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Health Agents, Background Information
“The Commissioners are now fully prepared to go before their various legislative committees with recommendations for a system of insurance law which shall be the same in all States – not reciprocal, but identical; not retaliatory, but uniform.”
Statement expressing the desire for more uniform insurance regulatory system made by George W. Miller, NY Insurance Commissioner and founder National Association of Insurance Commissioners, at the close of the very first meeting of the NAIC in 1871
But still today, a provider and seller of insurance in multiple states is subject to separate regulation in each one of those states – a time consuming and painful process at best. New forms and products must be approved by each state and each state must license every provider and agent doing business in that state.
Worse yet, any consumer moving to a new state or business owner wanting to expand into another state doesn’t understand why the products and coverages available are so different from state to state – this makes no sense in today’s technologically advanced marketplace.
Agents for Change is a trade association of insurance agents and brokers from across all lines of insurance working together to reform insurance regulation and enact a national insurance charter to allow producers and insurers the option of being regulated at either the federal or the state level. Members of Agents for Change participate in policy development and provide public policy makers with expert advice as they move forward to modernize insurance regulation.
Benefits to Agents & Brokers
The choice of allowing insurers to obtain a national insurance charter can greatly benefit brokers and agents by:
1. Providing uniformity of regulatory standards
2. Bringing new products to market more quickly
3. Providing a strong voice for the insurance industry in Washington, D.C.
1. Providing uniformity of regulatory standards
It is the intention that broker/agent licensing would be streamlined with a single licensing standard and a single license that would allow qualified producers to do business in all states Regulatory costs would be reduced by having one policy form rather than the thirty or so different versions necessary today to do business in all states The NAIC can draft and adopt models but cannot force state legislatures to enact them. Individual state insurance advocates can push for regulatory modernization in their own jurisdictions but they cannot force other state insurance advocates to push for similar change
2. Bringing new products to market more quickly
Insurers would have the ability to introduce innovative new products in response to customer demand. Brokers and agents are losing money due to the inability of insurers to get new products to market in a timely fashion The present system provides no real basis to compare insurers by the products they offer Freedom to market improvements would enable insurers to more effectively compete with other financial institutions who sell products serving the same consumer needs
3. Providing a strong voice for the insurance industry in Washington, D.C.
Insurance is the only segment of the financial services industry that does not have a single national advocate to serve as an expert resource on insurance issues in which Congress and the Administration are involved An advocate in Washington, D.C. would provide a national perspective on issues of importance to the industry
Much as choice in the regulation of the banking industry (federal or state) has strengthened its system, the same could be expected for the insurance industry.
Benefits to Consumers
As we have seen in banking and securities, an optional federal agency can benefit consumers by:
1. Enhancing portability
2. Promoting competition
3. Providing uniform and consistent laws
4. Better controlling fraud
1. Enhancing Portability
An owner of a health policy who moves from one state to another doesn’t understand why their current insurance agent may not be able to continue to service their policy Business owners expanding their businesses into another state have to select different policies for different employees to meet the guidelines of each state In today’s technologically advanced marketplace this makes no sense at all and costs the consumer lost time and money
2. Promoting Competition
Inefficiencies in the approval process in each state limit the variety of products that can be offered. Insurers can only get products to market as fast as each state bureaucracy allows National standards would also help consumers to understand and compare policies which will be uniform, nationally
3. Providing uniform and consistent laws
Consumers dealing with a national insurer will enjoy the same availability of products and services in all 50 states Consumers will have equal protection under the laws, no matter where they reside now or in the future Streamlined regulations for insurers inevitably lead to lower rates and greater availability of products and coverages for consumers A uniform regulatory system will eliminate needless paperwork and replace red tape with efficient regulation that protects consumers by assuring that insurance companies are around when consumers need them the most
4. Better Controlling Fraud
With a national insurance commissioner, a uniform system for background checks of agents and company directors could be more quickly integrated with both state and federal regulatory and law enforcement databases This uniform system for background checks would enable rapid identification of “rogue” agents who move from one jurisdiction to another The broader scope of a national advocate could also more easily identify and address fraud on a national basis
The current system is cumbersome and limits the consumer’s options. A national insurance charter will help lower costs through increased competition while enabling insurers and agents to bring more and better products to market in a timely fashion.
For all of these reasons, we believe that modernizing insurance regulation is important to insurance agents as well as the insurers they represent.
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