SANTA MONICA, CA, Feb. 8, 2017 --  Activity in the legislative, regulatory and judicial arenas on both the state and federal levels will impact independent insurance agents and brokers and the businesses of their clients in 2017, IIABCal President Dave Nelson said in his installation speech last week.

"This year we are likely to see two landmark cases outlining the legal authority of the Insurance Commissioner to use the Unfair Practices Act to create new categories of unfair and deceptive acts in the business of insurance," Nelson told IIABCal members at the installation luncheon. "This will allow the commissioner to impose massive monetary fines against broker-agents and other CDI licensees."

Nelson said the first of these two cases was decided last week, when the California Supreme Court unanimously ruled that the Commissioner could use his regulatory powers to create wholly new categories of unfair insurance practices.  If this decision stands, Nelson said, the Department could make new law whenever it wanted without needing legislative approval.

"Meanwhile, a related set of legal issues is now being heard in a separate case, PacifiCare v. Jones, now pending in Orange County Superior Court," he said. "In that case, lawyers for Commissioner Jones are interpreting their powers under the Unfair Practices Act in ways that are not only unprecedented but also Draconian in their scope." 

Senior CDI officials have publicly admitted they are doing this in part to compel larger settlements from licensees accused of wrongdoing, he said. 

"IIABCal is part of an industry-wide coalition preparing an amicus brief in that case to help the courts understand the danger and illegality of this tactic," he said. "IIABCal is the only property/casualty producer group defending broker-agent rights in this case, and we are only able to do so because of your support – and we thank you."

In 2017, Nelson said IIABCal will continue to focus on making the association more real for member independent agents and brokers. 

"IIABCal, like so many other trade associations, has made significant changes over the past five years to better meet the needs of members consisting of many different demographics," he said. "The way we communicate, provide services and conduct advocacy no longer occurs the same for all members.  We now operate on multi-dimensional levels."

Nelson said one example is the association's change in Professional Development to encompass a partnership based model that allows IIABCal to work with leading-edge educators to deliver an array of education services and the most up-to-date training available at little or no cost.

He said another example is the association’s focus on the Emerging Leaders Network and efforts to better engage younger association members by enhancing in-person meeting and digital experiences. 

 

"As much as we want to lead the association," Nelson told members,  "it is important for us to listen to you and better understand your needs.  Stay engaged like you are and please provide us constant feedback."

Independent Agents Are Different

"We are different and we are independent," Nelson said. "We also need to prove to our clients that we add value. Insurance is confusing to the consumer. We need to constantly provide our customers with the proper coverage at a fair price.

"Our agency has a saying: good things happen when you go out and see your client. Cement the relationship, uncover additional lines of business, and garner the referrals that are our life blood," he said. "What is the worst thing you can hear from a client? I did not know you sold that coverage. Also, remember that every service call into your office is a sales call. You and your staff need to remember that renewals are not automatic. Great service during the policy years is selling the renewal."

Nelson said automation and the web will continue to cut into the market share of the business of independent agents and brokers. Professionalism and human interaction are still important, he said.

"We all have to be cognizant that the delivery system of our products will continue to marginalize our role. We must stay on our toes and not become complacent with our business," he said. "Travel agents, brick and mortar retail and taxi companies have all seen their business reduced by new delivery systems.

"We already see personal auto being commoditized and what will happen with driver-less cars? Work comp and group health has new competition from payroll carriers and internet company darlings. Insurance contracts are complicated and the consumer only wants to know that if something happens, that he or she will be covered.

"We need to be that advocate for our client and make sure that when a terrible day happens and a loss occurs, that we as agents are there to say. Yes, you are covered. Yes, this will be replaced. Yes, the lawsuit will be defended. We as agents sometime forget that we help put lives back together."

Your association is in a good spot – financially sound, leadership strong, member supported, top-notch Professional Training, products to gain market access, and strong presence in both Sacramento and Washington, D.C. Nelson said he is committed to keeping it that way.