The backdrop of an ongoing debate regarding health-care reform, complicated by the continuing financial crisis and new proposals to implement increasingly stringent regulation of a variety of industries, including insurance, helped frame the issues and set the tone for this year’s PIA Federal Legislative Summit.

Representatives of your PIA state affiliate traveled to Washington, D.C., March 17-18 to take part in the annual PIA Federal Legislative Summit where they sat down with lawmakers, key aides and staffers to express how constituents in their districts are affected by current law and proposed legislation.

Just as it did in prior years, PIA’s 2010 agenda focused primarily on issues related to the continuation and modernization of successful state regulation of insurance as well as the reformation of the National Flood Insurance Program and the institution of a comprehensive national catastrophe policy.

Health care

PIA told congressional representatives it believes any efforts to reform the American health-care system must build on and support the private health-care system. Independent agents and brokers must retain their roles; untrained and unlicensed laypersons who are not subject to the same stringent pre-licensing education, continuing education and ethical and regulatory oversight as independent agents and brokers should not be allowed to sell, solicit or negotiate health insurance policies. Moreover, a separate government-owned insurance agency or brokerage should not be created and cost controls and wellness-encouraging programs should be promoted. As with all of the issues they discussed, agents and brokers brought the message that successful state-based programs should be supported.

Antitrust

PIA members explained that agents and brokers oppose any effort to repeal the McCarran-Ferguson antitrust exemption, particularly for property/casualty insurers. Your association representatives discussed how the current antitrust exemption applied to insurers under McCarran-Ferguson allows insurers to share loss data, which, in turn, allows the development of higher-quality actuarial data and that the antitrust exemption does not allow insurers to engage in anti-competitive activity such as price fixing or market allocation. This conduct is prohibited by and prosecuted under state antitrust laws.

The OFC, state regulation

PIA members discussed the association’s ongoing support for continued modernization of state-based insurance regulation—a system has been shown to provide the greatest degree of consumer protection and stability to the corporations regulated. PIA took the opportunity to explain how state-regulated insurance companies remain stable, safe and generally in good shape. Furthermore, PIA explained the inaccuracy of the misguided notion that the nation’s current financial situation is proof of the need for a federal regulator. Although stressing its opposition to any dual regulatory track, PIA expressed its approval of a systemic risk regulator for banking, securities and capital markets. 

Flood insurance

As the summit took place before the March 28, 2010, expiration of the National Flood Insurance Program, PIA members seized the opportunity to express support for the NFIP and the need to move forward with suggested reforms and long-term extensions. These reforms include: the continuation of single-peril insurance and the ongoing exclusion of wind coverage; a multi-year authorization of the NFIP by Congress, in this case five years, in order to operate a balanced, consistent program; and an increase in insurance maximum limits for all classes of insurable property including building and contents coverage. PIA noted that at this time, less real-dollar coverage is provided than in the past, since current limits have not been adjusted for inflation since 1968.

PIA also supported the idea of coordinating flood coverage for commercial policies in the area of business-interruption insurance. Business-interruption insurance is available now only in the private-sector property market, where flood is not a “covered peril.” Thus, for example, businesses affected by Hurricanes Katrina and Rita were not covered for ongoing business needs and costs in the aftermath of these storms.

National-catastrophe legislation

PIA told its congressional representatives that it supports a coordinated natural-disaster program that covers commercial and residential property and doesn’t compete with private-sector capacity to provide insurance.

Because natural disasters affect all areas of the United States, PIA stated that any catastrophe program should be a public-private effort, including state and local government, and should not undermine state regulation. Natural disaster legislation should not interfere with the existing NFIP.

Producer licensing

PIA members expressed their support for measures such as H.R.2554. The NARAB II bill allows states to continue to regulate the business of insurance, but, through furthering the goals of uniformity and reciprocity in regulation, makes it easier for business to be conducted across state lines.