2015 ADVOCACY AND POLICY PRIORITIES NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS

Transcription

1 2015 ADVOCACY AND POLICY PRIORITIES NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS

2 ABOUT PIA S ADVOCACY EFFORTS The National Association of Professional Insurance Agents (PIA) represents independent insurance agents in all 50 states, Puerto Rico and the District of Columbia. They operate cutting edge agencies and treat their customers like neighbors, providing personal support and service. PIA represents members interests in state capitals and in Washington, D.C., to ensure that lawmakers and regulators understand and support the independent agency system. PIA s grassroots campaigns; our annual PIA Federal Legislative Summit and District Lobbying Day events; and our political action committee, PIAPAC, give individual agents a powerful collective voice in government. PIA works with carriers and industry organizations the National Association of Insurance Commissioners (NAIC), the National Council of Insurance Legislators (NCOIL), the Association for Cooperative Operations Research and Development (ACORD) and others to ensure that the concerns of independent agents are addressed. Members have access to materials to strengthen their agency and to keep them up to date with industry trends and regulations. POLICY ISSUES OF FOCUS In October and November 2014, PIA in conjunction with state affiliates released a member advocacy engagement survey to help inform our 2015 policy priorities. Building on our advocacy successes in 2014 we considered feedback from the survey, the expected priorities in the 114th Congress, and expected state and federal regulatory actions to develop our top five priority issues for In addition to PIA s top five priorities, PIA will also continue to focus on a multitude of other business and policy issues that impact independent agents as well as monitor and address emerging and emergency policy issues as they arise. AGENT LICENSING UNIFORMITY: PIA supports increasing uniformity and reciprocity for producer licensing through state insurance departments and as necessary through targeted federal legislation. HEALTHCARE REFORM: PIA supports the critical role that independent agents play in the sale and servicing of health insurance. PROMOTING SMALL BUSINESSES & TAX REFORM: PIA supports a clear and simple tax code, reducing individual and corporate income tax rates for small businesses, and opposes tax provisions or regulations that impede small business growth. PROTECTING STATE INSURANCE REGULATION: PIA supports a modernized state-based insurance system and opposes any federal regulation or international standards that would destabilize or supplant state-based regulations. SAFEGUARDING IMPORTANT P&C PROGRAMS: PIA supports the vital role that independent agents play in the delivery of federal insurance and reinsurance programs, including the federal Crop Insurance, Flood Insurance, and Terrorism Risk Insurance programs. NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS 2

3 AGENT LICENSING UNIFORMITY PIA supports increasing uniformity and reciprocity for producer licensing through state insurance departments and, as necessary, through targeted federal legislation. The passage of the Gramm-Leach-Bliley Act in 1999 required the states to enact uniform or reciprocal licensing standards for producers. Since then, great strides have been made in regard to uniformity and reciprocity among the states. Nonetheless, there remain regulatory redundancies, inefficiencies, and inconsistencies that result in unnecessary costs and burdens on insurance producers and consumers. WORKING WITH NIPR AND NAIC ON STATE LEGISLATION AND REGULATION: PIA holds a rotating seat on the Board of Directors for the National Insurance Producer Registry (NIPR) to ensure that the interests of independent agents are considered in NIPR strategic decisions. Additionally, throughout 2014 PIA worked with NIPR, NAIC Producer Licensing (EX) task force and working group, state regulators, our state affiliates and our industry partners to increase uniformity and reciprocity for producer licensing. In 2015, PIA will continue to work diligently with stakeholders to ensure that producer licensing laws and regulations are sensible and effective, including advocating for uniform renewal dates across states and ensuring that continuing education requirements are not redundant, among other issues. SUPPORTING TARGETED FEDERAL PRODUCER LICENSING LEGISLATION: Legislation to create the National Association of Registered Agents and Brokers (NARAB) an independent, non-government, non-profit membership organization through which non-resident producer licensing requirements may be adopted and applied on a multi-state basis was passed in early January NARAB will facilitate reciprocity without creating a new federal insurance bureaucracy. In 2015, the proper implementation of NARAB will be a top priority of PIA. We will work with the Obama Administration, the NAIC, and our industry partners to ensure a smooth start-up process for the association. MONITORING FIO ACTIVITY: The 2014 annual report of the Federal Insurance Office (FIO) included concerns regarding the decline in the number of agents selling life insurance. The report states that the FIO will monitor life insurance sales and the number of life insurance producers to ascertain whether policymakers should consider efforts beyond NARAB to encourage producer licensing and to promote access to essential insurance products. As the FIO is statutorily prohibited from assuming a regulatory role, PIA is wary of their involvement in producer licensing and opposes any role for the FIO in the implementation of NARAB. PIA favors innovations that streamline agent and broker licensing, so long as they do nothing to undermine the principle of state-based regulation of insurance. In 2015, PIA will closely monitor FIO activity on producer licensing issues and work with stakeholders to ensure that the independent agency system is protected. PIA is wary of the FIO s involvement in producer licensing and opposes any role for the FIO in the implementation of NARAB ADVOCACY AND POLICY PRIORITIES

