TEXAS ASSOCIATION OF INSURANCE AGENTS, Re Senate bill 2077. Senator THOMAS J. MCINTYRE, Chairman, Senate District Subcommittee, DEAR SENATOR MCINTYRE: The attached statement is filed on behalf of the approximately 2,900-member independent insurance agency firms of the Texas Association of Insurance Agents, comprised of over 12,500 independent fire, casualty and surety agents and their associates. It is respectfully requested that this statement be made a part of the S. 2077 hearing record. Very truly yours, GRANT JONES, CPCU, President. STATEMENT OF GRANT JONES, CPCU, ABILENE, TEX., PRESIDENT, TEXAS ASSOCIATION OF INSURANCE AGENTS On behalf of the Texas Association of Insurance Agents, I wish to express our great concern with proposals for insurance rate regulation in the District of Columbia. The impact of any rating law passed will be enormous inasmuch as it could set a precedent that could be construed to be an actual expression by the Congress of its intentions concerning the basis of rate regulation most nearly conforming to the purposes of the McCarran Act. With this pseudoblessing being inferred, we are fearful that proponents of similar changes in Texas would seize upon this encouragement to seek embodiment of parallel rating principles into Texas regulation of insurance rates. For this reason we would strongly urge that the Senate District Subcommittee give careful consideration to the resulting impact and implications extending nationwide outside the boundaries of the District of Columbia to determine the effect of its action. Information we have received concerning proposed District of Columbia insurance rate regulation indicates that there are two basic rating approaches. One approach is the so-called, no prior approval regulation, and the other is the all-industry pattern recommended by the National Association of Insurance Commissioners the basic principles of which are embodied in S. 2077. While the Texas Association of Insurance Agents, for reasons already mentioned, would be reluctant to see any precedent setting rate regulation passed for the District of Columbia; we do believe that if any changes in the District of Columbia rating laws are considered, then S. 2077 should be the basic approach, since it contemplates a firm principle of regulatory prior approval of rates as opposed to the no prior approval (or posteffective date review) principle. The independent fire, casualty, and surety insurance agents of this State, both as individuals and as members of this association, feel that opponents of S. 2077 (who, incidentally, are also proponents of no prior approval regulation) while cloaking themselves in the guise of championing free competition are, in realty, attempting to establish a monopoly through neutralization of effective State regulation for the purpose of eventually creating an absolute seller's market. Despite their clamoring and claims of free competition in rates, we do not believe there is such a thing as a lower rate or a higher rate any more than there is any such thing as a 14-ounce or an 18-ounce pound of potatoes. Such a thing as a competitive pound simply does not exist; and neither is there any such thing as a competitive rate. Genuine competition in the field of insurance lies only in the area of protection and service to the policyholder; never in terms of insurance costs alone. Since the average insurance buyer does not understand that insurance purchased at a lower initial cost will later force him to give up something in the realm of service and protection, the no prior approval system and resulting unbridled competition (designed to create a monopoly) cannot possibly serve the best interest of the insurance buying public. For these reasons our association completely rejects the no prior approval approach. Inasmuch as S. 2077 removes some objections found in the no prior approval proposal, we firmly believe that if consideration is to be given to rating legislation in the District of Columbia, the all-industry pattern recommended by the National Association of Insurance Commissioners and embodied in S. 2077 appears to contain the best rating principles for a starting point. Re S. 2077. UTAH ASSOCIATION OF INSURANCE AGENTS, Senator THOMAS J. MCINTYRE, DEAR SENATOR: We are informed that consideration is being given to changes in the insurance rating laws for the District of Columbia. I have been instructed by the executive committee of the Utah Association of Insurance Agents, representing the major producers of insurance in the State of Utah, to indicate to your committee our concern regarding the proposed changes. It has been indicated to us that any changes made by you will be considered to be the will of Congress as to what any rating law should provide. As you know, the insurance regulators in the various States have made recommendations through the National Association of Insurance Commissioners. S. 2077 is patterned after these recommendations and we, therefore, feel that if any changes are considered in the District of Columbia rating laws, then S. 2077 should be the basis of consideration. We are firmly convinced that such prior approval of rates is necessary to retain stability and solvency in the insurance industry. For this reason we support the provisions of S. 2077. We are deeply concerned in this matter and ask for your consideration inasmuch as the opposing legislation of the no prior approval type can only bring about a chaotic and confused situation in this most important industry. The Utah Association of Insurance Agents supports the principle of S. 2077 and is opposed to any rating change not inviting prior approval of rates. Yours respectfully, RICHARD WISEMAN, President. WEST VIRGINIA ASSOCIATION OF INDEPENDENT INSURORS, Charleston, W. Va., January 31, 1964. Re