Reg. 79: Opinion

Reg. 79: Opinion

As we move into 2014, a number of things are still unresolved that deserve attention from regulators and legislators; a number of other issues and other news items have come across our desk as the old year waned that we would like to comment upon. First, the big news these past two weeks, other than the difficulties that Tower Insurance, AmTrust and a few other enterprises have had, is the report of the FIO calling for a hybrid form of Federal/State regulation. We include in this issue an astute analysis done by Mike Nelson and his staff at NDLH. Our view here is close to that of the IIABA and other agents’ groups. That is, the current system of state based regulation is worth retaining, albeit with some modifications. The purpose of the FIO from the outset was surely not to have caused itself to cease to exist by advocating state regulation or by simply reviewing and “okaying” the current system. Such is the nature of Federal organizations and offices. In this case, however, the report was comparatively fair minded toward the system itself. We understand that IFNY and other entities in New York are planning reviews of the matter with constituents and so we may confidently look forward to the coming debate on the usefulness of the report’s findings. We urge you to read the article carefully as this may be a blueprint for the future of insurance and to register your thoughts with us… A second, state level matter has come to the fore and has drawn strong opinion on both sides; this is the issue of Reg. 79. Recently, the Insurance Advocate presented both the opinion of columnist Steve Ruchman, reflecting the viewpoint of agents’ associations and a guest column by CARCO Chief Executive Jim Owens. In this column we have not commented on this matter. After considerable study and interviews, it is our view that Reg. 79 is a worthwhile regulation for its effect in combatting fraud and for its added layer of identification of automobiles and owners. On the other hand, it is reportedly a burden on agents and drivers and should have some wiggle room for discretion in the law that might be realized in the creation of a voluntary use of the photo inspection process by carriers. We believe it should be voluntary and that several refinements in the regulation itself, as have been suggested to the insurance department by CARCO, should be adopted. One side note is this: agents have justified for many years the service they render to insureds and to the industry, as trusted intermediaries. In an age of disintermediation, any services that are ceded by agents to other entities or left alone should be looked at carefully. The human touch, the added understanding that comes with interfacing with clients – even in fulfillment of Reg. 79 as an anti fraud measure and as an identifying mechanism, possesses some value in establishing the agent’s position in the marketplace with insureds. We call upon the Department to look at some of the suggestions CARCO has advanced and we urge every party in the process to proceed carefully toward a voluntary Reg. 79 use…Peter Bickford’s column this issue is a “must read”. Peter has sharpened his pencil and his wit for what amounts to a list of suggested New Year’s resolutions; be sure to read it…Our good friend Joe Petrelli, founder of Demotech Corporation has been elected one of 20 people to know in the insurance business. Joe’s long time service to insurers in offering creditable claims paying ability ratings and serving as a powerhouse resource of financial intelligence for insurers has earned him the distinction. Since 1985 Demotech has served the industry and Joe Petrelli and his wife, Sharon, have created a national reputation for this enterprise. We are proud to be among the many hundreds of people who agree that Joe is one of the most important people to know in insurance.