Is the Independent Insurance Agents and Brokers of Americalobbying against federal regulation out of fear it would facilitatemore direct sales via the Web and telephone, thus bypassing itsmembers? That's the ridiculous charge leveled by Datamonitor, aglobal analytical firm, which contends that while IIABA emphasizesconcern for consumer protection, it has a hidden, self-servingagenda.

IIABA's "recommendation to keep the state-based regulatorystructure intact is not wholly in the interest of theconsumer...Indeed, the current regulatory regime favors agents andbrokers, at the expense of the consumer, by making it difficult forinsurers to sell direct," wrote Jonathan Steiman, a Datamonitoranalyst, in a Feb. 17 "Independent Analyst Comment."

"IIABA's reasons for opposing the development of an effectivefederal regulator are simple," according to Datamonitor. "Afederally regulated insurance commission would accelerate theamount of premiums sold direct over the Internet or through callcenters. This is good for both insurers and consumers, but terriblefor agents and brokers, which has provoked the IIABA's tenuouslyargued opposition."

Datamonitor contends that forcing insurers to apply for licensesin every state discourages them from launching national directsales campaigns, thus insulating state-licensed agents from morecompetition.

"In short, the current regulatory regime is a classic barrier toentry, [as] enterprising players with hopes of selling directcannot achieve the proper scale," Datamonitor argues. "Furthermore,existing national insurers with agent forces do not have greatfears of new entrants selling direct, therefore they do not havethe incentive to take the risk of moving away from their agentforce and toward a direct-to-consumer strategy."

Datamonitor's Mr. Steiman concluded that "IIABA's opposition toa national regulator has little to do with the consumer, andeverything to do with protecting the status quo of the U.S.insurance industry. This is a shame, because the status quoelevates the cost of compliance for insurers, which is inevitablypassed on to the consumer. But even worse, the status quo hindersthe growth of direct distribution, which is what today's customerswant and tomorrow's customers will come to expect."

I think Datamonitor's argument is a stretch, at best. To suggestthat IIABA is merely arguing against federal regulation to preventthe growth of Internet and phone sales is crazy!

I also dispute Datamonitor's basic premise--that consumers wouldbenefit from more direct sales. NU's annual surfing surveys to seewhat it's like to try to buy insurance on the Web have revealed aprocess that's anything but simple, with consumers at risk of beingmisled, overcharged and underinsured.

Apparently, Datamonitor thinks consumers automatically getripped off using an independent agent to shop for coverage, but Iwould argue you get what you pay for. Cut out the agent, and youare on your own. Good luck with that!

IIABA's fundamental and most compelling argument against federalregulation--which Datamonitor dismisses as "tenuous"--is thatstates have basically done an excellent job protecting consumers.It's no accident that insurance is the least of our financialproblems right now--with the federally regulated banking andsecurities industries in far worse shape.

Is Datamonitor throwing agents under the bus to pitch its ownservices to insurers looking to go direct? Their e-mail didadvertise a report--"Catching Up: Online Direct Sales in U.S.Personal Lines Insurance"--authored by Mr. Steiman.

Whatever Datamonitor's motivation, by dismissing the value ofhaving an independent agent in your corner, they are the ones notputting consumer interests first.