Sun, Sand and Deregulation Featured at Louisiana Agents’ Convention

It may have seemed like the Independent Insurance Agents and Brokers of Louisiana (IIABL) were just out for fun in the sun when they met in Destin, Fla. last month for their 102nd annual convention. In reality, this year’s event, dubbed “The Big ‘I’ of the Tiger,” not only attracted agents, brokers and their families for five days of serious networking, golfing, swimming, fishing and crab hunting; they came for meetings and educational opportunities, as well.

The opening business meeting featured talks by Independent Insurance Agents and Brokers of America CEO Bob Rusbuldt; Louisiana Commissioner of Insurance J. Robert Wooley; Jeff Jenkins, a Tyler, Texas-based agency consultant with MarshBerry; and a special guest, Matt Mauck, quarterback of the 2003 Louisiana State University Tigers national championship football team.

Rusbuldt and Wooley applauded the Louisiana agents for their activism and support, and encouraged them to stay involved. Both also addressed what Rusbuldt called “the mother of all issues:” state versus federal regulation.

“This is a big deal,” Rusbuldt said, “whether you’re regulated in Washington or the state capitol. … If you like the IRS you’re going to love federal regulation of insurance … [it’s] ten times more complex than the Internal Revenue Service.”

The National Association of Insurance Commissioners (NAIC), the U.S. Congress and the industry are all considering the issue, he said, adding that, “a number of insurance company trade associations want optional federal regulation of insurance. They want to be able to choose between having a state regulatory system or a federal one. …

“I’d like a lot of choices in life too but I don’t always get them.”

Rusbuldt said the Big I, believing “there’s a better way than having federal regulation of insurance,” and realizing that uniformity in all states was not a possibility, two years ago came up with a middle ground approach. That approach was an outline for federal standards that the association believes are pro-agent, pro-markets and pro-consumer.

“What was known as the Big I proposal is now known as the Oxley-Baker road map plan,” Rusbuldt said.

He noted that Rep. Richard Baker, from Baton Rouge, “is one of the most important if not the most important member of the House of Representatives for insurance issues in Washington D.C.” Baker chairs the House “subcommittee that has jurisdiction over all insurance issues, or virtually all insurance issues. … Richard Baker is huge and he supports the Big I proposal.”

Rusbuldt said that although Baker would like the bill—which calls for rate deregulation in both commercial and personal lines—to go through the subcommittee this year, it may not happen. In which case the push would come next year. The NAIC likely won’t endorse it, although many individual commissioners are behind the bill.

“Commercial lines is not a problem politically in Washington but the personal lines side is,” Rusbuldt said. “We have got to work on our Democratic friends in Congress to get them to see that rate deregulation is not bad. And it’s going to take a lot of work … to get our Democratic friends in Congress to understand that we’re not out to get consumers. This isn’t a company bailout proposal. It’s the free market at work.”

Wooley told the agents that a dual charter would have a big impact on Louisiana and on state regulation.

“It is going to be an important issue and I think they are headed in the right direction,” he said. “Because you’re never going to get 51 different jurisdictions all to agree on anything.”

He admitted his colleagues at the NAIC “are concerned about rate deregulation. But as we’ve seen—what we’ve done and we’ve been going through in Louisiana—it can work as long as you do it in a responsible manner.

“And that’s what we’ve tried to do. You can’t go from a total prior approval regulatory scheme all the way across the spectrum to total deregulation without having a major disruption … because there will be people that will take advantage of it and will make a windfall profit until the market fills in.”

Noting that agents as well as consumers could get hurt by a too much too soon approach, Wooley said from the beginning he worked with IIABL executive director Jeff Albright on regulatory proposals “to make sure that we do it in a responsible manner.”

He said Congress may want to look at some of the safeguards included in Louisiana’s deregulation bill as they work on federal legislation.

“We put some handbrakes in there. Where there isn’t a competitive marketplace then we will not have deregulation,” Wooley said. “Because then it would be what people have talked about as being the problem with what we’re trying to do.

“One of the prime examples is medical malpractice. There isn’t a market nationwide in medical malpractice, so it wouldn’t be fair to deregulate that. … But I think we’re heading in the right direction both in Louisiana and federally.”

Wooley said it has been his goal to transform his agency into a resource for insurance companies, moving it away from being an “insurance Gestapo” that automatically views them as criminals. However, “we’re not going to be bullied by the companies [and] we’re not going to roll over and be lap dogs for companies.”

In the end, he told the agents, his ultimate message to company “CEOs and presidents is that eventually I want to be Illinois without the snow. We are going to be totally deregulated but we are going to do it in a responsible manner.”