A merger between the Alliance of American Insurers and the National Association of Independent Insurers (NAII) would instantly vault the new organization into a commanding position in the industry, NAII President and CEO Jack Ramirez told members at their Annual Meeting in Atlanta on Tuesday.
“Simply put, a merger means more members, more market share, more resources and more influence inside and outside of the industry,” the NAII president said.
Ramirez told members that if the merger agreement were reached the new name of the organization would be the National Association of Property and Casualty Insurers (NAPCI).
“Because the NAII Board of Governors has not yet approved a consolidation agreement I cannot tell you exactly when the merger will take place,” Ramirez said. “Our hope is to begin operating a consolidated organization in early 2004.”
Ramirez explained that once the negotiators from each organization have reached agreement on a merger proposal each Board will be asked to approve the agreement. If both Boards approve the agreement, the members of each association will be asked to approve the transaction.
The new merged organization would write nearly 40 percent of the nation’s property/casualty insurance coverage. In certain lines of coverage and in some states, its market share would be over 50 percent. NAPCI would represent nearly 32 percent of the total commercial lines market and over 39 percent of the workers’ compensation market.
“NAPCI would have a larger staff to provide information, advocacy and other services. Economics of scale would allow NAPCI to provide these additional benefits effectively and efficiently, “Ramirez said. NAII members would not see any increase in their current assessment rate and some would see an assessment decrease, he explained.
Ramirez explained that other advantages would be forthcoming if the merger goes forward.
“A merger would foster an environment where the largest and most diverse group of companies could come together under one roof to develop consensus positions and communicate a unified and unambiguous message to legislators, regulators and the media,” Ramirez said. “We all know how critically important a unified voice is in any legislative debate.”
The need for a more unified industry has never been greater, particularly on the issue of differing views on state versus federal regulation, according to Ramirez.
“With each passing year, the pressure increases for more federal involvement in the regulation of the insurance,” Ramirez commented. “In most states the system works well but in a number of key states it does not, making it difficult for regional and national companies of all sizes to do business. We have urged Congress to give the states ample time to improve the existing systems. We have had some successes in individual states and at the NAIC. However, time is running out and that is not a position – but a prediction.”
The industry is reportedly divided into three camps, those who want an optional federal charter, those who want no federal involvement under any circumstances, and those who want federal standards for state regulation.
According the NAII president, those in latter camp believe federal standards can save regulation. Even some regulators are suggesting that federal standards may be necessary to get the states to make needed reforms. Legislation is expected to be introduced during the next session of Congress.
“The debate is shifting in Congress from one of whether there should be federal intervention to one of what form that intervention should take,” Ramirez said. “NAII is preparing for the debate. Our Board of Governors has made it clear that we must be ready to influence and shape the best outcome for members and the industry. “A merged organization, representing a complete cross section of the industry would offer a broad and inclusive forum in which to reconcile conflicting interests and the many other difficult and divisive issues that confront us.”