Speier Addresses Attendees at American Agents Alliance Conference

Over 1,400 independent agents and brokers from California and Arizona descended upon Indian Wells, California this September for the 2004 American Agents Alliance Conference & Expo. Attendees took advantage of numerous continuing education opportunities over the five-day conference, which also featured a trade show, CEO panel, and keynote speeches by California Senators Jackie Speier (D-Hillsborough) and Chuck Poochigian (R-Fresno).

Speier, who recently enlisted the Alliance for assistance in conducting a survey on the Low Cost Auto Program (IJ West, Sept. 6), gave attendees a run down of the significant legislation of the past year. She began with SB 1500, which was recently signed into law by Governor Arnold Schwarzenegger. Speier noted that SB 1500 finally closed several loopholes to help reduce the churning of policies.

“This year we have come as close as we’re ever going to get to closing that loophole,” Speier said. “Under SB 1500, a driver who cancels insurance mid-term and who doesn’t replace it within 45 days, will have their registration suspended.” Speier’s remarks were met by an appreciative round of applause from agents and brokers. She went on to say that SB 1500 also requires all insurers to report policies electronically to the Department of Motor Vehicles (DMV), thus making the agents’ role easier.

“In short, if you try to cheat, you’ll get caught. That’s good for taxpayers, for accident victims, and it will reduce the churn in your book of business,” Speier said.

Speier noted several victories for agents and brokers during the 2004 legislative session, including the passage of AB 3088, which encourages healthy competition by allowing subsidiaries that don’t use common names and that have different marketing and cost structures to be marketed separately. Proposition 103 won’t require that a price be offered from a different subsidiary, allowing insurers to offer more products.

AB 2490, which was supported by both Speier and the Alliance, will allow producers to immediately bind coverage for surplus personal lines coverage, using essentially the same exposure used for surplus commercial coverage, Speier said. Governor Schwarzenegger signed the bill into law.

Governor Schwarzenegger also signed into law AB 2557, which increases penalties for agents and brokers selling insurance without a license, and requires producers to update their license and information in a more timely manner.

AB 2677 requires insurers to provide the lowest cost policy for Good Driver applicants. “This is a different issue than the one that was covered by AB 3088 because the bill narrowly addressed the single insurer and its obligation, not a family of insurers,” Speier said. The bill also received the Governor’s signature.

Finally, AB 2709 requires the DMV to report the auto insurance status of a car to the California Highway Patrol. It was also signed by the Governor.

Speier thanked the agents and brokers who participated in the Low Cost Auto survey and talked about changes she hopes to implement of the program in order to make it more effective. Among those included an increase in the “inadequate” commission and a reduction in the amount of paperwork. Speier said with the passage of SB 1500, the DMV in January 2006 will send out a notice of suspension to drivers that will also inform them of the Low Cost Auto program. Speier also acknowledged the concerns of many brokers that the 10/20/3 coverage levels are too low, but could not offer a satisfactory solution.

“I look forward to working with the American Agents Alliance to strengthen the program,” Speier said. “The existence of this program has allowed me to keep proof of auto insurance in place, and with the passage of SB 1500, strengthen the proof of insurance law. California is a complex place where compromise brings progress. Low Cost Auto is part of that compromise and part of the story of progress.”

Sunday’s closing session featured a CEO panel consisting of Gabe Tirador, Mercury Insurance; John Mullen, Unitrin Specialty Lines; Jim Schallert, Western United Insurance; Mark Niehaus, Progressive Insurance; Joe Rupp, Safeco Insurance; and Glen Godwin, The Infinity Group.

Topics discussed were the Low Cost Auto Program, the Krumme vs. Mercury lawsuit, which questions the validity of broker fees and broker compensation, the Donebedian vs. Mercury lawsuit dealing with persistency, and much more.

Persistency discounts relating to the Donebedian case was a hot topic. “It’s a case that’s broader in its potential impact than just persistency,” Mullen said. “We can rate with or without, just tell us what the rules are and make sure we’re all on the same page at the same time.”

The panelists also discussed the issues that pose the greatest threat to producers and insurance companies in the future. Rating variables, territorial rating, and disclosure topped the panelists’ list. “I think one of the big challenges is attracting and retaining bright young people to the industry,” Mullen said. “We’ve got the upcoming retirement of the baby boomers which is going to create a tremendous amount of opportunities and challenges for the industry if we can’t replace those folks with some real bright young people.”

Panelists also talked about the softening of the market. “Our position is in this kind of environment, you have to be very careful to reduce rates because you don’t know if you’re going to get them back,” Tirador said. Niehaus warned that new players would enter the market and come in at a real low rate level.

Also discussed was the use of credit in underwriting, a topic that has been under the industry’s radar for some time now, claims costs, and John Garamendi’s performance as insurance commissioner.

The panel was followed by a closing keynote speech from Senator Chuck Poochigian, who discussed the reform efforts in the workers’ compensation market and the changes under SB 899.

The Alliance also honored two members, Dick Hodge and Sharron Varga, for their contributions to the association and the industry. Alliance Executive Director Lorelle Kitzmiller presented Hodge with the Alliance’s Lifetime Achievement award in recognition of his service to the association in the last four decades. “As a founding member of the Alliance, you were part of a group that truly reflects our grassroots beginnings,” Kitzmiller said. “Your guidance as our second president for two consecutive terms, and input as a 23-year member of the Board of Governors, has helped us evolve into the vibrant and well-respected association we are today.”

Varga was honored with the Don Stewart Achievement award, “For your tireless efforts in promoting the ideals of the American Agents Alliance, organizing monthly meetings, making valuable contributions as a member of the Board of Governors, and being a role model for other independent insurance producers to follow.” Kitzmiller said. “You are a true embodiment of the ideals and values held by American Agents Alliance founder Don Stewart and have helped our association carry his dream into the 21st century.”
Senator Jackie Speier
CEO panel discusses greatest challenges to agents, brokers and companies in the future.
Dick Hodges with Alliance Executive Director Lorelle Kitzmiller
Kitzmiller presenting Don Stewart Achievement Award to Sharron Varga

Topics California Auto Agencies Training Development