. Of course, we spent most of our time discussing health care reform and insurance regulation.
 
Walking the halls of Congress with the Big “I” government affairs team, it was readily apparent to me how well-respected our lobbyists are on Capitol Hill. The Big “I” lobbyists are top-notch professionals who have all previously worked on the Hill as staffers and have the inside knowledge and relationships that are so critical to representing the interests of independent insurance agents and brokers. This bipartisan A-team gives our association the presence we need, and I can attest that they work long hours educating top decision-makers on the issues that directly impact our livelihood. In fact, one evening I was able to join Big “I” Vice President of Government Affairs Charles Symington, Big “I” Director of Federal Government Affairs John Prible and Big “I” Director of Grassroots Programs and InsurPAC Jen McPhillips at a reception honoring the Blue Dog Democrats. Not only was it a valuable experience for me to personally meet with so many influential policymakers in a small room of a nondescript bar, but it was amazing to see our government affairs team really in their element and on their game. I saw firsthand the great respect each of these members of Congress has for our bipartisan team.

There is no doubt the Big “I” has a powerful and well-respected bipartisan team in Washington that couldn’t be better positioned to advocate on your behalf. But they can’t do it alone–they need your help. When you receive the call for grassroots action it is absolutely critical that you respond. Only by working together can we have a voice on issues that directly impact your businesses and customers.
    
David Daniel (d.daniel@danieleustis.com) is Big “I”  chairman.

      

Pictured (left to right): Big "I" Vice President of Government Affairs Charles Symington; Big "I" Chairman David Daniel;  Rep. Bill Cassidy (R-La.); and Big "I" President & CEO Bob Rusbuldt. Joe Wall, Big "I" senior director of federal government relations, also participated in the meeting but is not pictured.
   
      

Pictured (left to right): Senator Mary Landrieu (D-La.), Big "I" Chairman David Daniel; and Big I President & CEO Bob Rusbuldt.  Not pictured but also participating in the meeting were Big "I" Senior Vice President of Government Affairs Charles Symington and Big "I" Vice President of Government Affairs John Prible.



On the Hill
Big “I” Crop Insurance Task Force Meets with Obama Administration
RMA administrator meets with agents, Big “I” staff, companies and farmers in North Carolina.

Last week, Big “I” Crop Insurance Task force members Brian McSherry, “Judge” Rives Manning, Big I  director of grassroots and InsurPAC Jen McPhillips and Kelly Erstine of the Independent Insurance Agents of North Carolina, along with others, met with William Murphy, administrator of the USDA’s Risk Management Agency, and Larry Atkinson, RMA regional director, in Raleigh, N.C.

First Crop and  Second Crop claims issues served as the first topic of discussion - specifically the confusion surrounding the retention period of planting records, the record keeping requirements and the misinterpretation of statues that leads to a reduction in indemnity payments if the proper records are not sustained. Agents and farmers in the southeastern part of the country where double cropping is a common practice are concerned that the statutory language for filing an indemnity claim is ambiguous and left open to interpretation on double cropped land. They believe that only proof of acreage is necessary – not proof of production. Murphy noted that these statutes cannot be changed by the RMA – only by Congress. Since a revised law would be scored by CBO, “cost savings” would need to be found in another program to offset the next expenditure – a practice commonly known as the “pay-go” system. 

The second agenda topic involved conflict of interest issues that prevent agents from effectively serving their clients. A section of the Standard Reinsurance Agreement (SRA) states that an independent agent is prohibited from speaking with his or her client after a notice of a loss is filed by the policyholder. Farmers and agents are concerned that if a claims adjuster makes a mistake on a claim or incorrectly calculates a loss, they can’t talk to their agent. Severe cases of waste, fraud and abuse within the farm program have led to extreme measures in both record keeping and agent-client transactions as a way to curb wasteful spending. Murphy seemed empathetic on the issue and suggested the task force make a formal recommendation to him and his staff to tweak the language of this policy and possibly mitigate violations.

Murphy also discussed the pending SRA re-negotiation and the possibility of cost savings in the final draft of the re-negotiation. He noted that cost saving measures may come in the form of additional cuts to the A&O budget, but that they are also looking into ways to rebalance subsidies and spread money across a broader region of the country.

In conclusion, the Crop Task Force was pleased with the candid and forthcoming nature of the conversation with the administrator. He was more than willing to discuss problems and possible solutions to concerns that fell within the administrative or regulatory functions of RMA. The meeting was a great milestone for the Big “I” Crop Task Force that has led to an open window of dialogue to the benefit of agents and farmers.

Jen McPhillips (jen.mcphillips@iiaba.net) is Big “I” director of grassroots efforts and InsurPAC.


On the Hill 
Big “I” Focuses Grassroots Efforts on Heath Care Debate in the House
Bill includes public option and will increase taxes on small businesses.

