In the fall of 2009, there are more issues being debated orconsidered in Congress with potential impact on professionalindependent insurance agents than at any other time in recentyears.

As lawmakers reconvene from what has been a raucous Augustrecess, healthcare reform is the first issue to deal with. Butthere also is a raft of proposals with the potential to help orhurt the businesses of independent agents and the consumers who aretheir customers.

PIA just completed its fourth annual August advocacy event,“Capitol Hill in Your Backyard,” during which members areencouraged to contact their members of Congress to discuss pendinglegislation of particular interest to agents. When PIA launchedthis in-district lobbying event four years ago, there weren't manysimilar campaigns. The debate over healthcare reform changed allthat.

As the healthcare debate became more contentious, the insuranceindustry was singled out for criticism for opposing certain reformproposals, with some advocates going so far as to call our industry“evil.” This is a symptom of the craziness that replaced reasoneddebate and rational discussion in some quarters during August.

At the outset of the debate, PIA issued 8 principles forhealthcare reform which we advanced as guidelines for thelegislative process. They are as applicable now as they were beforethe August shouting:

1 Build on and support the private healthcare system, notdismantle it

2 Improve existing government programs

3 Do not create a government-owned insurance agency orbrokerage

4 Preserve the role of independent agents and brokers

5 Build upon successful state-based innovations

6 Do not tax employer-provided health care benefits

7 Encourage cost controls and wellness programs

8 Congress needs to forge the broadest possible consensus beforeenacting any reform legislation.

What's going to happen in Congress? The final chapter is stillbeing written, but here's an educated guess: Something will pass,and it will be called healthcare reform. President Obama, bydeclaring this as his top priority, has wagered his credibility andthat of his still-young administration on being able to say heaccomplished his goals. The health insurance carriers, medicalproviders and pharmaceutical firms that have expressed support forreform (even though some of them used proxies to stoke oppositionin August) will, in the end, strike some kind of deal because itwill be in their interest.

Regulatory reform, nat cat, workers' comp

While all of this is occurring, other insurance-related issueshave continued to dominate the Congressional agenda. PIA continuesto oppose certain proposals, especially the “OFC-on-steroids” bill,the National Insurance Consumer Protection Act (H.R. 1880),introduced earlier this year by Reps. Ed Royce (R-Calif.) andMelissa Bean (D-Ill.). It is by far the most aggressive attempt toturn over insurance supervision to the federal government andundermine the states.

Last year, we opposed Rep. Paul Kanjorski (D-Pa.)'s bill tocreate an Office of Insurance Information, because it vested broadpowers in the Treasury Department to preempt state insurance lawsand regulations. Our effort was successful when the bill wasremoved from the consent calendar of the House shortly beforeadjournment for the year. The version introduced this year, theInsurance Information Act of 2009 (H.R. 2609), looked betterbecause it placed more restrictions on preemptions.

Unfortunately, separate legislation creating an Office ofNational Insurance (ONI) within the Treasury Department has noprovision allowing the Secretary of the Treasury to staypreemptions. Also, it does not provide Congress with the power tonullify a preemption determination. In addition, a provisionallowing the federal government to negotiate foreign treatieswithout congressional approval is causing concern. In short, muchof the good work that had been done to improve Rep. Kanjorski'sproposal has been undone in the ONI bill.

While we would prefer that neither an OII nor an ONI be enacted,any such legislation should contain strong restrictions on thepreemption of state laws. And while we would like to believe theproposed ONI will not be used to advance federal insuranceregulation, we have serious reservations about creating a federalbureaucracy for insurance which could then be used to begin tobuild a structure for full federal regulation of insurance.

We also oppose the National Commission on State Workers'Compensation Laws Act of 2009 (H.R. 635). It would create acommission to study state workers' compensation laws to determinetheir adequacy and whether additional “remedies” should be madeavailable. Translation: It would create and fund a federalcommission to fix what is not broken. There is no need for thisbill. It is a waste of lawmakers' time and the taxpayers'money.

