Top 5 Agent Issues of 2014

The News & Views editors and Big “I” leaders round up the year’s biggest stories for the independent agency system.

Flood law gets a big fix. In one of the biggest wins for the Big "I" in 2014, President Obama signed a major revision to Biggert-Waters into law this spring. H.R. 3370, the “Homeowner Flood Insurance Affordability Act of 2013,” was a top priority for the association as it reduces some of the unintended harmful effects of Biggert-Waters without undoing the numerous positive provisions within the law. Most notably, it helps with the “sticker shock” some consumers faced as a result of two provisions in Biggert-Waters that created drastic premium increases in many parts of the country. The Big “I” offered the industry perspective in numerous congressional hearings and discussions in 2014.

Certificates of insurance remain in the spotlight. During the past several years, the Big “I” has been an advocate for agents and their role in the certificates of insurance (COI) process. Agents encounter a variety of issues, including requests by insureds to certify coverages that weren’t in their policies; requests to strike language in the standard certificate form to comply with contractual requirements; and requests to issue certificates that included additional insureds who were not named on the policy. As these issues continue to simmer in the marketplace, a majority of states have issued COI statutes, regulations or DOI directives that have mitigated problems for agents—particularly in the area of cancellation notice and illegal coverage demands. The Big “I” continues to monitor the issue, providing a variety of resources to assist with problems agents many encounter from their carriers or insureds when providing COIs. Visit the Big “I” Virtual University COI resource area to learn more.

Finally, a Farm Bill and FCIP protection. In a big win for Big “I” crop insurance agents and American agriculture, a Farm Bill finally became law this year. After almost two years of deliberation, the Senate and House reached a consensus on a five-year bill: the Agriculture Act of 2014 passed the Senate in a 68-32 vote and the House in a 251-166 vote. The long-term bipartisan agreement is a complete overhaul of previous Farm Bill polices, saving taxpayers $23 billion over 10 years by ending the Direct Payment Program for commodities and reforming several other programs in the bill. Most importantly, the bill recognizes the Federal Crop Insurance Program (FCIP) as the central risk management tool for farmers and ranchers across the country. The Big “I” strongly advocated against any payment limits for the program to guarantee that agents remain the sole sales force of the FCIP and to ensure the program is readily available and accessible to all farmers.

New law clarifies financial regulation for systemically important insurers. Also in 2014, Congress passed legislation that would provide relief to insurers categorized as systemically significant (SIFIs) by clarifying that the Federal Reserve should not impose bank-centric capital standards on insurance companies. Insurance is different from banking and insurers should have distinct regulatory standards from banks; the Big “I” has long supported this premise and the push for legislation. The Senate passed S. 2270, the “Insurance Capital Standards Clarification Act of 2014,” in June and the House passed an identical version of the bill in early December. This legislation is one of the first Dodd-Frank “fixes” to be enacted into law since the financial overhaul bill passed in 2008. The legislation now heads to President Obama’s desk for his signature.

The “sharing society” shakes up personal lines. In the wake of the decline in home ownership ever since the peak of the housing market back in 2006, an entire economy has developed to serve a renting and sharing mindset. Younger generations in particular are opting for sharing of all kinds—cars, rides, homes, apartments, boats, even bathrooms—and the less they own, the lower their insurable interest. In addition to setting the stage for potential stagnation in the growth of the personal lines insurance market, the sharing society leaves an abundance of coverage gaps in its wake, presenting a variety of exposures that a typical homeowners, renters or personal auto policy is not intended to address. Still, the trend shows no signs of slowing down: According to a new infographic from Erie Insurance, customers can get a rideshare ride in 42 out of 50 states, and one-fifth of respondents to a University of California, Berkeley survey would be willing to use real-time ridesharing at least occasionally.

Madelyn Flannagan is Big “I” vice president, agent development, research and education. Margarita Tapia is Big “I” director of public affairs. Jacquelyn Connelly is IA senior editor.