Flurry of Activity in Congress

Heading into the traditional summer recess, Congress took action on a number of issues important to the insurance industry.

First, Congress moved one step closer to extending the terrorism risk insurance program that provides much-needed federal reinsurance for terrorist attacks, as the House Committee on Financial Services passed the Terrorism Risk Insurance Revision and Extension Act of 2007 (TRIREA). The legislation, sponsored by Rep. Michael Capuano (D-Mass.) and House Financial Services Committee Chairman Barney Frank (D-Mass.), would extend the federal terrorism insurance backstop on a long-term basis (15 years) with reasonable trigger levels. In addition, it would help to ensure coverage from catastrophic terrorist attacks by including nuclear, biological, chemical and radiological (NBCR) events. The Big “I” supports these provisions, which recognize both customers’ need for such insurance and insurers’ difficulty in underwriting these exposures. The legislation also would create a blue-ribbon commission to propose long-term solutions to covering terrorism risks—and the Big “I” is pleased that the views of independent insurance agents and brokers will be represented on the commission.

This legislation is crucial for the business customers independent agents serve and for the nation’s economic security, and the Big “I” is hopeful that the program will be extended before its expiration at the end of the year, thereby bringing certainty to the insurance market.

Before recess, the House Committee on Financial Services also approved legislation that would reform the National Flood Insurance Program. Included in the reforms would be an expansion of the program to include wind damage coverage, a provision proposed by Rep. Gene Taylor (D-Miss.).

On the federal regulation front, the National Insurance Act was reintroduced in the House with Rep. Melissa Bean (D-Ill.) and Rep. Ed Royce (R-Calif.) as cosponsors. Like the Senate bill introduced earlier in the year by Sen. John Sununu (R-N.H.) and Sen. Tim Johnson (D-S.D.), this legislation would create a massive new federal bureaucracy and lead to additional regulatory burdens on agents and brokers. The Big “I” opposes such efforts to create an optional federal charter for insurance and instead supports targeted federal legislation to reform the state insurance regulatory system. The House already has passed H.R. 1065, the Nonadmitted and Reinsurance Reform Act of 2007, which would help create uniformity in the surplus lines and reinsurance markets.

In other legislative news, the 2007 Farm Bill also contained provisions important to the insurance industry. This legislation reauthorizes farm programs for an additional five years and reforms the Federal Crop Insurance Program. The bill includes significant cuts to all aspects of the FCIP, including a 2.9% cut to the Administrative and Operating (A&O) Reimbursement (from 24.5% of premium to 21.6%), which could lead to a reduction in service to America’s farmers and could affect the livelihood of all crop insurance agents. The Big “I” strongly opposes these cuts and a provision in the legislation that would directly tie the amount of taxes, royalties and fees that offshore oil companies pay to the amount that independent insurance agents would earn for selling crop insurance policies. The legislation states that after 2012, if the U.S. government’s receipts from the bill’s increase in taxes, fees and royalties for offshore oil companies are ever less than they were for 2012, the secretary of Agriculture is to make up the difference by reducing the A&O Reimbursement rate from the FCIP.

Fortunately, the Farm Bill also includes a number of positive policy changes to the FCIP, the most important one being the permanent repeal of Premium Reduction Plans (PRPs). The Big “I” also was successful in fighting off two amendments that would have crippled the delivery of the crop insurance program. These amendments would have cut A&O Reimbursement by 7.5% and 9.5%, respectively.

There was also progress in the Senate on issues important to independent agents. The Senate Banking Committee passed the Commission on Natural Catastrophe Risk Management and Insurance Act of 2007. This legislation would establish a bipartisan commission to examine natural disaster risks and recommend possible solutions to the availability and affordability insurance crisis affecting many regions of the country.

Patrick Royal (patrick.royal@iiaba.net) is Big “I” director of public affairs.

Illinois Agents Answer the Call

In July, in anticipation of a House optional federal charter (OFC) bill, Illinois agents sprung into action. The Big “I” launched a grassroots action alert campaign targeting the likely co-sponsor of the bill, Rep. Melissa Bean (D-Ill.). Agents and brokers contacted the Congresswoman to voice their opposition to a federal regulator for insurance.

Illinois agents in the Big “I” database received an action alert e-mail outlining agents’ concerns and the need for timely action. The message included a link that led agents directly to the recently upgraded Big “I” grassroots Web site to learn more about the issue and take action.

Hundreds of agents answered the call. With a point and click, agent after agent sent e-mails, faxes or letters to Bean to urge her not to support federal regulation of insurance. Thanks to the upgraded, user-friendly grassroots software, it takes just 30 seconds to send a letter.

The Big “I” grassroots Web site and database is an invaluable tool to connect Big “I” members with federal legislators on issues like OFC. Please take a moment to update your home address information to help with the next big action alert. Go to www.independentagent.com and click “Government Affairs,” then “Grassroots” and “Update Your Grassroots.”