Independent agents have specific stakes in several high-profile issues being debated in Congress, including healthcare reform, renewal and reform of the National Flood Insurance Program (NFIP), and passage of a new Farm Bill in 2018.
Health care
The most contentious and unpredictable issue facing Congress is health care. The effort to repeal and replace the Affordable Care Act (ACA) has hit many bumps in the road. Ultimately, the ACA's fate will be determined by the political process, with public opinion the most important driver. PIA will work to ensure that agent and broker commissions are excluded from the calculation of medical loss ratio and that the "Cadillac Tax" (the 40% excise tax on "overly generous" employer-sponsored health plans set to take effect in 2020) is delayed, if not ultimately repealed.
Flood insurance
Congress is crafting legislation to reform and reauthorize the National Flood Insurance Program, which is set to expire on Sept. 30. PIA is a stalwart supporter of reauthorization, as well as many of the reforms in draft legislation, including improving the claims process and taking steps to encourage the private market to sell policies.
But in the House, legislation passed out of committee included a 3% cut to the Write-Your-Own (WYO) reimbursement rate, which is used by carriers to pay administrative expenses as well as agent commissions, among other costs. WYO carriers have made it clear that they intend to pass any cuts to their reimbursement rate to agents via their commissions. As a result, PIA is compelled to oppose legislation we would otherwise support because, as an agents' associatio, we cannot back a bill that would cut agent commissions.
Crop insurance
One of the most important risk management tools available to U.S. farmers is crop insurance, backed by the Federal Crop Insurance Program (FCIP), and sold and serviced by independent crop insurance agents.
The Trump Administration's proposed Fiscal Year 2018 budget includes a $28.56 billion cut to crop insurance over the next 10 years. But a House Appropriations Subcom-mittee markup of the FY 2018 Agriculture Appropriations Bill left crop insurance untouched. It was gratifying to see that members of the House Appropriations Committee recognized the critical importance of crop insurance and did not make any cuts to it.
A Trojan Horse
Another concern is a bill that is supposed to reduce federal regulation, but would do the opposite.
The full House of Representatives passed the Financial Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs (CHOICE) Act on June 8, which is meant to reduce federal regulation, but it contains a provision that would create a new, unnecessary federal insurance bureaucracy with the potential to grow called the Office of the Independent Insurance Advocate by merging the Federal Insurance Office (FIO) and the independent member with insurance expertise on the Financial Stability Oversight Council (FSOC).
In short, the Dodd-Frank rollback bill establishes a potential federal insurance czar, who would apparently report to no one. Such a federal official with broad, ill-defined powers and no supervision would be positioned to usurp our strong and effective system of state insurance regulation. CHOICE is a well-intentioned bill, but this provision appears to be a Trojan horse for federal insurance regulation.
Any thought that the 2016 election results would guarantee smooth sailing for the concerns of independent insurance agents was destined to be proven overly optimistic. The grinding of the legislative process always presents the twin possibilities of victories or setbacks, issue by issue. The key is to remain constantly engaged in order to win.
Ted Besesparis is senior vice president of the National Assn. of Professional Insurance Agents, Alexandria, Va. Besesparis is a member of National Underwriter Property & Casualty's editorial advisory board.
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