As the second session of the 112th Congress opens this month, the Big “I” Capitol Hill team continues to advocate for independent insurance agents and brokers on a number of critical issues. This year’s continuing battles include health care (see below for update on the medical loss ratio issue), insurance regulatory reform, agent licensing and crop insurance.
Insurance Regulatory Reform: This month the Federal Insurance Office (FIO) is expected to release its much-anticipated report to Congress detailing their specific recommendations to modernize insurance regulation. Late last year, the Big “I” and many of its state associations submitted formal comments to the FIO in strong defense of the state-based regulatory system. The Big “I” expects this study to be a catalyst for both the House and Senate to conduct an in-depth examination (including hearings and possible legislation) this year on ways to reform and modernize insurance regulation. The Big “I” will continue to argue against day-to-day federal insurance regulation while also advocating for targeted and limited federal legislation that can help make much-needed improvements in state regulation.
Agent Licensing: The Big “I” strongly supports and continues to push for the passage of H.R. 1112, the “National Association of Registered Agents and Brokers Reform Act,” commonly referred to as NARAB II, introduced in 2011 with strong bipartisan support by Reps. Randy Neugebauer (R-Texas) and David Scott (D-Ga.). This bill would remove obstacles faced by agents who operate in multiple states and would achieve much-needed reciprocity in producer licensing. Support for this effort is not to be confused with federal regulation of the industry. The Big “I” has long believed that targeted federal legislation is needed to bring about nonresident licensing reform. NARAB II applies only to marketplace entry and is deferential to states’ rights—day-to-day state insurance laws and regulations would not be affected. If signed into law, agents who become members of NARAB would have to adhere to the laws in the states in which they operate, including consumer protection laws. NARAB would not be part of any federal agency and would not have any federal regulatory power.
Federal Crop Insurance Program (FCIP): The 2012 Farm Bill will be debated in regular order in Congress at the beginning of this year. Both the House and Senate Agriculture Committee spent the fall composing a Farm Bill that could have been included in a super committee debt reduction deal had the committee come to an agreement. While this “proposed” Farm Bill would have cut $23 billion from agriculture programs, the FCIP would not have sustained any additional budgets cuts. Since $10 billion was cut from the FCIP during the 2010 Standard Renegotiation Agreement (SRA), that budget reduction was absorbed into the super committee Farm Bill baseline. Without a deal it is unclear what baseline the Agriculture Committee will use in writing a new Farm Bill in 2012, and it is highly likely that all programs funded through the Farm Bill, including crop insurance, will be re-evaluated for additional savings.
Other issues of importance to Big “I” agents and brokers include continued implementation of health care reform (see sidebar), the National Flood Insurance Program (NFIP), tax reform and protecting the rights of small businesses and consumers.
The Big “I” Legislative Conference & Convention is just around the corner on April 25–27, so stay tuned for more updates from the Big “I” Capitol Hill Team in IA magazine and the Big “I” weekly e-newsletter, Insurance News & Views (IN&V).
MLR Battle Shifts Gears
The Obama administration’s final rule on Medical Loss Ratios (MLRs) will keep agent and broker compensation in the “administrative cost” category. The Big “I” believes that in releasing this final rule, the U.S. Department of Health and Human Services (HHS) dismissed the National Association of Insurance Commissioners’ (NAIC) and others’ recommendations to provide agents and brokers with relief from the MLR calculation. Unfortunately, without legislative action by Congress, this move by HHS is sure to perpetuate the squeeze on commissions, leading to decreased services for consumers.
When drafting the original MLR rule late last year, the administration repeatedly commented that they looked to the state insurance regulators, through the NAIC, for their expertise on this issue. Consequently, for the final regulation to have been issued with no changes at all to the treatment of agent compensation on the heels of an NAIC resolution calling for agent relief was disappointing to many Big “I” small business members.
The Big “I” Capitol Hill team is now focusing its efforts on a legislative solution. A bipartisan bill, H.R. 1206, the “Access to Professional Health Insurance Advisors Act of 2011,” introduced by Reps. Mike Rogers (R-Mich.) and John Barrow (D-Ga.), would exclude agent commissions from the MLR calculation altogether. At print time, H.R. 1206 had more than 140 bipartisan cosponsors in the House and had already been vetted at two House Energy and Commerce Health Subcommittee hearings. However, passage through both branches of the legislature will be an uphill climb. If your agency sells employee benefits, please consider attendance at this year’s legislative conference to lend your voice to the fight.