IIABA: Give Agents More Cat Authority

WASHINGTON--The president of the Independent Insurance Agents & Brokers of America has called on carriers to give independent agents more authority in the aftermath of a disaster in order to help clients cope.

Addressing agents during Friday's closing session of the IIABA's National Legislative Conference and Convention, William G. Stiglitz III, IIABA president, laid out the failures of the insurance industry in the aftermath of Katrina and the lessons learned from this calamity.

He said that unlike instances where direct agents failed to perform in addressing client claims, independent agents were often called upon to act as mediators, friends and psychologists to their devastated neighbors and customers.

Noting the failure of many insurance carriers to come through quickly in settling claims, and the failure of the companies to communicate claims activity with agents, he said one lesson from Hurricane Katrina was that agents need to be permitted to do more for their clients.

"We simply must give agents more authority to issue drafts for additional living expense and emergency repairs," Mr. Stiglitz told the audience.

He said the claims situation demonstrated the lack of preparation on the part of carriers to deal with "a disaster of the magnitude of a Katrina."

Mr. Stiglitz said he was appointing a task force of eight individuals to work with various company and trade groups to bring the concerns of the independent agents to the carriers and work to be better prepared for the future.

"We agents sell one thing and that is the promise to perform in the event of a claim," said Mr. Stiglitz. "If we cannot fulfill this promise with our company partners then our system is in trouble."

"We agents sell one thing, and that is the promise to perform in the event of a claim," said Mr. Stiglitz. "We cannot fulfill this promise with our company partners when our system is in trouble."

Another concern coming out of Katrina is the future viability of the National Flood Insurance program. Mr. Stiglitz said it was important that the program be actuarially sound, more responsive to the insured and not a burden to taxpayers.

To this end, the association is supporting raising homeowners maximum loss coverage to $335,000 and commercial builders to $670,000. The current limits are $250,000 and $500,000, respectively.

Another issue of concern to agents is the current soft market condition and producers' ability to provide the best price and product for their clients.

Despite the advances in technology, Mr. Stiglitz said the industry is making a 360 degree turn back to the 1970's before agents could perform comparative rating. The carriers' construction of proprietary technology systems is reversing advances agents have made, he said.

"We have taken a giant step backward," said Mr. Stiglitz. "Let's all come together to find a solution to this problem."

He also urged companies to write to an underwriting profit and quit pursuing business at low prices. The current soft market threatens industry profitability, he observed, and makes companies ill prepared for a cycle of catastrophes that loom on the horizon.

He said independent agents continue to gain market share, but need to remain dedicated to improving themselves through advances in technology and bringing young people into the business to perpetuate agencies.

Continuing to build on that theme of improvement, Mr. Stiglitz pointed out the growth of the independent agent brand, Trusted Choice. By the end of the trade show, which featured the Trusted Choice experience, the number of agent participants reached 6,027, eight months ahead of the 6,000 agent goal he proposed at the beginning of his one-year term.

In promoting the brand, Mr. Stiglitz said the organization would continue to actively promote and build the brand through a million-dollar advertising campaign in both print and television.