An effective National Disaster Program has to be found so that if there is a catastrophe, we won’t have to rely on an “Air Force One Policy,” in which Air Force One flies in and brings us $20 billion, Alabama Insurance Commissioner Walter Bell told members of the Alabama Independent Insurance Agents during their 19th Annual Legislative Conference hosted by AIIA’s Young Agents Committee in Montgomery, Ala.
“That policy is not working,” Bell said. “It is costing you, it is costing me, and it is costing all the taxpayers in this country. We need a plan that you are actively involved in, that we are actively involved in, and one that is going to work for the consumers.
“Nobody wants to go through another Katrina, even though the hurricane prognosticators say that we will have a very, very dangerous season this year.”
Bell, who in December will take over as president of the National Association of Insurance Commissioners will be trying to put together a National Disaster Plan.
“Will it be the Protect America Plan suggested by Allstate Company? Nobody knows at this time what plan it will be at this point,” Bell explained. “Will we put everything into the same policy? Who knows?”
Bell said somebody needs to do something about the National Flood Insurance Program.
“We can not continue to put $23 billion into a program that is broke,” Bell exclaimed. “Somehow we have to come up with something new. In Japan they give people a tax deduction for buying earthquake insurance, that is something we need to look at to encourage people to buy.
“If you don’t encourage them to buy, then the federal government comes in for the ones that have not bought insurance, and we see this all the time, they pay for FEMA to put out money for a $480 a night hotel, so why do I need insurance,” Bell said. “We have to change that mindset in this country. People have to be aware the government is not going to take care of you anymore to give them incentive to take care of themselves.
Bell gave an update about what the Insurance Department has accomplished and is attempting to do in the Alabama Legislature. He said the licensing bill that allows agents to obtain licenses for two years, as opposed to one year, has passed the House and is expected to soon pass in the Senate.
“You can get your drivers license for four years and the state does not have trouble keeping up with you, so we figure we can at least keep up with you for two years on the insurance side,” Bell said. “That bill only needs to pass the House to become law, it came out of the Banking and Insurance Committee of the House last week, and all we have to do it now is to get it passed in the House.”
Bell said in the past the bill has always passed the House. It was started in the Senate this year. He said the Senate tacked on an amendment to exempt legislators from having to complete continuing education if they have an insurance license.
Bell said online registration and licensing will be a huge efficiency for the Department of Insurance. He said that at present, 60 to 70 percent of the agencies in Alabama are participating, an agent will even be able to print out his license and will not have to wait for it to come in the mail, making it convenient, efficient and productive.
“We are looking forward to that bill coming out, it will be a big change for agents, and for the department,” Bell said. “It means we will only have to license 30,000 people each year, as opposed to 60,000 per year. This will increase departmental efficiencies, I will be able to put two or three people that were previously busy renewing licenses onto consumer protection handling consumer complaints and consumers’ issues.
Bell complemented agencies, saying that he does receive letters from consumers saying agents are doing a good job, so it’s not all complaints.
“When you have a hurricane coming and you receive 20,000 issues and questions, you need people to respond quickly,” Bell said.
Bell holds high hopes for the passage of a captive bill which will create captive insurance companies in Alabama. He explained that several companies now doing business in Alabama are licensed in Bermuda. The passage of a captive bill would make it possible for an Alabama carrier to become a captive in Alabama and write policies for consumers unable to obtain coverage after insurance companies pulled out of their areas. He cited Alabama’s hurricane- and flood-prone areas as an example.
Bell said a NAIC issue he will tackle is a proposal to require insurance agents to be fingerprinted. He said there are still a lot of unanswered questions about this procedure, like will there be a repository in which fingerprints will be housed from all states, and if so, where will it be housed.
“Do we do it for one time, and if you leave the business and want to come back, do you have to be fingerprinted again?” Bell asked. “If we keep them in a repository they are already on file, if you want to get a license one state, or in 50 states, an agent should only have to be fingerprinted once. There are some processes we have to work out.”
Bell said speeding the market for an interstate compact will be the next step NAIC will look into.
“It’s a little more difficult to do national uniform standards for property and casualty, and personal lines than it is to do life and health,” Bell explained. “If you are a 50-year-old in New York and Alabama you are going to pay pretty much the same premium if your health is the same.
“We do have a work group looking a personal lines to come up with something, but as you know, automobile rates in New York City are much more different than they are in Alabama. It’s much, much different.”
He said in terms of policies you have to take all kinds of variables into consideration.
Bell opposes federal charter
“On the one hand for consumer protection, on the other hand, if in fact we had a federal harter I don’t know how often we would see a federal commissioner coming down to Alabama,” Bell said. “We think the best is the government that comes closest to the people and being in Montgomery is the one that is closest.”