IIABA Prez Seeks More Agent Authority In Disasters

The president of the Independent Insurance Agents and Brokers of America called on carriers to give his members more authority in the aftermath of a disaster, while withholding support for a national catastrophe plan until the industry finds common ground.

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

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

Noting the inability of many insurers to come through quickly in settling claims, and the failure of some companies to communicate claims activity with agents, he said one lesson from 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 expenses and emergency repairs,” Mr. Stiglitz told the audience.

He said the claims fiasco following last year's monster hurricane season demonstrated a lack of preparation on the part of carriers to deal with “a disaster of the magnitude of 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 independent agents to 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. “We cannot fulfill this promise with our company partners when our system is in trouble.”

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

To this end, the association is supporting hiking homeowners coverage to a maximum of $335,000 and commercial insureds to $670,000. The current limits are $200,000 and $500,000, respectively.

Earlier in the day, Mr. Stiglitz, speaking during a panel discussion with company executives, said the association would withhold its support for any national catastrophe plan until the industry coalesces around the issue. Allstate has been pitching a plan to create state disaster funds with a federal catastrophe backstop, but many in the industry are skeptical or opposed.

“If we are not united [in our message], then it is an exercise in futility,” said Mr. Stiglitz. Until the carriers' position on this issue is unified, he added, the association is not going to offer support for any one plan.

“We would be glad to support a good unified position,” said Mr. Stiglitz, noting that without such unity federal legislators will not listen to the industry. He also said that given the industry's burgeoning surplus and higher profits last year despite record catastrophe losses, “it will be a hard sell to legislators if there is not one position to make the case with.”

Another issue of concern to agents is the current softening market conditions, and the ability of producers to provide the best price and product for their clients.

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

“We have taken a giant step backward,” he said. “Let's all come together to find a solution to this problem.”

He also urged companies to write to an underwriting profit, warning that the softening commercial market threatens industry profitability 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.

Building on that theme, Mr. Stiglitz pointed out the growth of the IIABA's independent agent branding program–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 Trusted Choice brand, Mr. Stiglitz said IIABA would continue an ad campaign in both print and television.