In testimony before the Subcommittee on Housing and Insurance of the House Financial Services Committee on June 13, Nelson said, “it is inappropriate for FIO or any other non-regulator to seek to participate in supervisory colleges, which are vehicles to discuss supervision of specific companies, without an invitation from the [state] regulators.” Nelson also criticized the direction of international work on Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) and other projects of international insurance bodies.

“The NAIC believes that the FIO can enhance existing efforts of the NAIC and the U.S. insurance regulators, and adds another federal voice. However, FIO does not speak for insurance regulators,” said Nelson. “We expect the Treasury Department to give deference to, and be supportive of, the views of the regulators in forums that focus almost exclusively on regulatory issues.”

NAIC CEO Ben Nelson testifying on June 13 before the Subcommittee on 
Housing and Insurance of the House Financial Services Committee.Nelson 
said the Federal Insurance Office (FIO) “Does not speak for insurance regulators.”

NAIC Press Release (6/13/13)

FIO’s “Annual Report on the Insurance Industry” is not the delayed modernization report mandated by the Dodd-Frank Act. It is merely an annual report to the president and Congress on the condition of the domestic insurance industry. The National Association of Insurance Commissioners (NAIC) had no comment on it.

What everybody is really waiting for is the FIO’s report on insurance regulatory modernization, which was mandated by Dodd-Frank. There is considerable apprehension about this report, because the questions asked by the FIO belied a clear bias toward federalization of insurance regulation. FIO Director Michael McRaith said this report – overdue since January 2012 – would be out “soon.” PIA heard from reliable sources that the report was about to be issued in March, but it was pulled back shortly after newly-installed NAIC CEO Ben Nelson, in a speech to the National Conference of Insurance Legislators (NCOIL), said that the FIO needed to do “the job it was intended to do, but not our job.” Nelson restated that the FIO is not a regulator, and then added, “I think they’re beginning to understand that.”

To provide a measure of balance that we expect will be lacking in the FIO report, last year PIA worked with then Insurance Subcommittee Chairwoman Judy Biggert (R-IL) and Rep. Steve Stivers (R-OH) on requesting a study from the Government Accountability Office (GAO) that looks into the benefits of the state insurance regulatory structure. The study was accepted and is due out from the GAO soon. This GAO report could be released at the end of June; however, the release date can be postponed up to 30 days. The GAO is timely with its reports, unlike the FIO, which has several congressionally-mandated reports more than a year overdue.

What It Means to Agents: PIA supports state regulation of insurance and opposes federal encroachment. We share the concerns of many of our industry colleagues that the FIO might attempt to use its report as the basis for a power grab, to propose that the federal government take over some or all insurance regulatory functions from the states. We are hopeful that the strong stance taken by NAIC CEO Ben Nelson may help to avert this.

“It is critical that the indispensible role played by licensed independent insurance producers is recognized and protected,” the bill states. “It is essential that licensed independent insurance producers continue to perform these duties, and others, as the Patient Protection and Affordable Care Act has made significant changes to the regulatory environment for health plans.”

H.R. 2328 made key technical adjustments to a previous bill that should improve its score by the Congressional Budget Office, improving its chance for passage. The changes will also make the House bill more consistent with companion legislation in the Senate (S. 650). PIA thanked the prime sponsor of the House bill, Rep. Mike Rogers (R-Mich.).

PIA Agents Praise H.R. 2328 (PIA 6/13/13)

“We are encouraged that the Vitter-Cochran bill addresses key concerns while not eliminating the move toward risk-based rates,” PIA noted in remarks by Mike Becker, vice president of federal affairs, which were excerpted in an article in the National Underwriter. “At the same time, there are real concerns that the phase-in of increased rates we are seeing proposed thus far imposes a considerable burden on homeowners. While we support risk-based rates, consumer affordability must be taken into consideration and the Vitter-Cochran bill takes steps in this regard.”

“The bill also places additional requirements on FEMA to publish their projected base flood elevations in the Federal Register before implementing them. We are also encouraged that this bill expands the Stafford Act to include mitigation assistance for flooding events. PIA has long supported efforts to encourage flood mitigation.”

Bills Seek NFIP Rate Delay (National Underwriter 6/11/13)

This bulletin makes expressly clear how the National Flood Insurance Program (NFIP) treats cooperatives. As a result of documentation provided during the claims adjusting process for cooperative-owned property in New York following Superstorm Sandy, it takes into account and addresses unusual forms of cooperative ownership. FEMA/NFIP finally agrees that these still qualify as a cooperative, and they give guidance as to how and what parties are insured. While the example is specifically from New York, this is not the only place that these newer style of more complex cooperative arrangements arise. FEMA encourages insurance agents and the Write Your Own companies to review the underlying cooperative documents to determine how cooperative buildings are owned, as it may be that other cooperative arrangements exist that allow an individual to actually own the building, and thus be able to purchase building coverage.

