Along with warmer weather, sunny skies, cherry blossoms and swarms of tourists, April in Washington, D.C. also brings to our nation's capital the Independent Insurance Agents and Brokers of America's National Legislative Conference. This year, for the first time, the IIABA combined the lobby-palooza with its annual convention. As participants gathered to discuss issues, network, exhibit, attend workshops and meet with legislators, foremost on their minds were natural disasters, terrorism insurance, regulatory reform and tax reform.

Tom Minkler, Big "I" government affairs committee chairman, called regulatory reform of the insurance industry "the No. 1 issue" to discuss with members of Congress. "Nothing is more important for independent agents and brokers than who regulates you and how they do it," he said, and lawmakers are weighing several options for doing just that. The options include 1) reforming the current system via the NAIC and passage of various state and federal laws, 2) optional federal regulation of the insurance industry and optional federal charters for insurers, 3) mandatory federal regulation, and 4) the IIABA-endorsed State Modernization and Regulatory Transparency Act (SMART), which would revamp the state system by creating federal uniform standards–without a federal regulator.

"Local regulation works best, and a state-based system ensures a level of responsiveness for consumers and independent agents that cannot be matched at the federal level," according to Charles E. Symington Jr., IIABA senior vice president of federal government affairs. He cited a bill recently introduced in the Senate, S. 2509, that would create an Office of National Insurance, housed in the Treasury Dept. and headed by a commissioner appointed by the President. Recalling the federal government's response (or, rather, lack thereof) to Hurricane Katrina, Symington stated, "We do not want to create a FEMA to regulate the insurance marketplace." Symington also fears the dual state-federal structure proposed in S. 2509 would confuse consumers by regulating some products at the state level and others at the federal level, not to mention agents and brokers trying to understand and navigate both regulatory systems. Further, he said, federally licensed producers, brokers and insurers could operate nationwide, with no state-level regulation for many of their activities.