S. 2077. Senator THOMAS J. MCINTYRE, Chairman, Senate District Subcommittee, DEAR SENATOR MCINTYRE: Enclosed herewith is statement embodying the views of the West Virginia Association of Independent Insurors as obtained to S. 2077. We would appreciate having this statement read into the record of the hearing on this measure. Cordially yours, C. T. MCHENRY, Secretary-Treasurer. STATEMENT BY THE WEST VIRGINIA ASSOCIATION OF INDEPENDENT INSURORS While we agree that it might appear unusual for insurance agents in the State of West Virginia to be concerned with insurance rates, and method of arriving at said rates, in the District of Columbia, certainly, such is not the case. It would appear obvious to us that changes constituted in the District of Columbia rating laws would be strongly considered in the legislatures of the several other States. For that reason, as well as for many others, we are strongly in favor of the passage of S. 2077. It is also our feeling that S. 2077 retains a needed provision in that rates, under this measure, are filed and then reviewed by proper authorities prior to being made effective. The same procedure follows as respects deviation filings. It is our firm conviction that any other method of rating approval, such as those calling for immediate filing and use of rates, will lead only to unbridled competition and chaos in the insurance industry. In a business as highly technical and complex as the insurance business, a paramount consideration in its regulation is the absolute need for safeguarding assets to preserve the solvency of companies. As contrasted to any manufacturer wherein only stockholders, employees, and creditors are affected, insolvency of an insurance company also affects employees, stockholders, and creditors, but extends harm to thousands of policyholders who stand to be deprived of protection which they purchased. We would recommend a careful assessment of the all industry rating bills which are the pattern for rating laws throughout the country, certainly here in West Virginia. These laws reflect the careful consideration of leading insurance agents, as well as the National Association of Insurance Commissioners, who certainly are in the best position to comprehend the type rating laws best suited for the public. In conclusion, the West Virginia Association of Independent Insurors believes that any consideration of rating legislation for the District of Columbia be ultimately patterned as referred to heretofore and embodied in S. 2077 should be the beginning. As agents in the State of West Virginia, it is our hope that this subcommittee will look beyond the District of Columbia to determine the effect of its action. INDEPENDENT INSURANCE AGENTS OF WISCONSIN, Re your committee's support of S. 2077. Hon. THOMAS J. MCINTYRE, Chairman, Senate District Subcommittee, MY DEAR SENATOR MCINTYRE: Representing 1,350 licensed producer-agents in the field of fire and casualty insurance in Wisconsin, this association urges your strong favorable support for subject bill which, we understand is scheduled for public hearing before your committee on January 28. We should appreciate your making the following points a part of the record as the official stand of Independent Insurance Agents of Wisconsin : The impact of District of Columbia adoption of S. 2077 will provide a most significant impact on actions by other State legislators across the country, critics of S. 2077 (advocates of S. 1184) to the contrary. It is our fear of this influence, reflecting an unwholesome trend disregarding the facts and demonstrating a callous disregard for the public welfare, that inspires our position in support of S. 2077. The 15-year history of Public Law 15 has served the citizens of Wisconsin and of the other various States extremely well. To allow no prior approval of insurance rates and plans will eliminate a number of public safeguards necessary to insure solvency of all of the over 800 companies licensed in Wisconsin, and further removes the very vitals from the authority which has been wisely extended by legislative act to administrative authority. Such actions further removes "government" from proximity to the citizens whose tax moneys have supported administrative costs for the most economical (State control) operation of administrative departments of insurance. In addition to inviting insolvencies (not all licensed companies are completely responsible any more than all citizens are sin free), we very strongly feel that allowing the passage of a no-prior-approval bill will encourage discrimination between insurance buyers. The "little" insurance buyer, in our opinion, will be placed in a position of "picking up the tab" for the rate and plan breaks which companies will logically be tempted to proffer "larger" accounts. Is this the kind of "justice" (that accorded only to those tabbed as "big") the opponents to S. 2077 are fostering? The insurance industry has not only contributed much to the financial security of this country, but their loss-prevention engineering and research have also contributed heavily to the preservation of life and property. The pollution of insurance laws, by inviting this "free-for-all" which would certainly result without the adoption of S. 2077, will in our opinion curtail if not completely eliminate such services out of financial necessity. This country has been historically described as the "land of opportunity." Failure to adopt S. 2077 will result in granting special opportunities exclusively to large insurance companies and big insurance buyers at the same moment discriminating against the smaller companies and the small buyer. It is on behalf of these customers of ours and constituents of yours which prompts our strong position favoring the continuation of prior approval