What are the key issues affecting commercial insurance brokers in the marketplace? The following list outlines some of the major regulatory and industry issues, and briefly outlines The Council's stance on them.
Property/Casualty Issues
SURPLUS LINES REFORM The Council’s top legislative priority in the 110th Congress is reform of the surplus lines marketplace to address serious problems with declinations, premium tax allocation and other conflicting state regulations. Legislation was introduced in February 2007 by Reps. Dennis Moore, D-Kan., and Ginny Brown-Waite, F-Fla., to address the confusing state regulatory treatment of surplus lines insurance by assigning regulatory authority to the home state of the insured , A surplus lines reform bill passed the House in 2006 by an overwhelming 417-0 vote, and House leaders are predicting an equally strong vote when the issue is voted on again this session. Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, has promised to give the measure consideration and said the strong House support speaks to its merit.
BROKER COMPENSATION The Council strongly supports a uniform system of transparency for agent/broker compensation. Although the National Association of Insurance Commissioners adopted a model disclosure act in 2004 which The Council supports, only one state has adopted it. Other states have enacted a watered-down version of transparency advanced by the National Conference of Insurance Legislators. The NCOIL model would require disclosure only to clients who pay a fee if their broker receives contingent income. The Council’s view on transparency, which is consistent with the NAIC model, is that brokers should advise their clients of their compensation in the most effective way of their choosing, but a business model should not be imposed upon that process through regulatory, legislative or prosecutorial means.
COUNTERSIGNATURE LITIGATION The Council has waged a vigorous legal battle to bring down the remaining countersignature laws in the United States, the Virgin Islands and Puerto Rico. Federal judges in every jurisdiction where The Council filed a legal challenge – Florida, Nevada, South Dakota, Puerto Rico and the Virgin Islands -- have agreed that countersignature statutes are unconstitutional. West Virginia repealed its law rather than defend it in court. Although the rulingin the United States Virgin Islands is not yet completely final and the ruling in Nevada is still under appeal, an end to this egregious restraint of free trade is in sight.
FEDERAL BACKSTOP FOR TERRORISM REINSURANCE With the change of leadership in the 110th Congress, the prospects for enactment of a permanent or long-term extension of the Terrorism Risk Insurance Act have improved. The Senate Banking Committee held a hearing on Feb. 28, 2007, the extension of TRIA, which is due to expire at the end of this year, and the House Financial Services Committee is expected to move a TRIA extension measure to the House floor by summer. The Council strongly supports a permanent long-term extension of TRIA to head off market disruption and keep terrorism insurance available and affordable to critical industrial sectors.
CATASTROPHIC COVERAGE The Council has urged Congress to take action to avoid disputes regarding wind-versus-flood destruction that occurred in the aftermath of Hurricanes Katrina, Rita and Wilma in 2005. The Council supports a number of measures to improve hard market conditions in coastal areas. Specifically, they include targeted tax incentives to encourage greater reinsurance capacity in coastal areas; expansion of the Liability Risk Retention Act to include property coverage; overhaul of the National Flood Insurance Program to update maps, better synchronize wind and flood coverages, increase limitations, and encourage mitigation; and better land use laws. The Council encourages a strong congressional debate on broader issues of national catastrophic reinsurance proposals.
OPTIONAL FEDERAL CHARTER The Council supports an Optional Federal Charter for insurers, modeled after the dual state/national commercial banking regulatory regime.
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Employee Benefits Issues
ASSOCIATION HEALTH PLANS The Council supports expansion of market options, particularly for the small group market, however those options need to be viable for the long-term. The Council strongly supports the market reform concepts embodied in legislation by Sen. Michael Enzi, R-Wyo., including provisions that streamline benefit mandates and ratings across state lines for both AHPs and for other purchasers of insurance. This will help maintain a level playing field and avoid market disruption.
HEALTH CARE MANDATE: MENTAL HEALTH PARITY The Council supports the extension of the mental health parity standard and continues to oppose efforts to broaden the current law’s standard by applying parity requirements to plan deductibles, co-payment amounts, covered days or visit limits or by imposing restrictions on how plans determine covered services. No other area of medical specialty has similar blanket coverage, and employers should not be forced to cede authority over benefit design.
HEALTH SAVINGS ACCOUNTS The Council, with guidance and support from its CEBE Board, worked diligently the last two years on HSAs. The Council was pleased that a significant amount of that input became law in the last hours of the 109th Congress. These HSA provisions, now law, remove barriers and increase accessibility for employers wanting to offer HSAs and employees selecting the product. The Council continues to support legislative and regulatory improvements that will increase access to and the long-term viability of these products.
MEDICAL MALPRACTICE LIABILITY REFORM The Council believes that all players in the health care system should be subject to the same reforms and the same limits on excessive damage awards. Without such evenly applied protections, liability costs will not be reduced, they will simply be shifted to sponsors or administrators of health benefit plans. The Council vigorously opposes any proposal that would give those paying for the health services -- employers and health plans -- less liability protection than health care professionals who actually render medical care.
PENSION 401(k) LEGISLATION REFORM The Council remains fully supportive of legislation that will strengthen the funding of American’s pension system and ensure the proper resources and program design for lasting retirement security for plan participants. The Council also supports clarification of rules relating to conversion to hybrid plans and to address the age discrimination issue for existing hybrid plans.Reform proposals should include steps to provide participants with greater access to plan information and investment education and advice. The Council opposes the inclusion of any mandates that burden plan sponsors with additional costs or expose them to greater legal liability than is already provided under federal pension law.
SOCIAL SECURITY REFORM Although any reform of the Social Security system needs to focus on program solvency, The Council believes the Social Security debate should be taken one step further. The Council would like to see Social Security included in a broader discussion of pensions, personal savings and long-term care and has relayed those views to lawmakers in both the Senate and House.
As policy analysts, researchers and lawmakers grapple with ways to make Social Security solvent for the long-term, they also must consider the effects that various tweaks and major changes will have on all Social Security beneficiaries, as well as on the structure of employer-sponsored benefit plans.
International Issues
REGULATION The Council supports harmonization of insurance regulation in the United States and abroad. The global nature of the insurance industry requires uniform and non-discriminatory regulation.
TRADE The Council supports international trade liberalization and market access for insurance intermediaries. Opening the insurance market in China and liberalizing other markets around the world provide new opportunities for brokers to expand business and to service clients operating abroad.
TRANSPARENCY The Council supports industry efforts to improve transparency of the regulatory process in countries that are key trading partners of the United States. A more transparent process safeguards the public, promotes a competitive market and ensures a level playing field for foreign and domestic insurance businesses.