PIA Defends State Regulation, Opposes Federal Charter, Objects to Disclosure

The National Association of Professional Insurance Agents steadfastly supports state regulation of insurance, strongly opposes an optional federal charter and has cautioned carriers against adopting company-specific disclosure requirements, according to the association’s executive vice president and CEO Len Brevik.

In a June 17 address during the annual PIA Convention in Memphis, Tenn., Brevik said PIA is continuing to withhold an endorsement of the State Modernization and Regulatory Transparency Act (SMART).

“PIA is a state’s rights organization, in the best sense of that term,” Brevik said. “We support state regulation of insurance and we are opposed to an optional federal charter. When it comes to state regulation, PIA is in this fight to stay.”

Brevik quoted the mission statement in PIA National’s newly adopted Strategic Long Range Plan: “To promote, protect and defend the integrity of our members, the value of their profession and the success of their businesses.”

“This says it all,” Brevik said. “It is what PIA is all about. At times, it is a difficult task, but our job is to speak truth to power.” He noted that PIA has been in the forefront of the public policy debate resulting from the investigations by New York Attorney General Eliot Spitzer.

“From the moment the first Spitzer story broke, PIA National shifted its focus,” Brevik said. “PIA National has been engaged with the NAIC, NCOIL and with state legislatures across the country, in an effort to ensure that any new legislation is not burdensome for agents.” He also noted that at times during the post-Spitzer period, it has been necessary for PIA to go on the offensive.

He pointed out that when a consumer activist, J. Robert Hunter, told Congress that the performance bonuses agents receive are “kickbacks” and implied agents may delay claims filings, PIA took Hunter to task in public. When Consumer Reports magazine advised consumers that by buying coverage from direct writers like State Farm, they can avoid “the bid rigging problem,” PIA challenged them in public.

On the issue of insurance regulation, Brevik said PIA’s position is crystal clear. “PIA is a steadfast supporter of state regulation of insurance–always has been, always will be,” he said. “PIA has worked closely for decades with the NAIC. But when the NAIC adopted a broker disclosure model that was not in the interest of our members, PIA opposed it publicly.”

Another recent area that PIA has been focusing on is educating carriers about some of the problems that can be created by company-specific disclosure requirements. Recently, a few insurers have begun to impose what they term “voluntary” compensation disclosure requirements on their insurance agencies.

“These requirements are ‘voluntary’ only in the sense that no law requires them,” Brevik noted.

PIA believes regardless of whatever immediate, short- term, focused reason that outside counsels think they have for pushing carriers into such actions, in the larger, longer-term interests of the insurance industry as a whole, they are ill-conceived. They unwisely tread on current, well-defined insurance law that defines PIA members’ agent-broker legal issues within which their E&O insurance and practices operate daily. Such requirements would create and codify conflicts in common law and create a multi-tiered compliance paradigm for independent agencies.

Brevik said that carriers would be wise to consider that the issues raised by compensation disclosure continue to evolve, and that any disclosure requirements created by insurance companies raise the possibility of an expanded view of both producers’ and insurers’ individual and mutual obligations in terms of compensation disclosure.
“Let me be clear: PIA adamantly opposes any such compensation disclosure requirements imposed by carriers,” Brevik said, noting that PIA sent a letter to carriers last month advising them that insurer-created “voluntary” compensation disclosure provisions that may provide strategic and competitive benefits for the insurer “will be met with extreme resistance.”