A new trade association for insurance agents has been formed to support passage of an optional federal charter.
The group, Agents for Change, has been in existence for about two months and has approximately 200 members. It was put together by the Washington firm of Bonner & Associates with seed funding from the Financial Services Roundtable, which continues to fund the group. Among the insurer members of FSR are Prudential, MetLife, Principal and MassMutual.
“What we’re all about is the optional federal charter and trying to make that happen,” said Robert Poli, chairman of Agents for Change. When approached about being a part of the organization, “it made all the sense in the world to me,” he said.
Poli noted that the Gramm-Leach-Bliley Act said that “by 2002 the insurance commissioners had to come up with something to make it easier for us to do business across state lines.” That, he said, has not happened, highlighting the need for a federal option.
Agents for Change faces significant hurdles to overcome, however. At the moment, the optional federal charter is running a distant second to the State Modernization and Regulatory Transparency, or SMART, Act being proposed by House Financial Services Committee chairman Michael Oxley, R-Ohio, and Rep. Richard Baker, R-La., who chairs a key subcommittee.
“It is an uphill battle,” Poli said. “They’re looking for a very quick, neat and tidy answer,” he added, noting that Congress is also interested in “pleasing a few people,” specifically state insurance commissioners.
Agents for Change held a “very successful fly-in” recently, Poli said, in which members met with 20 different congressmen and senators who, he added, were “very sympathetic to our cause.”
Additionally, the group stands in opposition to the largest insurance agents and brokers trade association, the Independent Insurance Agents and Brokers of America, or “Big I,” which questioned the role of the Financial Services Roundtable in supporting the group.
“As the top trade association representing 300,000 independent insurance agents and brokers across the country, the Big I finds it interesting that the Financial Services Roundtable, which represents only the largest financial services companies, is behind this so-called Agents for Change that purports to represent small business owners in the insurance market,” said Charles Symington, senior vice president of government affairs and federal relations for the IIABA. “As the largest insurance agents and brokers trade association, the ‘Big I’ opposes the optional federal charter but supports the SMART Act currently being drafted by Chairman Oxley and Rep. Baker.”
The IIABA also held a fly-in recently, bringing over 1,000 agents to lobby their congressmen in favor of the SMART Act.
“Those on Capitol Hill know who represents insurance agents and brokers and we look forward to working with them as the chairman moves the SMART Act forward,” Symington said.
Poli acknowledged that not all agents share his views. “We talked to some agents who feel the state insurance commissioners are doing a good job, and I believe they are doing a good job,” he said, emphasizing the optional aspect of the proposed federal charter. However, he said, the variances in licensing regulations can cause significant problems for agents. As an example, he said, if a customer moves to a different state, that agent faces the decision of getting licensed in the new state or, if those licensing regulations are too burdensome, severing the relationship.
Poli argued that a federal charter is needed to help reduce the burden on agents who do business in multiple states. In his own firm, based in Rockville, Md., he said he has an employee whose sole duty is to ensure that all of the paperwork for licensing in different states is current.
Having a federal insurance regulator established under the optional federal charter legislation, Poli said, also would serve to help the insurance industry in times of crisis. The events of Sept. 11, 2001, he said, “showed how in need the country was of a national insurance commissioner,” as insurers initially tried to deal with questions of what coverages applied and how much should be paid. “There was no one to look to for answers.”
Looking forward, Poli said that Agents for Change could eventually play a role in other issues facing insurance agents but only after an optional federal charter has been implemented. “Once we fight and win this battle,” he said, “we can look at other things.”
Currently, the group’s funding is provided by the FSR, but Poli said he believes the group will eventually change to a member-supported structure. “They have seeded it in order for it to grow,” Poli said.
‘Agents for Change,’ with seed money from the Financial Services Roundtable, supports an optional federal charter