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AAMGA Special Section Embracing the changing landscape AAMGA continues its efforts to advance legislative and regulatory reforms By Bernd G. Heinze, Esq. When we all had time to place the results of the 2006 national, state and local elections into context, it took no more than a nanosecond to appreciate the mandate of the electorate as it pertains to insurance-related matters. For 81 years, the American Association of Managing General Agents (AAMGA) has represented the premier members of the wholesale insurance industry in numerous ways, including educating our elected officials and regulatory colleagues on the insurance industry’s wide array of products and services that provide an integral element of our nation’s economic and social infrastructure. In testimony before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the U.S. House of Representatives Committee on Financial Services in June 2006, we testified on needed efforts to modernize the industry. We noted that the scope and nature of the insurance market had been molded around the changing needs of policyholders and industry opportunities. “Insurance is the DNA of capitalism and free market entrepreneurship by stimulating competition; incentivizing investment, research and development; creating jobs, and offering the opportunity to secure risk for public and private consumers.” These statements are truer than ever in today’s new governmental and regulatory environment. Insurance practices and positions are being evaluated. Actions taken in response to market opportunities and risk events are being scrutinized. Antitrust exemptions are being reviewed. In addition, federal and state representatives are taking a greater interest in how the industry conducts its business. This is no time to shirk the responsibility of continuing to enhance collaboration and foster relationships with those in elected and appointed leadership positions, or in the effort to encourage all insurance professionals to add their voices—and votes—to the process. Further, it is important to include in the discussions the manner in which the industry is supplying a full range of innovative solutions to the needs of policyholders, and the brokers and agents who represent them. Access to trusted markets and financial securitization is essential as consumers invest in homes, cars, commercial vehicles, boats, businesses, and other everyday needs. Long-range impact The results of last year’s elections will have an impact for the next several decades. The changes in policy and priorities have already been seen in both domestic and foreign policy. The social conscience agenda has been advanced and will affect the behaviors and culture of this Congress. Hearings have already been held on claims handling and insurance coverage practices based on events following the destruction caused by Hurricane Katrina; on eliminating the McCarran-Ferguson antitrust exemption for insurance carriers; and on an insurer’s ability to withdraw from a state following the outcome of governmental and judicial actions. These questions and scrutiny will continue; and so too must the commitment to advance the concerns of policyholders, agents, brokers and the industry in both the short-term and long-term conduct of the insurance business. Regulation for the sake of regulation has never been a preferred alternative to the free market’s ability to drive competition and innovation. Much can be added to the debate by actively engaging in efforts toward insurance modernization and reform. An example is the success of AAMGA’s efforts, in collaboration with other industry associations and representatives, to assist congressional staff in drafting and moving the Non-Admitted and Reinsurance Reform Act through passage in the House of Representatives during the last session. We worked with the offices of Congresswoman Ginny Brown-Waite (R.-Fla.), Congressmen Richard Baker (R.-La.) and Dennis Moore (D.-Kan.) to have the measure introduced this past February. Other congressional leaders are being contacted to co-sponsor the bill, which would streamline the exporting of risks to the excess and surplus lines insurance market. Premium taxes on multi-state risks would all be paid in the policyholder’s home state, as opposed to being estimated and paid in each state in which the respective portion of the risk resides. There are other benefits of the legislation, which will complement our efforts to have a companion bill introduced and moved through the Senate, as we seek to ensure freedom of rate and form in surplus lines insurance. Wide range of issues AAMGA is also working with congressional staff and elected officials on the industry’s response to a variety of issues, including the risk management implications of and consumer-oriented concerns related to climate change; providing insurance options for current federal initiatives to assist those seeking more affordable housing; consideration of reauthorizing the Terrorism Risk Insurance Act; the solvency and sufficiency of the National Flood Insurance Program; the deliberations on providing national disaster coverages; and whether legislation to offer an optional federal charter is the best solution to the challenges that lie ahead. In addition, AAMGA is continuing its efforts with the state stamping and surplus lines member offices to draft and implement an interstate compact on excess and surplus lines business. As currently envisioned, the compact would: 1. Establish one set of compliance requirements for all multi-state surplus lines risks by which all states in the compact would jointly regulate the transaction. 2. Establish a clearing house where all multi-state surplus lines risks would be filed and recorded, thereby eliminating all separate filing requirements by such states. 3. Establish a mechanism by which each state in the compact would receive its fair share of taxes for the portion of the risk located in the state as determined by one set of uniform tax allocation formulas. Since its founding in 1926, AAMGA has always based its actions on a commitment to education and advocacy. As the needs of the market and consumers have changed, we have remained flexible in addressing the needs of the association’s 517 members and their customers. In calendar year 2005, the 287 Managing General Agent members alone posted a combined $22.1 billion in annual written premium with domestic and international insurers. The AAMGA brand stands for, and continues to advance, the values of integrity, confidence, security and professionalism. Members of the association have earned their positions as trusted business partners based on their personal relationships and the continuity they bring to the insurance equation. These core principles will drive AAMGA’s efforts to implement needed legislative and regulatory reforms, while enhancing the members’ commitment to service. We have a busy year ahead. Strong currents can cause one to steer into uncharted waters. However, the members of AAMGA, the association itself and its University have always ensured that an experienced hand is able to provide steady navigation throughout the voyage. * The author |
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