The next few days are critical as the U.S. House of Representatives is expected to vote on the revised and recently introduced Democratic Health Care Reform bill any day. This week, the Big “I” launched a grassroots campaign targeting approximately 90 members of the House currently “on the fence,” sending a strong message to Congress expressing the association’s opposition to the House health care reform legislation. Thousands of independent insurance agents have already heeded the call to action and are flooding congressional offices with phone calls and e-mails.

One week ago today, the House Democratic Leadership unveiled a 1,990-page bill that is the byproduct of months of negotiations between House Democratic Leadership and members of the moderate and more liberal factions of their caucus. The “revised” bill closely resembles the original bill that was vetted by three committees.

The current bill includes a government-run health insurance plan (“public option”) that the Big “I” believes would unfairly compete with the private insurance marketplace, limit consumer choice and increase the taxpayer burden. To finance the government-run health insurance plan, a 5.4% surtax would be imposed on successful small businesses that file as individuals. The bill also includes an employer mandate that would force small employers with more than $500,000 in payroll to offer their employees health insurance and subsidize their premiums, at a 72.5% subsidy for individual plans and 65% for family plans, regardless of their current plans and without taking into account what they can actually afford. If a small business is unable to afford or chooses not to comply with this new mandate, it will be subject to an 8% payroll tax.

The bill explicitly states that agents and brokers would be allowed to enroll individuals and employers in qualified health benefits plans, including the public option, inside and outside of the exchange. However, the legislation also creates a new Small Business Administration grant program that would award federal money to non-profits for the purpose of providing small businesses, with fewer than 100 employees, assistance with consumer information, outreach, counseling and enrollment. The new program would cut experienced and educated agents out of the process in favor of random non-profits with no prior health insurance background and would give such entities the authority to advise small businesses on their insurance decisions.

The latest grassroots effort is already a hot topic in the industry and one of many Big “I” efforts on behalf of its members. For more information about the grassroots campaign, contact Jen McPhillips, Big “I” director of grassroots programs and InsurPAC, at 202-863-7000; Jennifer.McPhillips@iiaba.net.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.


Legal Advocacy
Red Flags Rule Enforcement Delayed to June 1; Judge Rules Lawyers Are Exempt
Judge’s decision to reject FTC’s broad definition of “creditors” may affect agents. 

The Federal Trade Commission (FTC) lost round one against the American Bar Association (ABA), which filed a lawsuit in late August challenging the FTC’s expansive definition of “creditors” as including lawyers under the identity-theft regulations commonly known as the Red Flags  Rule. The rule is designed to fight identity theft by requiring creditors with certain kinds of accounts to implement compliance programs to detect and prevent identity theft. A federal judge for the U.S. District Court for the District of Columbia decided on Oct. 30 that the rule does not apply to lawyers, giving law firms a reprieve from creating compliance programs required of creditors subject to the rule.

The FTC also announced on Oct. 30 that it is further delaying enforcement of the Red Flags Rule until June 1, 2010. After several earlier delays, enforcement by the FTC was to have begun on Nov. 1. However, several members of Congress requested the further delay so that Congress could work on legislation passed by the U.S. House of Representatives last month to refine the Rule.  The Big “I” will continue to monitor the progress of that legislation and will report on any changes enacted into law.

In issuing his opinion in the ABA case, the judge rejected the FTC’s view that charging clients monthly fees for services rendered (rather than having clients pay in advance) made lawyers into creditors. He commented that under the FTC’s interpretation, a plumber who works for two days to repair a broken toilet would also be a creditor – a result the judge thought inconsistent with the intent of the law. The judge also said, "I have a real problem with concluding that Congress intended to regulate lawyers when these statutes were enacted." The judge delivered the order from the bench, and a written opinion explaining the decision is expected to be issued by the court within 30 days.

It is uncertain at this time whether the FTC will appeal the decision. An FTC attorney said the commission “is going to consider its options very seriously.”

The legal community has been watching this case closely, not only because of its impact on law firms but also because of the insight it may provide as to how the rule may apply – or not apply – to the other professions and industries they counsel, such as insurance agents.
 
The FTC has not specifically listed everyone it considers subject to the rule, but it has broadly interpreted the term “creditors” who are subject to the rule to include many professions typically not considered creditors, such as doctors, accountants and, in this case, lawyers. The similarities between insurance agents and some of the other professions make the arguments in the ABA lawsuit of interest to insurance agents concerned about whether the FTC will construe the rule as extending to their activities. 

As noted in prior articles, each insurance agency operates differently and thus needs to assess the definitions under the rule carefully to determine if it must comply. The Big “I” summary of the rule can be viewed in a memo titled, “Overview of the Fair Credit Reporting Act, the Fair and Accurate Credit Transactions Act, and the Drivers Privacy Protection Act,” starting on page 10 at letter G. This memo is available to Big “I” members who log on to www.independentagent.com and select Legal Advocacy, under Memoranda and FAQs.

The Big “I” will continue to monitor developments about the case and any other lawsuits/regulatory actions filed about the application of the rule and will report on anything that may affect its application to independent insurance agencies.

Scott Kneeland (scott.kneeland@iiaba.net) is Big “I” counsel.