IBA West Steps Up Advocacy Efforts to Target Calif. Workers’ Comp Crisis

Just about everyone has heard about California’s beleaguered workers’ compensation system. And just about everybody has a say on the issue these days, most notably the membership of IBA West.

To tackle some of the public policy issues facing agents and brokers in California, including workers’ comp reform, the leadership of the state association of agents and brokers decided to vamp up advocacy efforts in Sacramento to make sure their voice is heard. Last year, the association outlined the campaign, California First Advocacy Campaign, to target pressing issues affecting agents and brokers often brought before the legislature.

“The genesis of our campaign began last March or April,” Andrew Valdivia, president of the IBA West, said. Valdivia, who is also an executive vice president and principal at White & Company in Santa Monica, Calif., has been co-chair of the IBA West California First Advocacy Fund, the fundraising arm of the public policy effort, since its inception last year.

“Over the last two years, we have been concerned about what’s going on in Sacramento,” Valdivia said. “We realized as an organization we have always been very effective through our lobbying in Sacramento, but it’s a much different game now.

“In order to be a real impact player and have a seat at the table, we realized we had to build coalitions and really step up our advocacy efforts a notch or two,” Valdivia added. “This fund helps us achieve the goals of the overall campaign.”

In just a few months, the Advocacy Fund has raised nearly half of its $500,000 financial goal. Valdivia, along with the help of his co-chair Stanley Simpson of Buckman-Mitchell Inc. in Visalia, Calif., agreed to chair the fundraising effort to support lobbying efforts in Sacramento, which includes a four-part plan laid out by the IBA West board of directors.

“We had to take a real proactive approach to correct some of the misinformation,” Valdivia claimed. Misinformation he says that was generated in part by applicant attorneys, chiropractors, labor unions and other groups claiming that broker and carrier compensation is excessive. “There is no question that we are a target in Sacramento because they don’t understand what our role is.”

The initial part of the plan was to establish more-effective relationships with coalitions and other ad hoc issue advocacy groups targeting similar issues as agents and brokers.

Valdivia said the IBA West has committed its resources to two coalitions targeting workers’ comp reform—the Workers’ Compensation Insurance Coalition (WCIC), a coalition of insurers and the IBA West, and the Workers’ Comp Action Network (WCAN), a coalition of major employers, insurers and business groups.

“What we are trying to do is make sure the right information gets in front of our legislature and regulators,” he said.

According to Valdivia, the WCIC is a defense oriented strategy to correct misinformation that had been circulated about insurance company profitability in California and to defend the agent/broker role in the workers’ comp system and the industry as a whole. WCAN aims to mobilize the business community to encourage the legislature to enact further workers’ comp reforms.

Secondly, the plan calls for doubling the size of IMPAC, the non-partisan political action committee of the Agents and Brokers Legislative Council (ABL). ABL is a coalition of four California associations of independent insurance brokers, agents and wholesalers, which includes IBA West, California Insurance Wholesalers Association (CIWA), Insurance Brokers Society of Southern California (IBSSC), and Insurance Brokers Society of Orange County (IBSOC).

“The board asked ABL leaders this year if IMPAC is effective at its current level of $350,000 of contributions per two-year election cycle,” Valdivia said in an e-mail statement. “They replied that legislators realize that ABL member organizations don’t represent ‘big money interests;’ but even so, IMPAC has not kept pace—especially if we are to achieve ‘player’ status on mega insurance issues.”

The third part of the plan was to expand the role of the association’s contracted lobbyist, Norwood & Associates, for regulatory issues. “This will enable us to increase our effectiveness via closer day-to-day liaison with the insurance department’s senior staff,” he added.

Lastly, the plan calls for the revitalization of the association’s grassroots political action network. Valdivia explained the ultimate goal of the grassroots network is to train interested members to mobilize their clients and influence associates to elect legislators who target reform.

Changing role of the agent
“My role as an insurance salesperson has changed,” Valdivia said in a speech at the IBA West’s annual meeting in January. “Today, the value I provide my clients is also in the form of risk management, loss prevention, safety and loss control services.”

He added that while the role of the insurance agent has seen increased responsibilities, commission levels in workers’ compensation has declined. Last year, Commissioner John Garamendi ordered the State Compensation Insurance Fund to reduce its agent base commission rate from 8 percent to 5.5 percent. IBA West reports that the rest of the workers’ comp market followed shortly thereafter.

“You have the applicant attorneys and chiropractors trying to convince the legislature to cap broker and agent commissions and regulate workers’ comp rates versus implementing real reform,” Valdivia said. He added that’s why it’s important for the membership of IBA West to provide legislators with information again and again.

And if reform doesn’t happen in Sacramento, “Our association would definitely support the governor on a ballot initiative if the legislature is not prepared to reform the system.”

Valdivia explained what the association has that legislators’ value most is the ear of the consumer. “Our power is in our numbers, and the faith and trust that our clients put in us,” he said. “We can influence voters to influence their legislators; or if we have to we can influence at the ballot box to pass some meaningful reform.”

After all, Valdivia said, “We [agents] are the ones who deliver the bad news on a daily basis to our clients about what’s wrong with the system—we have a unique position.” And the bad news translates into workers’ comp rates that have nearly tripled in just five years.

“We [agents] are the ones who deliver the bad news on a daily basis to our clients about what’s wrong with the system—we have a unique position.”