Raising the profile of managing general agents in the U.S. and abroad

Outgoing American Association of Managing General Agents President Francis Johnson likes to say that the AAMGA is “an exclusive group” but not an “excluding group.” Johnson, who with his two brothers owns Johnson & Johnson Inc. in Charleston, S.C., has made it a goal during his term as president to make sure the association communicates to regulators, legislators and those in the insurance industry, not only the integrity and professionalism that membership in the AAMGA represents, but also the role of the managing general agent in the broader context of the industry.

“One of the main goals we had this year was to brand our image of professionalism and integrity,” Johnson said.

To that end, the association employed not only longtime Executive Director Bernd (Bernie) Heinze, but also members of its board of directors and governmental affairs committee to attend meetings of the National Association of Insurance Commissioners, of the National Conference of Insurance Legislators, and of industry trade organizations both in the United States and abroad.

The group has traveled to Washington, D.C., to meet congressional leaders on Capitol Hill and their staffs and met with regulators and insurance industry leaders in the United Kingdom, as well. Their aim has been to “explain what the managing general agent’s role is in the insurance industry, how we fit in that role and the professionalism we bring to that role. I think we’ve done a great job in that area,” Johnson said.

“The AAMGA is attending every single industry trade group meeting across the country to make sure that regulators and legislators appreciate the value of keeping the competitive spirit of commercial insurance entrepreneurial,” Heinze said. He noted a group from the association is “scheduled to meet on April 27 with Congressman Mike Oxley from Ohio and Congressman [Richard] Baker from Louisiana to continue our discussions with legislators on the importance of maintaining the profitability of the excess and surplus marketplace and specifically the wholesale insurance distribution network.”

Federal regulation’s impact on MGAs
Heinze, whose job is to communicate to lawmakers the importance of the association’s stance on legislative and regulatory issues, explained that how the debate over federal versus state regulation turns out is of great importance to his membership. He indicated that the AAMGA favors the State Modernization and Rate Transparency Act over the recently introduced Optional Federal Chartering legislation, although neither is a perfect body of work from the association’s standpoint.

“In terms of the SMART Act, there are some provisions of SMART that we agree are important to consider, mainly those that deal with the automatic exports for sophisticated purchasers and sellers of insurance, as well as the national licensing and the national taxation aspects,” Heinze said.

Streamlining the process of licensing and payment of taxes across state lines is an essential issue for AAMGA members he said, adding, “there is a provision in the SMART Act where that would be contemplated and made more streamlined.”

He noted that the group has visited with Pennsylvania Insurance Commissioner Diane Koken, the immediate past president of the NAIC, whose staff is working on surplus tax regulation that would streamline and make more effective the payment of taxes.

“We’re working with her staff to make sure [the legislation] makes sense not only for the agents and brokers that are transacting that business, but also and perhaps equally important to the customers and policyholders that we’re protecting,” Heinze said.

Explaining that the AAMGA is still studying the newly introduced OFC, Heinze offered the opinion that the bill seems to create inconsistencies in the marketplace, when the focus needs to be on “a consistent, dependable, reliable market that has minimum amount of governmental interference and regulation, and allows the self regulatory concept of free market competition.” He added it seems to authorize a federal producer “to sell in the admitted market, but does not appear to contemplate broker activity in the excess and surplus lines marketplace.” Because the bill does not appear to explicitly authorize “such activity nor does there appear to be a prohibition against it … it will be important for us to continue advising legislators and regulators on how this marketplace operates,” he said.

Other legislative issues the AAMGA is following, Heinze noted, are the Sarbanes-Oxley Act and its implementation in publicly traded companies, the national catastrophic insurance plan being formulated by the NAIC and the Producer License Model Act, which seeks to “streamline many of the various state regulations that deal with producers, brokers and agents that transact business across state lines.”

Going international
Johnson said the association in 2005 sought to raise the profile of the AAMGA to its members’ customers, such as the independent insurance agent members of the National Association of Insurance Women and the Independent Insurance Agents and Brokers of America, but the effort to heighten awareness “of exactly who we are and what we represent” has not been limited to the United States.

In 2005, the association’s board met with Lloyd’s and London market professionals, and the FSA, “their regulatory board, to explain our role in the United States. They had never met with anyone to actually explain what our trade organization did, so we had the opportunity to do that in London. Not only with the FSA, but with London brokers and syndicate underwriters and London Worldwide.

“We also went to Bermuda where we met with reinsurers and companies, and also their regulatory authority to explain to them what AAMGA’s role is, and our members’ role in the insurance industry.”

Both Heinze and Johnson stressed that educating its members is one of the association’s key components.

“In 2007, our nonprofit AAMGA University will celebrate its 20th year of providing continuing education and professional development classes to the wholesale insurance marketplace,” Heinze said. “In 2005 alone, we will have educated over 5,500 attendees at our classes from over 400 companies. That’s about a 48 percent increase over our 2004 numbers.”

The AAMGA University is also playing a part in promoting the association internationally. In September, in conjunction with colleagues in London, it will conduct a week-long class at Cambridge University’s Corpus Christi College in the United Kingdom.

“We’ll take 10 specialized people from the United States as AAMGA members combined with 10 specialized professionals from the Lloyds and London market, put them together for a week and expose them” to U.S. regulators and legislators, professionals from the Lloyds and London marketplace and other industry experts. In 2007, the group plans to bring the experience to the United States, most likely to Georgia State University.