With the start of a new Congress and state legislative sessions, the Independent Insurance Agents and Brokers of America (the Big “I”) announced its legislative agenda for 2005.
Top issues for the insurance association this year will reportedly include the following items:
Broker Fee Disclosure—The Association will work closely with state legislatures and Congress in any review of broker compensation, and the Big “I” will continue its call for broker disclosure of meaningful information concerning incentive fee arrangements, while continuing to support legitimate incentive compensation arrangements, which are commonly used to reward outstanding sales performance.
“There must be a balance between appropriate disclosures by brokers and the protection of legal incentive compensation,” said Big “I” CEO Robert Rusbuldt. “We applaud the actions that are being taken to root out alleged illegal activities, and we seek responsible reforms that will halt and punish bad actors and disclose relevant information to consumers—while preserving legitimate forms of incentive compensation.”
Insurance Regulatory Reform—The Big “I” will continue to strongly support the State Modernization and Regulatory Transparency (SMART) Act discussion draft, the result of the joint efforts of House Financial Services Committee Chairman Mike Oxley (R-Ohio) and Subcommittee Chairman Richard Baker (R-La.). Independent agents and brokers hope to see the discussion draft, which would reform the current state-based regulatory system without creating a federal regulator or “optional” federal charter, introduced this year.
“The Big ‘I’ and its 300,000 agents and employees across America strongly support preserving and reforming the state-based regulatory system, which will better serve consumers without creating a cumbersome federal bureaucracy,” said Charles Symington Jr., Big “I” senior vice president of federal government affairs. “We support the SMART Act and its approach of targeted, common-sense reform that preserves the strong points of the existing system while making improvements in areas where they are necessary.”
Terrorism Insurance Backstop Renewal—The Association will continue to work with its industry partners for the renewal of the Terrorism Risk Insurance Act (TRIA), providing a federal backstop to help cover uninsurable catastrophic losses in the event of a major terrorist attack on American soil.
“Renewal of TRIA is crucial to the ability of our industry to cover catastrophic losses related to terrorism and also to preserving confidence in the marketplace,” said Symington. “Existing TRIA legislation expires at the end of this year, and it is crucial that we get this act renewed as quickly as possible.”
Tax Reform—The Big “I” continues to support changes in the tax code to allow a quicker depreciation schedule for intangible assets, such as customer lists and the write-off of the first $5 million of intangible assets acquired in the purchase of another agency, with ratable depreciation over 14 years. It also supports President Bush’s call to make the individual tax rate reductions permanent, which would benefit independent agencies (“S” corporations) that pay taxes at personal rates, as well as the elimination of estate taxes. The Big “I” also opposes an increase in Social Security payroll taxes or the elimination of the wage cap, which would prove very onerous for small business owners.
“Tax relief is crucial to independent insurance agents and brokers,” said Symington. “Whether in growing their businesses, hiring more employees or passing on their agencies to their families, independent agents and brokers stand to benefit from common-sense reforms to the tax code. This is an issue we will continue to push vigorously.”
Legal Reform—Independent agents and brokers will continue their push for much needed reforms to the current litigation system for claims related to asbestos exposure, medical malpractice cases and class-action lawsuits.
“We absolutely must get legal claims under control and restore common sense to our courts,” said Rusbuldt. “The courts are clogged with asbestos claims. Medical malpractice actions have become so prevalent that it is becoming nearly impossible in many locales for doctors to afford coverage. And class-action lawsuits are so unregulated that trial attorneys commonly go ‘venue shopping’ to secure big legal jackpots. It is well past time to bring sanity to our court system by enacting sensible reforms to our legal system.”
Crop Insurance Reform—The Big “I” will work to build upon its successes in late 2004, in which the Federal Crop Insurance Corp (FCIC) properly decided to stop the proliferation of Premium Reduction Plans (PRPs) pending further review. The Association has been the leading voice in favor of agents who sell this type of insurance, and has made the case against proliferation of plans that would hurt farmers by undermining the ability of independent agents, who have great expertise in this field, to serve America’s farmers
“We will continue to work so that the crop-insurance industry continues to thrive, and to ensure that agents will remain in business to offer their expertise to farmers across America,” said Patrick O’Brien, Big “I” director of Federal Government Affairs.
Health Care Reform—Independent agents and brokers will continue to seek increased access to health insurance to help the uninsured obtain the coverage they need. The Big “I” believes this can be accomplished by Congress working with the Bush administration to expand health savings accounts (HSAs) and create refundable tax credits.
“With roughly 45 million Americans having no health-care coverage, it is clear that a solution is needed as soon as humanly possible,” said Symington. “Providing more options to make this coverage available and affordable must be a priority not just for insurance agents and brokers, but for the nation as a whole.”