Congress: Favorable bills toward insurance agents in 2015?
Posted on August 16, 2015 20:57 pm CDT
Property Casualty 360
By: Ted Beseparis
A new Congress always brings with it new opportunities. Issues of importance to professional independent insurance agents that have not been at the forefront in recent years have a real shot at movement now on Capitol Hill.
As soon as the opening gavel fell on the 114th Congress, it was apparent that things might be different for insurance issues, which can move very slowly or languish for years on Capitol Hill. Just days into this session, Congress acted decisively to pass a long-term renewal of the Terrorism Risk Insurance Act (TRIA) that included creation of the National Association of Registered Agents and Brokers (NARAB), two agent priorities. This followed on the heels of last year’s passage of another priority, the Homeowner Flood Insurance Affordability Act (HFIAA).
The current makeup and tenor on Capitol Hill may be a bit more favorable to us. While there is massive gridlock on some major issues, many topics important to independent insurance agents are much less controversial by comparison. This is especially so because many of our legislative priorities are geared toward protecting and supporting small business and protecting the rights of insurance consumers, both of which are better able to bridge partisan divides.
Among the issues of importance to agents are priority items, such as:
- The need to exempt agent compensation from the calculation of medical loss ratios (MLRs) in health insurance
- Opposition to further cuts in crop insurance
- Support of state-based insurance regulation and opposition to a federal insurance regulator
- The need for tax reform that includes reducing individual and corporate income tax rates.
The Access to Professional Health Insurance Advisors Act of 2015 (H.R. 815) has been introduced by Reps. Billy Long (R-Mo.) and Kurt Schrader (D-Ore.). It clarifies that producer compensation will not be considered as part of medical loss ratio (MLR) calculations under the Affordable Care Act (ACA). This bill supports the critical role that independent agents play in the sale and servicing of health insurance. A Senate companion bill is expected to be introduced soon.
In 2011, the Department of Health and Human Services issued regulations requiring health plans to treat independent agent and broker compensation as part of the calculation of total administrative expenses limited to 15% or 20% under the ACA. As a result, health insurance agent and broker compensation has been slashed by health insurers in the small group and individual markets, leading to an exodus of qualified, licensed agents and brokers capable of serving people in ACA-backed plans. “This is a major oversight that has caused significant, negative consequences,” said PIA National Executive Vice President & CEO Mike Becker. “Congress needs to fix this.”
“Licensed insurance professionals continue to provide personal support, advice and counsel to their customers,” added PIA National Director of Federal Affairs Jon Gentile. “It is critical that customers continue to have full access to licensed, trained, local insurance agents who can provide them with professional advice regarding all of the options available to them.”
No more crop cuts
Backing good legislation is the best way to advance your position, but it is also necessary to oppose bad ideas. One of them is a White House proposal that would reduce crop insurance premium subsidies by $16 billion over the next 10 years. Just 30 days after President Obama signed the Farm Bill in 2014, which called for increased use of crop insurance for risk management, he released his 2015 budget proposal, which actually recommended further cuts to crop insurance. In common parlance, this is known as bait-and-switch.
The president’s budget for fiscal year 2016 has again called for cuts to the crop insurance program. PIA will continue to work with our allies to insist the Farm Bill be allowed to be implemented and that no cuts be made to the program.
PIA also is closely monitoring activities of the Federal Insurance Office (FIO), including actions related to producer licensing and international agreements, to ensure that the FIO does not exceed its limited authority. Left to its own devices, the FIO could attempt to morph itself into a federal insurance regulator. Congress has been clear: The FIO has no authority to act as a regulator of the business of insurance. That’s a job that belongs to the states.
One bill that would bring power back to state regulators, and which PIA supports, is thePolicyholder Protection Act of 2015 (S.798/H.R.1478) introduced by Sen. David Vitter (R-La.) and Rep, Bill Posey (R-Fla.). The legislation allows state insurance regulators to protect policyholders in their state by ensuring that insurance companies structured under larger financial firms are not held financially responsible for an affiliated bank’s failure or financial crisis. The bill does this by prohibiting federal banking regulators from moving the assets of insurance companies, which are regulated at the state level, to a bank if the state insurance regulator determines it would harm the status of the insurer.
The Policyholder Protection Act also would better empower state regulators to rehabilitate a troubled insurer, rather than moving directly to liquidation, if it would benefit consumers. The bill also protects policyholders by limiting the ability of the Federal Deposit Insurance Corporation to seize insurance company assets intended for policyholder payments when an affiliated financial entity is subject to liquidation.
The closer we get to 2016, the more the focus will shift to the presidential campaign trail. Already, some candidates are visiting the cornfields of Iowa and the mountains of New Hampshire. There is a small window of opportunity now for Congress to improve prospects for Main Street agents before the stickers are brought forth abundantly upon the bumpers, and the voices of the candidates rise to form an ear-splitting cacophony.