IIABA TESTIFIES IN SUPPORT OF OXLEY-BAKER “ROAD MAP”
Independent Agents and Brokers Express Strong Support for Regulatory Reform Initiative
WASHINGTON, D.C., March 31—In testimony to the House Financial Services Committee today, the Independent Insurance Agents & Brokers of America (IIABA) voiced its strong support for the insurance regulation “road map” proposed by committee Chairman Michael Oxley (R-Ohio) and subcommittee Chairman Richard Baker (R-La.).
Thomas B. Ahart, CPCU, AAI, president of Phillipsburg, N.J.-based Ahart, Frinzi & Smith Insurance Agency and an IIABA past president, testified on behalf of the association. In addition to expressing IIABA’s and its 300,000 independent agents and brokers’ strong support for the Oxley-Baker proposal, he also outlined the Big “I” vision of how federal legislation could reform insurance regulation within the framework of the current state-based system. The plan proposed by Oxley and Baker would preserve and reform the state-based framework, a concept that IIABA has advocated for more than two years. Baker is chairman of the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
“IIABA strongly supports the conceptual approach to insurance regulatory reform put together by Chairmen Oxley and Baker. In our view, the Oxley-Baker road map, which calls for the targeted and focused use of federal legislation to modernize the core areas of state insurance regulation, offers legitimate hope for the first time that enactment of national regulatory reform may be possible to the benefit of consumers across the country,” said Ahart, who is chairman of IIABA’s State Government Affairs Committee.
“Using targeted federal legislation makes good sense because it can be applied to nearly every important area of state insurance regulation and different legislative tools can be utilized in a tailored fashion on an issue-by-issue basis. There are no one-size-fits-all solutions, and this committee and Congress will have the opportunity to make use of the wide variety of legislative tools at its disposal in a way that strengthens and preserves state insurance regulation,” continued Ahart.
The Big “I” has consistently called for reforms that would streamline the current regulatory system through creation of national standards and licensing reciprocity, but without creating a new federal bureaucracy. Within that framework, Ahart outlined how six major issues should be addressed by Congress as the Oxley-Baker blueprint is fleshed out. These issues included:
- Property-Casualty Product Regulation—IIABA believes Congress should adopt a series of reforms in this area that have four primary effects: 1) make product oversight more market-oriented, including the use of competitive rating; 2) provide for quicker development and introduction of new insurance products; 3) reduce or eliminate unnecessary duplication within and among states; and 4) create greater accountability.
- Life Insurance Product Regulation—IIABA supports efforts to ensure the nationwide adoption of the National Association of Insurance Commissioners’ interstate compact proposal. This proposal would provide product standards for life insurance products and provide a central point of filing for insurers.
- Agent-Broker Licensing—In order to remove unnecessary bureaucratic hurdles facing agents and brokers, IIABA urges the subcommittee to consider four licensing reforms: 1) expand the Gramm-Leach-Bliley Act’s reciprocity mandate to all states and establish a nationally reciprocal licensing structure at the same time; 2) enact a targeted federal proposal to help establish greater multi-state licensing consistency for agents and brokers where additional uniformity is necessary, including reforms in the agency licensing area; 3) preempt all remaining mandatory countersignature laws and similar barriers to effective multistate commerce; and 4) enact background check provisions that were included in H.R. 1408 as adopted by the House during the last Congress.
- Insurer Licensing—IIABA supports a move toward a nationally uniform set of standards or a common process for licensure that would apply in every jurisdiction.
- Market Conduct—IIABA urges Congress to examine a model law recently adopted by the National Conference of Insurance Legislators that outlines a procedure for performing regular market analyses to determine patterns of misconduct, that establishes a continuum of market conduct actions, that creates protocols and procedures for onsite exams, and that promotes uniformity and coordination among the states.
- Dispute Resolution Mechanism—IIABA believes any dispute-resolution process or mechanism must be limited in its power and authority and should be obligated to act quickly and effectively, and that any such structure that is established must not become a backdoor federal regulator. IIABA looks forward to working closely to ensure that no federal entity takes on any formal or regulatory licensing power.
“For the first time, the Oxley-Baker road map offers hope that meaningful reforms can be enacted that address existing inefficiencies, barriers to efficient competition, and the lack of multi-state uniformity,” Ahart told the subcommittee. “We believe the framework identified in the road map is the most effective way to bring about such reforms at the state level and that the use of targeted federal legislation will bring about greater consistency and other needed reforms across state lines.”
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—employee benefit plans and retirement products. Web address: www.independentagent.com.