The New Climate on Capitol Hill

As President Barack Obama moves into the White House and the House and Senate get revved up for the 111th Congress, the Big “I” Capitol Hill team is already hard at work making sure the 300,000 agents and brokers who comprise the Big “I” membership have a voice in the nation’s Capitol.

The Big “I” celebrated several victories during the 110th Congress that have set the stage for a busy and productive 2009. Among the previous Congress’s many accomplishments were: the introduction and House passage of the National Association of Registered Agents and Brokers Reform Act of 2008 (NARABII), a temporary extension of the National Flood Insurance Program (NFIP), passage of the Farm Bill, inclusion of federal natural catastrophe (NatCat) policy language in both the official national platforms of the Democrat and Republican parties, and record-breaking participation in the Big “I” political action committee(InsurPac).

This year, the Big “I” will again be busy on a host of issues important to independent agents and brokers.

Federal Regulation: Insurers’ access to the Treasury Department’s TARP funds and the recent rescue of AIG has brought renewed interest to the regulation of insurance. With significant taxpayer money now “on the hook,” the new Congress is expected to move toward increased regulation of the entire financial services industry, although numerous analysts have said the insurance industry is stable and could be used as an example to other financial services fields. The Big “I” will continue to fight against efforts to establish an optional federal charter (OFC), and will highlight the fact that a deregulatory proposal such as OFC would only exacerbate, not solve, any potential marketplace problems.

Targeted Regulatory Reform: The Big “I” supports targeted regulatory reform, such as NARAB II. This bill will provide for nonresident insurance agent and broker licensing while preserving the rights of states to supervise and discipline producers. NARAB II will also make independent agents more efficient by eliminating costly and redundant paperwork for multi-state agent licenses and by streamlining the licensing process so that agents can dedicate their time to their mission of serving consumers. The House passed NARAB II overwhelmingly in 2008, and the Big “I” is optimistic that the bipartisan legislation will achieve similar positive results in the 111th Congress.

Natural Disaster Insurance (NatCat): President Barack Obama is the first president in American history to have included specific language in his campaign platform calling for the creation of a natural disaster insurance fund. The Republican Party also included language in its party platform on natural disaster issues. The Big “I” has been at the forefront of the NatCat debate for more than 25 years and has called on the insurance industry and government to recognize that it is essential that consumers have affordable natural disaster insurance coverage without it being a drain on the American taxpayer.

Flood Insurance: The Big “I” is continuing to work on an extension of the National Flood Insurance Program (NFIP) which is set to expire on March 6, 2009. Certain reforms that would improve the program for consumers, such as the inclusion of optional business interruption and additional living expenses coverage, are also being considered and pushed by the Big “I.”

Taxes: The new administration’s tax plans have many independent agents concerned. Potential increases in taxes for subchapter S corporations, Social Security payroll taxes and estate taxes are all concerns that the Big “I” is already addressing to ensure fair tax treatment for independent agencies.

The new political landscape in Washington certainly has the potential to cause a stir in the insurance industry. The Big “I” looks forward to working with the new administration, both sides of the aisle and other stakeholders to protect the continuing success and security of independent agents.

Margarita Tapia (margarita.tapia@iiaba.net) is Big “I” director of public affairs.



Financial Services Crisis Persists

The federal government and various industries started the New Year with visions (or nightmares) of requests for access to bailout funds blaring in their heads. As all interested parties work to improve the nation’s financial markets, the insurance industry will continue to feel the effects of this lingering crisis.

AIG, Citigroup, the auto industry and many others have stood in the bailout line as billions of taxpayer dollars have been distributed. One major development at the end of2008 that drew attention to the insurance industry was the appeal of several insurance companies (mainly life companies) to access funds from the U.S. Treasury Department’s Capital Purchase Program (CPP), which is part of the Troubled Assets Relief Program (TARP) authorized by the Emergency Economic Stabilization Act (EESA). Insurance companies such as the Hartford, Lincoln Financial and Genworth Financial among others applied to purchase troubled savings-and-loan holding companies in order to potentially qualify for access to TARP.

This potential additional taxpayer exposure to the insurance industry is also expected to influence the debate over federal regulation. As more and more federal taxpayer money goes to the insurance industry, calls for increased federal oversight of the industry could increase.

—M.T.