Special AAMGA Section
Making its presence known on Capitol Hill
AAMGA Governmental Affairs Committee assumes more active role
By Phil Zinkewicz
There was a time when AAMGA’s Governmental Affairs Committee essentially functioned as a kind of town crier. That consisted of keeping abreast of developments on Capitol Hill and in state and local governments and then informing members of recent happenings. That was sufficient, perhaps, during less volatile legislative times.
However, as federal, state and local legislative developments began to have more profound effects on managing general agencies and the conduct of their business, AAMGA leaders recognized that its Governmental Affairs Committee needed to take a more active approach. That approach has been highly successful.
Consider a few years ago when then New York Attorney General Eliot Spitzer, now governor of New York, instilled fear into the hearts of virtually every segment of the property and casualty insurance business with his investigations into industry operations. Spitzer’s headline-grabbing probes led other state attorneys general to follow suit, and before long the industry was on its way to significant, if not desirable, changes.
Through the efforts of the AAMGA Governmental Affairs Committee, however, managing general agents and wholesalers emerged unscathed. Committee leaders worked with legislators, explaining how the MGA system operates, so that MGAs were not tarred with the same brush as miscreants in other sectors of the business.
Now the Spitzer situation has died down, and the committee has turned its attention to bringing about reform at the federal level that will free MGAs and wholesalers from cumbersome regulations, which negatively affect not only producers but also the consumers they serve.
Frank Mastowski is board liaison for the AAMGA Governmental Affairs Committee. The Jimcor Agency, Inc., executive says that this year the committee is making another big push to bring about passage of HR 1065, the Nonadmitted and Reinsurance Reform Act. “The bill, among other things, would streamline the regulation of surplus lines insurance and reinsurance by creating a uniform system of premium tax allocation and remittance, one-state compliance on multi-state surplus lines risks, and direct access to the surplus lines market for sophisticated purchasers,” says Mastowski.
Last year, the AAMGA and other agents’ associations came close to getting the legislation passed. “The bill passed in the House unanimously, at 417 to 0,” Mastowski says. “It didn’t make it through the Senate because the session closed before action could be taken. The bill has been reintroduced, again with unanimous acceptance in the House. We’re waiting on the Senate.”
Simply stated, the bill says that, if an agent has a risk that is based in one state but has offices in other states, taxes and filings need be presented only to the risk’s state of domicile. The state would then be responsible for sharing the taxes with the other states involved, according to Mastowski. “This would result in greater efficiency and easier access for the consumer to the surplus lines arena,” he says.
However, if the bill passes both the House and the Senate and is signed into law, as Mastowski anticipates, the problem of how to implement the new law will have to be considered. “Each state would be responsible for sharing taxes paid to it. Some states are just not capable of taking on the task. It might be necessary to appoint a third party to take on the problem.
“AAMGA Governmental Affairs Committee leaders are working with other insurance groups to develop a way to implement the law,” Mastowski continues. “The effort is called the Surplus Lines Multi-state Compact.”
The committee is also working with legislators in other areas such as terrorism risk insurance, flood insurance, national disaster catastrophe coverage, credit scoring, the McCarran-Ferguson anti-trust exemption, and an optional federal charter.
“Generally, the optional federal charter approach is not favored by the AAMGA membership,” says Mastowski. “They believe a federal charter would only lay another level of bureaucracy on state regulation. The governmental affairs committee is currently working on a position paper regarding the subject.”
Summing up, Mastowski says: “Our committee is working diligently to keep the AAMGA visible on Capitol Hill and various state and local legislatures. We have been more than moderately successful so far. A great deal of our success is due to AAMGA Executive Director Bernie Heinze, who serves as staff liaison.” *