5 Issues Agents Should Watch in 2010

With insurance agents across the nation breathing a sigh of relief that 2009 is behind them, their focus has turned to the future: What will 2010 bring for the industry? These emergent issues are important not only for insurance agents, but also the insurance-buying public. Here’s a quick roundup of key issues we can expect.

Producer Compensation Disclosure
As goes New York, so goes the nation. All industry eyes have been on New York state this past year, to see how the highly contested issue of producer compensation disclosure plays out. With official publication of a proposed regulation by the New York State Department of Insurance’s on Dec. 2, 2009, the question no longer is when disclosure mandates will appear, but how agents will meet the challenge. While the Professional Insurance Agents of New York Inc. (with a number of other industry groups) remains steadfastly opposed to mandatory disclosure, advocacy with the New York State Department of Insurance during drafting resulted in substantial improvements to its current proposed rules. Now, the question remains, what further steps will the NYSID take, and will other states begin to consider their own rules on mandatory disclosure?

An Increase in Insurance Fraud
A recent Insurance Information Institute analysis estimates that fraud accounts for 10 percent of the industry’s losses, or about $30 billion a year. With the current economic downturn, it’s no surprise to see insurance fraud on the rise. An area particularly vulnerable to insurance fraud is personal injury protection coverage in states with no-fault auto insurance plans. Currently, a number of states have some type of no-fault coverage that, while intended to protect policyholders, can enable abuse. This leads to higher costs for honest drivers. Some changes PIA is advocating include: mandatory arbitration for some no-fault claims; increasing penalties for organized fraud; more time for insurers to spot suspected fraud; and medical protocols for treating injuries.

Coastal Insurance (Un)Availability
Sure to remain concerns among policyholders in 2010 are the availability and affordability of coastal-area homeowners’ insurance. An increasing number of insurance companies have pulled out of coastal states, causing agents along the coasts to scramble for alternative sources of coverage. Clearly, this protection already can be hard to obtain, and problems likely will grow in the event of major hurricane activity during 2010.

Health Care Reform
There’s little question some kind of federal health care reform will be enacted in 2010. Whatever changes occur, they’re sure to impact not only agents who sell health insurance, but agencies providing health care for their employees. PIA is working diligently to make one thing certain: licensed, professional insurance agents must be part of the solution. Consumers will be faced with a broad array of new choices, and they will need the expertise of licensed professionals qualified to help them navigate the new options.

Federal Oversight of Insurance
An issue that’s gotten much attention in recent years, greater federal insurance oversight, seems to be gaining steam as Congress grapples with financial services regulatory changes going into 2010. The more radical proposals likely will be scrapped, due to widespread recognition that the existing state-based system of insurance regulation already provides the transparency, constant monitoring and early-intervention tools. This system demonstrably protects insurers’ financial stability, safety and soundness. Remember that, in the recent financial services meltdown, it is the state-regulated insurance subsidiaries of troubled firms like AIG, which remained financially sound. State regulation has proven superior in its response to such situations, while unproven federal regulation would merely add to consumers’ jitters.

While PIA and other associations will continue to advocate for legislation to protect agents and consumers, it’s essential that every agent stay informed on these issues, understand their repercussions and reach out to their elected representatives.