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Potential Threat To Insurance Agent Commissions

Friday, March 15, 2013   (0 Comments)
Posted by: Kim Gray, President of PIA of Florida
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To: Florida's Professional Insurance Agents

From: Kim Gray, President of PIA of Florida

RE: Potential Threat To Insurance Agent Commissions

There are some issues so critical to the future of our industry that it becomes necessary to communicate with agents in the state to ensure that you are aware, and that we have the benefit of your experience and input on an issue critical to the future of our profession.

The Florida Legislature is now considering a "clearinghouse" or MGA that all agents would have to submit their business to for a 48-hour period in which participating carriers could assume the policy before its placement with Citizens.

During Agent Expo, professional agents throughout the state discussed this proposal in-depth and there were three main concerns voiced. This proposal could be devastating to both agents and consumers. Below are the details of those concerns as referenced in "IBS 1", downloadable below, a proposed committee bill by the House Insurance and Banking Subcommittee.

1) Page 4, lines 86-91: This language POSES AN IMMEDIATE THREAT TO AGENT COMMISSIONS by allowing Citizens to pay for some or all of the costs of this new program out of existing agent commissions.

2) Pages 5 & 6, lines 132-161: This language completely removes consumer choice and provides no protections from future increases, cancellations, or reductions in cover. If a "basic" policy is offered within the 15% rule on new business or 5% on renewals, the business will be denied with Citizens, even though the term is not sufficiently defined.

3) Pages 8 & 9, lines 212-228: This language authorizes "private" MGAs as an alternative to the Citizens MGA. Since agents can already partner with a variety of high quality MGAs voluntarily to expand their market access, the prospect of being forced into the Citizens MGA or one of these "private" MGAs forces agents to engage with an extra and unnecessary level of bureaucracy that preys on agent commissions, while still leaving agents responsible for an even longer and more painful process of writing Citizens policies - all for an even lower commission than those already not adequate to cover your time for writing it.

4) This entire proposal creates a new and unnecessary layer of bureaucracy to market business, built entirely on the false premise that the size of Citizens is a result of agents placing business in Citizens that doesn't belong there. While we will concede that this does occur, there are more effective ways to address these concerns; not to mention that the underlying assumption that take-outs are somehow proof positive that those policies should never have been placed with Citizens initially could not possibly me more wrong.

At PIA of Florida, we always stand ready to fight the battle of what is best for Florida's agents. However, many have expressed a great deal of support for this concept, leading us back to what has always been the core value of PIA...What does the professional insurance agent think?

That is why we are asking for your immediate review of the language in the context of our concerns and for you to provide us feedback to this proposal, no later than 12:00 P.M Eastern Daylight Time on Monday, March 18th.

Please send all responses to

Please takeaway few moments to let us know how your agency feels we should proceed with regard to this proposal. As always, we appreciate your time, support, and feedback!

To Download IBS1 Please Click Here

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