4 HEALTHCARE REFORM PIA supports the critical role that independent agents play in the sale and servicing of health insurance. The Patient Protection and Affordable Care Act (ACA) was signed into law in March 2010, dramatically changing the health insurance landscape. Among other things, the ACA establishes online health insurance exchanges, administered by states and the federal government, where individuals and small business can purchase private insurance plans. The exchanges went live in October The first year of exchange operation was fraught with challenges for agents and brokers, many of which will persist in WORKING WITH CCIIO: Despite challenges throughout 2014, PIA did see successes working with the Center for Consumer Information and Insurance Oversight (CCIIO) to have PIA member input included in an agent/broker study, to make the application process easier for agents to navigate, and to have agent information displayed on the healthcare.gov website. In 2015, PIA will continue to work with the CCIIO to help maintain a strong role for independent agents in the marketplace. SUPPORTING CHANGES TO THE MLR: On Capitol Hill, PIA will continue to support legislation to make sure that consumers have adequate access to health insurance agents and brokers. The ACA implemented a requirement, called the medical loss ratio (MLR), designed to limit the amount that a health insurance company can spend on administrative costs to ensure that consumers receive more value for their healthcare dollar. PIA agrees with this goal, but believes that agent and broker commissions were improperly classified as administrative costs, thereby limiting consumer access to an important resource. SUPPORTING THE VALUE OF AGENTS: PIA is dedicated to guaranteeing that the value and role of licensed professional agents is properly recognized in the sale of health insurance. The ACA created a class of assistance personnel, generally called Navigators, to educate the public about healthcare plans. By working primarily through community centers and call centers, Navigators are intended to help Americans gain access to health plans sold on the exchanges, but they are prohibited from enrolling anyone into a health plan. PIA supports strong consumer protections for Navigators. In 2015, PIA will continue efforts to support the value of independent agents by working with the NAIC, PIA state affiliates, and state insurance departments and legislatures to ensure that ACA assistance personnel are properly licensed and regulated under state and federal law. PIA will also support legislation in Washington, D.C. to ensure strong consumer protections for Navigators and encourage utilization of the agent and broker community. NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS 4

5 PROMOTING SMALL BUSINESSES & TAX REFORM PIA supports a clear and simple tax code, reducing individual and corporate income tax rates for small businesses, and opposes tax provisions or regulations that impede small business growth. Small businesses are one of this country s greatest assets. They stimulate the economy, create jobs, and have a history of pulling this country out of recessions. Despite these significant contributions, they are hampered by overly burdensome laws and regulations. Taxes, at all levels, represent a major cost of doing business and are especially harsh on small businesses. In 2014, both House Republicans and the Obama administration released ideas for tax reform, though no progress was made. In 2015, the House and Senate will see new leadership on the tax writing committees, bringing Rep. Paul Ryan (R-WI) as chairman of the House Ways and Means Committee and Senator Orrin Hatch (R-UT) as chair of the Finance Committee. This change in leadership, and the administration s interest in engaging on this issue, will present opportunity to make reforms to the federal tax code. REDUCING BURDENS FOR SMALL BUSINESSES: The sheer complexity of the U.S. tax code remains a constant threat to small businesses and their ability to grow. Research by the Small Business Administration (SBA) shows that compliance cost is particularly substantial for small businesses. Compliance with tax regulations imposes costs that are 67% higher in small businesses than their larger counterparts. It s imperative that Congress address the unnecessary complexities and provides a system that is clear and competitive. Small businesses are struggling to keep up with the consequences of the current U.S. tax code and regulatory environment. PIA encourages swift congressional action to eliminate these onerous burdens. REDUCING TAX RATES FOR SMALL BUSINESSES: Not only are businesses hindered by overly burdensome compliance measures but the cost of doing business is significant, too. The same research by the SBA shows that the average effective tax rate for small businesses (less than $10 million in gross receipts) is 19.8%. Contrarily, it s not uncommon for large businesses in this country to pay significantly less or nothing at all placing small businesses at a competitive disadvantage. This hardship only accounts for federal income tax, not other federal taxes small businesses may be subjected to, including Social Security; Medicare; employment; or excise tax, let alone any state or local taxes. Small businesses must balance these considerable taxes and ever increasing operating costs, all while attempting to make a profit. A decrease in the corporate income tax rate, something that has bipartisan support, would protect the role of small businesses, create jobs, and could be self-financing. In 2015, PIA will work with Congress to ensure that small businesses are part of any tax reform package and to reduce tax burdens and rates for main street business owners. A decrease in the corporate income tax rate, something that has bipartisan support, would protect the role of small businesses, create jobs, and could be self-financing ADVOCACY AND POLICY PRIORITIES

