Up for the Challenge

My boss (and Council president) Ken Crerar has cautioned for a long time that the 100th anniversary of the organization must be more about vision for the future than the view in the rearview mirror. 

He tasked our colleague Coletta Kemper to be our guru for our centennial, and she’s done a splendid job—including unearthing many tidbits in our archives. As I’m pushing a quarter-century at the organization, I’ll confess I’ve gotten the biggest kick out of the old stuff, from which we could all learn a few lessons.

The Council (originally the National Association of Casualty and Surety Agents) merged with the National Association of Insurance Brokers in 1998, so we can claim joint heritage with that organization. Flipping through the NAIB meeting minutes from 1935, I came upon a report of the NAIB Legislative Committee, which condemned the newly enacted and “questionable” Social Security Act.

“It not only goes far to substitute such security for that legitimately furnished by life insurance but it may disrupt plans already in existence for old age protection,” said the report. “The evils attendant on the accumulation of such an enormous fund as the Act contemplates it is not difficult to conceive. Such an accumulation can hardly have other than disastrous consequences.”

Social Security is such an accepted and entrenched entitlement—and safety net—for millions of Americans today that the resolution of the NAIB at the time seems, in hindsight, to be patently protectionist, even hysterical. Still, many of the warnings about sustainability of the benefits do jibe with the current deep challenges facing the federal old-age program. Because the “trust fund” is largely illusory in the context of congressional spending and the national debt, there’s some truth in the 1935 resolution: “We believe it would be impossible for congressmen to keep their hands off so vast a sum of money and that it would become one of the greatest corruption funds ever known.”

The question this begs is obvious. In these pages, I’ve railed for three years about the evils of Obamacare—the unsustainable subsidies, the violence to employer-sponsored plans, the mismatch of the individual/employer mandates to penalties, the inevitable adverse selection and the overall inefficiency of big government supplanting private enterprise. Will my successor, 75 or 100 years hence, be as entertained and baffled by reading my Chicken Little rants?

Will Obamacare be the slippery slope to single-payer health? If so, is that necessarily the worst thing for the nation’s health? Does that merely pave the way for a vibrant private voluntary benefits world? Will Obamacare implode long before its objectives are met? Will anyone remember the word Obamacare?

Looking through the archives of this association, there is plenty that is protectionist. After all, that’s why people come together in associations—to protect themselves, even to protect the weakest among those who are associating. The first decades of NACSA and NAIB were spent defending set (and presumably high) commissions, particularly in workers compensation.

My first years as an insurance lobbyist, for example, were spent in great part on trying to keep banks out of the insurance brokerage business. We complained about unfair competition, consumer tie-in abuses, everything we could think of and/or litigate. At a certain point, I even believed my own b.s. about the evils of bankers. We lost those battles, and it’s a good thing for the industry that we did. If nothing else, the full-fledged entry of banks into the insurance agency/brokerage business raised the value of all the independent agencies and brokerages.

To a certain extent, commission protection is implied in our opposition to Obamacare’s Medical Loss Ratio (MLR) provisions. But today, two years after the implementation of the MLR law, I often hear concerns about the pressure on margins in the benefits arena, but I seldom hear the MLR as the central source of ire about the act.

Most brokers in the 1930s had barely dabbled in ancillary benefits, and with the benefit of hindsight, Social Security peacefully coexists with retirement plans and all sorts of benefits that commercial insurance brokerages best provide. In the same ironic way, brokers have been the beneficiaries of Obamacare, as clients need them more than ever. I’ve no doubt the architects of the Affordable Care Act intended to remove brokers as intermediaries, and I remain deeply concerned that the act threatens—over the long haul—the employer-provided group health insurance marketplace. Though I’m certain that Council member firms will make the best of it.

Despite the protectionist impulses I’ve seen documented over the past century, the more common thread has been progressive advocacy on behalf of our industry and clients. From the earliest days, The Council and its forerunner organizations fought for a more streamlined—and less protectionist—state regulatory structure. Non-resident agent/broker licensure has been a priority for many decades, and we’re on the precipice of largely solving this problem in Congress through the NARAB Act (shame on us if we can’t get it over the finish line in this session).

The Council was the first agent/broker group to peel away from the anti-bank consensus of the 1990s. As cathartic as the transition was during the Spitzer inquisition, Council member firms set the gold standard in the industry on transparency. The organization has always led, not followed, in fighting anti-consumer protectionist laws—surplus lines, anti-rebating regulations, countersignature laws, you name it.

On the occasion of our 100th anniversary, it’s tempting to slip into maudlin platitudes about the leadership that has gotten us here. In my 23 years at the organization, I’ve met plenty of truly inspirational leaders. It certainly helps that our association’s membership criteria keeps us oriented on the marketplace winners; even our “lowest denominator” is a very successful regional powerhouse. We’ve been the seedbed for great financial services talent, one whose leadership is marked as much by community-mindedness and civic preeminence as it is by industry expertise.

We have said and done some curious things over the last century, and I’m sure some of our actions will look strange in retrospect many years from now. But a review of our successful record conjures the William Faulkner quote: “The past isn’t dead. It isn’t even past.”