It is important for PIA members to ask when applicable: Is the property: Multi-tenant rental property, or a condo, or a cooperative, or a land-grant trust – and what is the exact structure of ownership, i.e., who owns what?

AIG received $182 billion in U.S. funds, while GM took $50 billion during the economic recession in 2008 and 2009. The bailouts were highly controversial, but government officials said they were necessary to stabilize the weak U.S. economy. In December 2012, the U.S. Treasury Department announced it was selling its remaining stake in AIG. Taxpayers made a profit on the AIG bailout, a once unthinkable outcome. Later that month, the U.S. Treasury said it would exit GM by early 2014.

PIA National Vice President/Treasurer Richie Clements of Chalmette, Louisiana spoke on a panel “Super Lessons Learned from a Superstorm,” held during the joint annual conference of PIA of New Jersey and New York on June 9.

Clements serves as PIA National’s representative to the Federal Emergency Management Agency (FEMA), the National Flood Insurance Program (NFIP) and will become chairman of Flood Insurance Producers National Committee (FIPNC) in October 2013. He says he received a call one day from an insurance company vice president telling him, “Hey, look stupid, you have to take care of yourself; this is more than just about your policyholders. This is about you too. Every day you have to get yourself a little bit of exercise; you got to get to sleep and you have to take time just for yourself. Don’t wear yourself out, because you are going to.” Clements said, “Boy, you don’t know how those words rang true.”

The June 7 letter to Sebelius notes that under proposed HHS rules, Navigators will not be allowed to assist [consumers] with determining the appropriate plan. PIA noted that while it is appropriate that unlicensed Navigators or assisters not be permitted to make plan recommendations, this puts the consumer in the position of lacking needed information.

“According to the National Association of Professional Insurance Agents,” the letter to HHS Secretary Sebelius says, “this scenario can be expected to be common and it is our position that the complexities of these plans are best handled by those who are trained and state-certified to sell such products—licensed insurance agents or brokers.”

“Additionally, insurance agents and brokers carry Errors and Omission (E&O) insurance to protect not just themselves, but consumers from any accidental wrongdoing,” the letter continues. “In the event that an error occurs, consumers have recourse to recoup any losses that they may have endured. It is our understanding that your Department will not recommend E&O coverage for Navigators, resulting in possible large gaps in consumer protections.”

What It Means to Agents: Your PIA association is working diligently and effectively in Congress to defend your business interests and protect your clients. PIA convinced these Members of Congress to press the Obama administration on the need for appropriate consumer protections regarding Navigators. These lawmakers also endorsed agents and brokers as being best to advise consumers of all of their healthcare choices, including those in the private market.

PIA National thanks Rep. Duncan Hunter (R-Calif.) and the 32 other Members of Congress for sharing PIA’s concerns and raising these issues with HHS.

Congressional Letter to HHS Secretary Kathleen Sebelius (Full text 6/7/13)
PIA Thanks Rep. Duncan Hunter for Asking Tough Healthcare Questions about Navigators (PIA press release 6/7/13)

“It is critical that the indispensible role played by licensed independent insurance producers is recognized and protected,” the bill states. It listed the things producers do for consumers and noted, “It is essential that licensed independent insurance producers continue to perform these duties, and others, as the Patient Protection and Affordable Care Act has made significant changes to the regulatory environment for health plans.”

The Access to Professional Health Insurance Advisors Act (H.R. 2328) ensures proper access to licensed professional insurance agents and brokers by consumers needing assistance evaluating their choices under the Affordable Care Act (ACA). As part of ensuring such access, the bill provides that certain compensation for agents and brokers is exempt from the calculation of the allowable Medical Loss Ratio (MLR) under the healthcare law. Currently, a rule by the department of Health and Human Services (HHS) classifies all such compensation as administrative expenses, which are restricted.

“This bill is good for consumers,” said Mike Becker, vice president of federal affairs for PIA National. “In a few short months, many people will need to begin to navigate the complexities of the Affordable Care Act. They will also need the expert, professional advice that only licensed insurance agents and brokers can provide. As we know, the Navigators and assisters hired by governments will not be advising consumers on plan selection. Licensed insurance producers, however, can.”

Becker noted that H.R. 2328 made key technical adjustments to a previous bill that should improve its score by the Congressional Budget Office, improving chances for passage. The changes will also make the House bill more consistent with companion legislation in the Senate (S. 650). PIA thanked the prime sponsor of the House bill, Rep. Mike Rogers (R-Mich.).

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America ^SM. PIA’s web address is www.pianet.com.