6 PROTECTING STATE INSURANCE REGULATION PIA supports a modernized state-based insurance system and opposes any federal regulation or international standards that would destabilize or supplant state-based regulations. In 2014, international regulatory issues were firmly pushed to the forefront of concern for regulators and legislators, at both the state and federal level. While states set insurance policy and regulate insurance in the U.S., developments at the international level heavily influence state laws and regulations. Actions by certain federal and international bodies have raised alarm that the state-based insurance regulatory system may be needlessly eroded in the face of new global challenges. In response to this, PIA worked to support efforts by national state-based associations to educate state legislators on developing international regulatory issues and how these issues will affect state insurance regulation. On Capitol Hill, PIA supported Congressional resolutions calling on the International Association of Insurance Supervisors (IAIS) to conduct its business in an open and transparent manner. While international issues pushed to the forefront in 2014, PIA continued to monitor and act on many state and federal regulatory issues. Among other efforts, PIA worked with Congress in the wake of the FIO Modernization Report, released in December 2013, to ensure that the integrity of state-based regulation is being upheld. In 2015, PIA will focus efforts to protect the state-based insurance regulatory system by: Working with members of Congress on legislation to ensure the proper implementation of Dodd- Frank and to establish appropriate oversight for international agreements that touch on state insurance regulation; Collaborating with the NAIC and NCOIL to educate state policymakers on the importance of international regulatory issues and ensure the proper implementation of prudential insurance regulations and legislation; Monitoring the activities of the Department of Treasury, including the FIO and the Financial Stability Oversight Council (FSOC), to ensure that the federal government is not encroaching on state-based insurance regulation or placing an undue burden on independent agents; and Monitoring international standard setting developments, trade negotiations, and FIO efforts on certain international agreements to ensure there is no negative impact on state insurance regulation or independent agents. NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS 6

7 SAFEGUARDING IMPORTANT P&C PROGRAMS PIA supports the vital role that independent agents play in the delivery of federal insurance and reinsurance programs. CROP INSURANCE: PIA supports a federal crop insurance program (FCIP) and was pleased to see the FCIP reinforced as the fundamental risk management tool for farmers in the Agricultural Act of The FCIP is a highly technical program that relies on independent insurance agents. Since Congress called on independent agents to deliver the program in 1981, it has thrived. Nonetheless, attempts to remove agents from the process, both in whole or partially, continue and PIA strongly opposes such efforts. As part of the FCIP, the United Stated Department of Agriculture s Risk Management Agency (RMA), negotiates a Standard Reinsurance Agreement (SRA) with approved crop insurance companies (AIPs) every five years. The SRA determines reimbursements and underwriting gains for AIPs. The SRA is being renegotiated in Despite their essential role in the FCIP, independent agents are improperly excluded from negotiations and have no formal input on the details of the SRA. Throughout 2015, PIA will continue to advocate for agents to have a voice in the SRA renegotiation process and work to make certain that current and proposed policies do not negatively impact the FCIP or consumers who rely on it. FLOOD INSURANCE: PIA supports the National Flood Insurance Program (NFIP) as it provides critical support to those affected by floods and coverage that the private market is unable to supply. In 2014, PIA helped craft the Homeowners Flood Insurance Affordability Act, which granted rate increase relief to homeowners. Provisions PIA advocated for, including mitigation, grandfathering, and a study of catastrophe savings accounts, were included in the final bill. However, PIA remains concerned that delaying risk-based rates, while providing needed relief for many homeowners, does not address the underlying long-term problems of adequate rates and affordability. In 2015, PIA will continue to work with the Federal Emergency Management Agency (FEMA) and Congress to support solutions to eliminate the NFIP s debt and put the program on a path to fiscal stability ahead of September 30, 2017, when the program is up for reauthorization. PIA will also support legislative solutions to create sensible options for growing the private market. Finally, PIA will continue to monitor and comment on federal rulemakings and state proposals related to flood insurance, as well as other issues impacting independent agents who sell flood insurance. TERRORISM INSURANCE: PIA supports the Terrorism Risk Insurance Program (TRIP). Since 9/11, the private market alone has been unable to offer sufficient options for terrorism insurance due to a lack of actuarial modeling and the total unpredictability of risk and the nature of terror attacks. TRIP offers a feasible solution through what has been a successful public/ private partnership. After failing to reauthorize TRIP during the 113th Congress, the 114th Congress, in early January, voted for a long-term extension of TRIP through December 31, The reauthorization package includes some changes to the program, such as raising the trigger for when the federal backstop would kick in to $200 million over five years. It would also include a five-year phase-in period for an increase to the mandatory recoupment to $37.5 billion. In 2015, PIA will work to ensure that changes made to TRIP are appropriately implemented ADVOCACY AND POLICY PRIORITIES

8 NATIONAL ASSOCIATION OF PROFESSIONAL INSURANCE AGENTS GOVERNMENT AFFAIRS STAFF CONTACTS: 400 North Washington Street, 2nd Floor Alexandria, Virginia Stephanie Klarer Government Affairs Coordinator Telephone: (703) Fax: (703) Jon Gentile Director of Federal Affairs Jennifer Webb Counsel & Director of Regulatory Affairs