Now is Not the Time for Insurance Industry Retreat

By Assemblyman Ted Gaines | November 16, 2008

The word change has been largely embraced by the country this election season. As small business owners, the concept of change in our industry is something we have long been familiar with. Changes in the marketplace are undoubtedly one of our greatest competitive advantages. Change in the financial market in the wake of financial turmoil is something both presidential candidates vowed to shake up.

There is no doubt that the results of the November election were not very favorable for the insurance industry or agents and brokers nationwide.

Vowing to take significant action to address America’s economic meltdown, the election of President-elect Barack Obama and increased Democratic majorities in both houses of Congress mean that we will likely see renewed pushes for increased regulation, government-control over our industry and increased taxation.

The global financial crisis and the recent general election results could be the perfect storm that forces comprehensive regulatory reform of the financial services industry.

Liberal leaders across America have vowed to push for single-payer, government-run health care schemes at the federal and state levels. As small-business owners, we can also expect attempts to raise taxes to fund new, big-government initiatives being formulated in Washington, D.C., and Sacramento, Calif.

But now is not the time to sit back and wave the white flag and give in to whatever efforts are being contemplated in the halls of power that could hurt our insurance industry. The most important thing insurance agents and brokers can do right now to protect their businesses and our industry is to stay active and engaged in the political process.

The results of the November election, although disappointing, should not be taken as a sign by the insurance industry that we must retreat. To the contrary — despite the difficult political reality we will face in Washington, Sacramento and state capitols across the country, agents and brokers need to get involved and engage the political process.

Ensuring that state action offers maximum protection for customers in California is an example of the state’s regulatory system working. Regulation plays a key role in monitoring the fiscal condition of insurance companies and its agents and brokers. However, regulation must not be over burdensome to our industry, while at the same time protecting consumers.

Recent workers’ compensation reform is a working example of effective change in California.

Four years ago, strong workers’ compensation reforms were passed overwhelmingly by the Legislature and signed into law by Gov. Arnold Schwarzenegger. Under this new law (SB 899), passed in an effort to save jobs, reduce costs for employers and improve care for injured workers, employers are saving more than $11 billion a year in workers’ compensation costs out of a total system cost of $29 billion.

As a proud member and past president of the Independent Insurance Agents and Brokers of Sacramento, now Insurance Brokers and Agents of the West (IBA West), I recommend joining and taking an active role in an insurance trade association to remain active in the future assured success of the insurance industry.

Now, more than ever, it is important that insurance agents and brokers reach out and forge relationships with their representatives at the state and federal levels, Democrats and Republicans alike, especially those who have a background in business or insurance.

Education is key — showing lawmakers and administration representatives the important role insurance plays in protecting people’s homes, property and businesses and growing our economy. It is important that they learn the harmful impact costly mandates and burdensome regulations could have on jobs, the economy and hard-working taxpayers.

Even though we face long odds, we can make a difference in defeating or altering bad legislation for our industry if we remain involved in the process. Refusing to engage in politics and public policy will mean the worst nightmares for the insurance industry will come true.

I hope insurance agents and brokers will learn from the election results and follow the example set by President-elect Obama and his supporters. Only by getting involved in the political process can the insurance industry truly make changes for the better.

About Assemblyman Ted Gaines

Assemblyman Gaines represents California’s 4th Assembly District, taking in all or parts of, Placer, El Dorado, Sacramento and Alpine counties. He was elected to the state Legislature in 2006, and currently serves as a Republican Whip. He is the owner of Point West Insurance in Sacramento, which he has been operating since 1981.

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