NAII Chair: NAII-Alliance Merger Plan Equals ?Clout'

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By Lisa S. Howard

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NU Online News Service, Nov. 12, 2:04 p.m. EST,Atlanta?The chairman of the National Association ofIndependent Insurers urged his membership today to approve anupcoming merger proposal with the Alliance of American Insurersbecause as a larger group they will have "more politicalclout."

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Speaking at NAII's annual conference here, William Pollard saidthe two groups after months of negotiations are near an agreement,which must be ratified by both boards and their group membership.In NAII's case two thirds of the organization must voteapproval.

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"Along with your vote in favor of the merger, I ask for yourpatience and cooperation as we combine two corporate cultures intoone cohesive organization," Mr. Pollard, said.

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The combined organization, which would be known as the NationalAssociation of Property and Casualty Insurers, would have combinedpolitical action committee funds of $580,000, according toofficials of the two groups.

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An NAII spokesman said over the last two years NAIIPAC hasraised $400,000.

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Mr. Pollard, who is executive vice president of North CarolinaFarm Bureau Mutual Insurance Company, said the merged trade groupswould represent 40 percent of the total property-casualty market inthe United States, giving "every member company more politicalclout in both statehouses and in Congress."

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Jack Ramirez, NAII president, said in an interview that over thenext week to 10 days the two groups hopefully will finalize amerger proposal for a vote by both boards and finally theirmembership.

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Although a merger of the two groups isn't definite and somethingstill could go wrong, "the chances are very good" that aconsolidated organization, to be called the National Association ofProperty and Casualty Insurers, will be formed in early 2004, hesaid, speaking to NAII members.

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"If the merger becomes a reality, it would be a truly historicdevelopment in our industry--the first merger of property andcasualty trade associations in more than 80 years," he said.

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He added later, "Simply put, a merger means more members, moremarket share, more resources, and more influence inside and outsidethe industry."

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The merged organization would represent close to 50 percent ofthe industry on the personal lines side, he said. "It would give usover 1,000 member companies and between 450-500 insurancegroups."

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With member companies in every state, the merged group wouldhave more influence over public policy, "which is what we want tohave in order to be as effective as possible," he emphasized.

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"The new organization will want to try to be as effective aspossible in improving the regulatory system and in a number ofother issues as well," he said, citing asbestos and class actionreform, two topics on the agenda for Congressional action.

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Mr. Ramirez noted that insurers have difficulty reachingconsensus because "we have a diverse industry and a lot ofdifferences in opinion." He said he hoped the merger would providethe critical mass to attract other companies to become members andwork toward the "ultimate goal of a unified industry."

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He acknowledged that the merged organization would clearly bethe most diverse of the trade associations on the property-casualtyside, which, he said, is both an advantage and a challenge.

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"It's a challenge because we have more perspectives and pointsof view to try to bring together to reach consensus," he said. Buta merged organization lends itself more readily to resolvingdifferences among the competing interests within the industry, hesaid.

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Mr. Ramirez noted that potentially divisive issues over who willbe in charge and where the merged organization will be based havebeen resolved or are "pretty well decided upon," and they will notderail the plans. (The Alliance is based in Downers Grove, Ill.,while the NAII is based in Des Plaines, Ill., within 30 miles ofeach other.)

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"The only things we're still working on are more thetechnical-financial type" issues, he said.

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