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PIA's Brevik Says Main Street Agents, Industry Facing "New Nexus of Challenges"

WASHINGTON, March 20, 2007 - In remarks prepared for delivery at a meeting of the Board of Directors of the National Association of...
March 20, 2007

WASHINGTON, March 20, 2007  - In remarks prepared for delivery at a meeting of the Board of Directors of the National Association of Professional Insurance Agents (PIA) April 1 in Arlington, Virginia, PIA National Executive Vice President & CEO Len Brevik says independent agents and the insurance industry are facing "a new nexus of challenges."

"There has been a significant deterioration of the insurance industry's standing in the past six months," Brevik says in his prepared remarks. "This is not about quarterly financial reports, which for many carriers have never looked better. The insurance industry in general and professional independent agents in particular today face a new nexus of challenges. These are all coming at us at the same time in the legislative, regulatory and judicial arenas - all branches of government."

Brevik points out that advocates of federal regulation of insurance are taking advantage of public discontent resulting from some claims practices following Hurricane Katrina, leading some in Congress to hold hearings and propose legislation. He says two bills are of most concern to PIA. One would repeal the McCarran-Ferguson limited antitrust exemption for the insurance industry and the other would create federal regulation under a so-called "optional" federal charter.

"All this is happening at the same time that several state Attorneys General continue their attempt to legislate how our industry operates by judicial fiat," Brevik states. "They are using a few settlement agreements to try to ban contingent commissions industry wide and impose legally flawed disclosure requirements that would create compliance problems for independent insurance agents." He added that these challenges are requiring PIA to fight on several fronts simultaneously - opposing federal regulation in Congress, while defending contingent commissions in court and with state Departments of Insurance.

"The McCarran repeal proposal is very dangerous because it would effectively negate Congress' 1945 designation of the states as regulators of the business of insurance," Brevik said. "This would throw all disputes between overlapping state and federal systems into the courts. It is a blueprint for chaos in the insurance marketplace." Brevik also observed that it is "interesting to see some of the advocates of optional federal charters in a quandary about McCarran. At first, some of them wanted to get Congress to pair a repeal of McCarran with passage of an optional federal charter, but quickly changed their strategy when they realized the extent of the damage a repeal of McCarran would do to the industry."

Brevik's presentation is slated for April 1, several days after PIA members from around the country converge on Washington, D.C. for the association's 25th annual Federal Legislative Summit.

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.

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