The ascendancy of associations

In the 80 years since the inception of American Agent & Broker, agency trade associations have played an important role for our readers. Although much has changed, most agent associations remain true to their original mission statements: to educate, represent and support the independent agency system.

Today, these three entities are the major players in the independent agency world.

Independent Insurance Agents & Brokers of America (IIABA)
by Robert A. Rusbuldt, president and CEO, IIABA

Eighty years later, I'm honored to follow in a long line of Big I leaders and submit the sequel to DeVan's piece.

The Big "I" was founded in 1896 as the National Local Assn. of Fire Insurance Agents. The name was changed to the National Assn. of Insurance Agents in 1913 to reflect the expansion of property-casualty business and coverages. To emphasize its members' ability to work with a variety of insurance companies, we became the Independent Insurance Agents of America in 1975, and took our current name in 2002 to reflect the diversity of membership.

IIABA is now a voluntary federation of state associations and local boards, with affiliates in every state and the District of Columbia. We represent a network of more than 300,000 agents, brokers and their employees nationally and our international membership is also on the rise.

Much has changed over the last 80 years, but our mission remains the same: to advocate for and represent the independent agency system.

In 1929, DeVan warned of the threat of "excess legislative and departmental control." It is ironic that today we face an economic crisis with many of the same threats and concerns.

As our country recovers, some have clumped insurance with the problems of other financial services markets. As some politicians call for more regulation, we are threatened with having to pay for the deficiencies of other industries.

Our industry is well protected by a strong state regulatory system, which is not to blame for the financial crisis, including the troubles of AIG. As the stability of the insurance market demonstrates, state regulation does a good job of monitoring insurance entities for potential financial trouble by using a variety of tools to help insurers navigate through choppy market waters.

Some are using the crisis and AIG's problems to argue for federal insurance regulation through an "optional" federal charter (OFC), in which insurers could pick and choose whether to be regulated at the state or federal level. This could cost consumers and taxpayers dearly.

Despite efforts to turn this into a "guilt by association" situation, the health of AIG's state-regulated insurance businesses--particularly its property-casualty operations--proves the effectiveness of our current system in regulating insurance, especially solvency.

National Assn. of Professional Insurance Agents (PIA)
by Ted Besesparis, senior vice president of communications, PIA

It was Washington, D.C. The year was 1931. There was great economic turmoil in the country. People were concerned about their future, as the nation sunk into the depths of the Great Depression. Twenty-two men met to create the National Assn. of Mutual Insurance Agents--now known as the National Assn. of Professional Insurance Agents (PIA).

While the difference between mutual and stock insurance companies has long since blurred, it was a major point of contention in the early years of the organization. Stock agents of the 1920s and 1930s accused mutual companies of being "communistic" or "socialistic." This division was so deep that a field representative for a mutual insurance company recalled it was not uncommon to walk into an agency and have the owner say to him, "We don't represent mutual insurance companies, and I would prefer it if you would leave."

The first meeting of the NAMIA was held Sept. 24, 1931 at the Ambassador Hotel in Washington, D.C. The 22 agents who were there voted the organization into existence, and unanimously adopted these principles:

o Educate agency owners and staff about insurance concepts

o Keep agents informed about changing company offerings

o Increase cooperation between carriers and agents

o Encourage uniform policy writing and assist in proper form completion

o Advocate for agents in legislative matters

o Foster acquaintanceship among agents so they could support one another

o Protect the American Agency System.

The board's first action was to appoint two committees: Company Relations and Communications.

Although legislative problems were not in the forefront at the time, the board agreed to watch activities concerning insurance legislation to ensure that agents were not discriminated against.

One of the purposes of the founding of NAMIA in 1931 was to create national E&O and group life & health insurance programs for mutual insurance agents. Although NAMIA secured the life & health program within a year, E&O was more problematic because at the time U.S. stock insurers would not write a liability program for mutual agents. In 1934, NAMIA established its E&O program--the first for any profession until then--through Lloyd's of London, and we have provided continuous, uninterrupted E&O coverage for agents since then.