Our engagement on natural catastrophe issues continues. We haveendorsed three pieces of legislation that will go a long way towardmaking hazard mitigation a key national priority: H.R. 3026, theHazard Mitigation for All Act; H.R. 3027, the Pre-disaster HazardMitigation Enhancement Program Act, and H.R. 3028, the FirstResponder Innovation and Support Act of 2009. All three bills wereintroduced by Rep. Bennie G. Thompson (D-Miss.), chairman of theCommittee on Homeland Security. “Congressman Thompson'sthree-pronged effort to facilitate disaster mitigation is a winningstrategy in the fight to protect America from natural disasters,”said Brian T. Marino, co-chair of the PIA natural catastropheworking group.

Passage by the House of a 6-month extension of the NationalFlood Insurance Program (NFIP) was necessary and should provideenough time to complete common-sense reforms and a multi-yearrenewal; however, the Multiple Peril Insurance Act of 2009 (H.R.1264) unwisely seeks to make wind insurance policies, currentlycovered under homeowners' insurance policies and statewide windpools, available to the public through the NFIP.

PIA supports the Indexed Annuities and Insurance ProductsClassification Act of 2009 (H.R. 2733), a bipartisan bill toreverse a December U.S. Securities and Exchange Commission (SEC)decision to regulate equity-indexed annuities as securities. AndPIA has joined a long list of insurance industry associationsasking Congress to spare the industry entirely from regulationunder the newly proposed Consumer Financial Protection Agency.

Victory for state regulation

The good news is the Obama administration's long-awaitedregulatory reform proposals did not include a call for federalregulation, leaving insurance regulation to the states. Thissurprised many in the industry and no doubt came as a blow to thosewho have been intensely lobbying for a federal takeover.

There is an interesting backstory to this. For many years, itwas assumed that many Republicans generally supported stateregulation of insurance, while most Democrats were inclined tosupport federal regulation. But not everyone lined up that way, andthere had been some shifting of positions over time.

When the Obama administration took office, it said nothing onthe issue. Then on May 20, the White House released a memo fromPresident Obama to all federal departments and agencies that placedbroad restrictions on federal actions to preempt state law.

This marked a significant and far-reaching reversal of what hadbeen going on for a decade. Since 1999, various federal agencieshad adopted regulations that declared certain state laws to be nulland void, trumped by the agencies' interpretationof federal law. This was often done without any specific action byCongress, or any clear authorization in existing federal law. TheOffice of the Comptroller of the Currency was notorious forroutinely declaring state insurance laws preempted by federalbanking laws. Now, the President of the United States was takingsteps to restrain such regulatory overreach. This memo turned outto be a harbringer for what was to come.

On June 4, at the invitation of the White House, PIA executivevice president and CEO Leonard C. Brevik participated in a meetingwith insurance industry and Treasury and Commerce Dept. officials.It focused primarily on the insurance aspects of financial servicesreform legislation that would be proposed by the Treasury.

Brevik stated that administration officials would benefit fromstudying the state system of insurance regulation, to learn why itsucceeded during the financial crisis while federal regulation ofthe other sectors in financial services failed.

Days later, the Treasury released its proposed legislation forregulatory reform. Absent was any call for federal regulation ofinsurance, or any mention of an optional federal charter. Apartfrom systemic regulation of mega-insurance firms in the event of acrisis that could tank the entire financial system, insuranceregulation would be left to the states.

The Wall Street Journal, in a report on the June 4 meeting,noted that the Administration had been caught off guard by theindustry's division on the issue of federal regulation ofinsurance.

In a commentary, PIA national president Kenneth R. Auerbach,Esq., noted that “sometimes there is a tendency by some groups tosoften their views or develop a case of organizational laryngitisat pivotal meetings such as these, in order to ensure that they getinvited back. I am proud that PIA stood its ground in this settingand gratified that our forthright presentation of our views mayhave contributed to federal insurance regulation being excludedfrom the Treasury's recommendations. Well done!”