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AAMGA Special Section Governmental Affairs Committee continues vigilance Informing members on issues and educating legislators about MGAs makes for a full agenda By Phil Zinkewicz
It was business as usual last year for the AAMGA Governmental Affairs Committee, headed by James A. Roe of the Arlington/Roe & Co. in Indianapolis, Indiana. The committee is charged with ensuring that AAMGA members are kept informed on the governmental and regulatory issues, developments and prospects having an impact on their operations. Roe says that committee members regularly attend all meetings of the National Association of Insurance Commissioners (NAIC), the National Association of Professional and Surplus Lines Offices (NAPSLO), the National Conference of Insurance Legislators (NCOIL), and other insurance industry conferences. He says also that information obtained and positions taken, as instructed by the AAMGA board of directors, advance the standing of AAMGA members and foster the relationship of the association with regulators and government officials. The year before last saw dramatic examples of how the Governmental Affairs Committee’s vigilance protected managing general agents’ interests. It was a time when New York Attorney General Eliot Spitzer was shaking up the insurance industry with his much-publicized investigations into insurance industry operations. For one thing, he was looking into the concept of contingent commissions between large brokers—Marsh in particular—and insurers. While it was true that contingent commission arrangements between brokers and insurers had been accepted in the insurance industry for years, Spitzer charged that it resulted in conflicts of interests on the parts of brokers. Not to be undone by Spitzer and his troops, state regulators and legislators began re-examining their own broker disclosure laws. The NAIC and NCOIL sought to establish their own models for broker disclosure. The AAMGA Governmental Affairs Committee realized that these models were detrimental to managing general agents. Following the committee’s testimony before the NAIC, managing general agents became exempt from the new model. The committee achieved a similar victory with NCOIL’s model bill. “It wasn’t that the AAMGA was against broker disclosure,” says Roe. “In fact the association endorses full broker disclosure of compensation in those transactions involving a producer and an insured buyer under the terms of an insured buyer service agreement. However, because AAMGA members serve as wholesale intermediaries between the retail producer and the insurance company, they have neither a direct nor indirect contact with the insurance buyer and, therefore, should have been exempt from the models then under consideration. We won our point.” That was almost two years ago, and the Spitzer controversies regarding contingent commissions have died down. That does not mean, however, that the Governmental Affairs Committee is resting on its laurels. “We remain ever vigilant regarding any developments at the regulatory or legislative levels that might affect AAMGA members,” says Roe. “AAMGA Executive Director Bernie Heinze and I work together to monitor developments and to construct amicus curiae briefs when necessary in states where changes to MGA laws are being considered. We are closely watching moves towards federal standards or optional federal charters. We are in favor of state regulation and we believe the optional federal charter approach would take away from that.” Continues Roe: “One of the problems we are constantly faced with is the fact that there is very little understanding in the legislative community of what a managing general agent is. We want to do more in educating legislators and the public as to the role an MGA plays in an insurance transaction. It’s been slow going, so we have to keep at it. Committee members must continue to provide testimony and other information to officials when issues of the day will impact managing general agents and their company markets, and offer solutions to ensure the wholesale distribution network’s objective of maintaining freedom from rates and form is maintained.” * |
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