Although growth was steady, it wasn't until 1937 that agents outnumbered company representatives at the annual convention. The association had its first full-time CEO in 1939--Phillip Baldwin, who served until his death in 1960.

By 1940, the mutual/stock rift began to disappear, as more stock agents began selling mutual insurance. The trend continued, and in the 1970s NAMIA changed its name to the National Assn. of Professional Insurance Agents (PIA).

PIA has been a supporter of state insurance regulation since its inception. The groundwork for the advocates of federal insurance regulation had been laid out in 1944, when the U.S. Supreme Court, in U.S. v South-Eastern Underwriters Assn. et al, held that insurance was a business involved in interstate commerce. After the decision, it was thought that federal antitrust laws would be applied to the insurance industry. The threat of federal regulation was never as great.

Then in 1945, the McCarran-Ferguson Act gave the industry a limited antitrust exemption. Efforts to transfer insurance regulation to Washington, D.C. have been
relentless ever since. In the 1960s Ralph Nader targeted not just General
Motors and the Corvair, but also insurance rates.

In the early 1970s, Sen. Edward Brooke (R-Mass.) introduced the Federal Insurance Act, which would have given insurers a choice of federal or state company charters and granted the industry complete freedom from prior rate approval. An antitrust unit of the Justice Department came out with a report at the same time that paralleled the objectives of the Brook measure. It recommended scrapping McCarran and rate deregulation. Both proposals died.

In the late 1970s, Sen. Howard Metzenbaum (D-Ohio) authored a bill to institute federal insurance regulation. It died. In the 1980s, Rep. John Dingell (D-Mich.) led a renewed push for federal regulation, excoriating the NAIC and holding hearings on the adequacy of state regulation.

The 1990s brought broad deregulation of financial services. The Gramm-Leach-Bliley Act of 1999 reorganized financial services into three distinct sectors: banking, securities and insurance. Regulatory barriers were removed, allowing each to do business in each other's sector. Fortunately, GLBA affirmed that insurance would be state regulated, sparing our industry from last year's meltdown in banking and securities.

At each step of its history, PIA demonstrated resilience by identifying agents' new and changing needs, and then transforming itself to better meet those needs.

"PIA has always adhered to the principles set down by its founders at their first meeting in 1931," said PIA National executive vice president and CEO Leonard C. Brevik. "When you look at each of our founding principles, it is something PIA does to this day, because the imperatives are unchanged. Our long-range plan states succinctly that PIA's mission is: 'To promote, protect and defend the integrity of our members, the value of their profession and the success of their businesses.' That's what PIA has been doing for 78 years and what we will continue to do for many years to come."

CIAB
The Council of Insurance Agents & Brokers (CIAB or The Council), headquartered in Washington, D.C., was founded in 1913 to serve the independent brokerage community. The National Association of Insurance Brokers (NAIB), established in 1934, was considered a competitor until the two groups merged in 1998, blending into an association servicing 280 brokers, representing more than 80 percent of the commercial property-casualty market. Today, CIAB serves members in more than 3,000 locations, placing 80 percent (more than $90 billion) of all U.S. insurance products and services. In contrast to PIA and IIABA, the Council's members are primarily large global agencies and brokerages.

AAMGA
The American Assn.of Managing General Agents (AAMGA) was established in 1926 to serve the interests of companies and agents. In 1983, the AAMGA opened its membership ranks to domestic and foreign insurance companies, underwriters and other organizations that provided services to the MGA system.

In order to enhance the AAMGA's leadership role this vital segment of the insurance industry, the Association' Board of Directors has developed a group of significant member services. In addition:

• AAMGA members are committed to maintaining a sound professionals image, continuing education and long-range personal development. They work with industry professionals to hold timely and informative educational training sessions aimed at enhancing members' professional competence and capabilities.

NAPSLO
The National Assn. of Professional Surplus Lines Offices, Ltd. (NAPSLO) is a national trade association representing the surplus lines industry and the wholesale insurance marketing system.