of insurance rates and plans, and for the further reasons stated here, that we urge your early positive consideration of S. 2077. Respectfully yours, PAUL H. MAST, Executive Secretary. Senator THOMAS J. MCINTYRE, THE WYOMING INSURORS ASSOCIATION, Chairman, Senate District Subcommittee No. 2, Washington, D.C. DEAR SENATOR MCINTYRE: Enclosed herewith is a statement on behalf of the Wyoming Insuror's Association in connection with S. 2077. Please make this statement a part of the S. 2077 hearing record. Sincerely yours, WYOMING INSUROR'S ASSOCIATION, STATEMENT BY THE WYOMING INSURORS ASSOCIATION We are very much concerned with District of Columbia insurance rates because we feel that whatever Congress does in the District will be considered an indication of what they would like to see done in all the States. S. 2077 is in line with recommendations made by the National Association of Insurance Commissioners whose membership consists of the insurance regulators of each State and District. They are thus very close to the details and complexities of the insurance business and certainly in a position to have' great amounts of information at their fingertips to uphold their convictions. We of the Wyoming Insuror's Association feel that if some change is to be made in the District insurance rates said changes should be in accordance with S. 2077 because it is very essential that we not have the unbridled competition which could readily result from a "no prior approval" type approach to ratemaking. We are fully aware that competition is stimulating and proper but we are also aware that lack of supervision of rates before use could result in many small companies being forced into insolvency by the giants of our industry. Another very important factor to consider is the tendency to put the burden of proof in any given rate case on the insurance regulator whereas it seems only proper that a company filing for a particular rate should be required to furnish the proof that their rate is adequate and yet not excessive or discriminatory. Because of the above and other reasons important to a sound insurance industry we hope that you will approve S. 2077. Hon. THOMAS J. MCINTYRE, STATE OF OKLAHOMA, Oklahoma City, Okla., January 31, 1964. Chairman, Senate District Subcommittee, DEAR SENATOR MCINTYRE: I want to speak out as being against Congress amending the District of Columbia insurance rating regulatory laws to permit file and use of fire and allied lines rates in lieu of prior approved rates. If Congress permits fire and casualty rates to be used before they are approved by the District of Columbia Insurance Department, the result will be uncontrolled rate wars, inadequate rates, excessive rates, discriminaton and unfair competition, and insolvency. Congressmen might wonder what business it is of the State insurance commissioner of Oklahoma as to what goes on in Washington, D.C. My answer is when Congressmen make a mistake, the whole country suffers. Having served 21 years in the Oklahoma Insurance Department, I think my experience qualifies me to take this stand. Yours very truly, JOE B. HUNT, Insurance Commissioner. JULIAN B. HOPKINS INSURANCE AGENCY, Re prior approval versus no prior approval. DEAR SENATOR MCINTYRE: I am writing you, sir, concerning a matter that could have national repercussions in the insurance business, wherein, it ap pears some kind of action may be forthcoming this month on prior approval of rates or no prior approval by your subcommittee. We respectfully request that prior approval be given your sincere consideration. If this is not done, then no prior approval could sweep the country with a chaotic situaton beyond description. This is not a matter restricted to the District. It is an attempt to get a precedent for all States to follow, and I strongly suggest, State regulation is more desirable than another potential octopus in Washington around our necks. If it is desired in New Hampshire, then it should be the prerogative of New Hampshire authorities. A very small majority of insurors are behind no prior approval; and their motive is not for the insurance buying public which after all is the reason for any kind of regulation. Thus, we respectfully request your doing all you can to maintain prior approval. Respectfully yours, HARRIS HOLLAND. H. L. WILLIAMS, AGENT, Corinth, Miss., January 23, 1964. Senator THOMAS J. MCINTYRE, Chairman, Senate District Subcommittee, DEAR SENATOR MCINTYRE: I see where there is some push for the passage of the "no prior approval" bill and I hope that you can see fit to oppose this bill very strongly as it leaves a company wide open to file at a ridiculous rate and to go to writing insurance at this rate until a hearing by the commissioners. I think this will tear up the whole structure of insurance rating and will also have a bad effect on all local agents in the United States which I feel is the backbone of insurance today, protecting the insured, servicing the insureds needs, and seeing that both large and small insureds receive an even break. Anything you can do to help protect us we will appreciate very much. Yours very truly, HARRY L. WILLIAMS. ROBERTS INSURANCE AGENCY, Re Senate bill No. 2077. Senator THOMAS J. MCINTYRE, Senate Office Building, Washington, D.C. DEAR SENATOR MCINTYRE: It is my understanding that soon your committee will discuss the pros and cons of the above bill and I would like to voice my opinion for what it is worth. The insurance industry is one of the largest businesses in our country and many people benefit from same. I am sure that you are aware of the fact that this industry, as a whole, wants fair practices for the industry but most of all for the customers. If it were not for the customers or John Q. Public our product could not be successful. Prior approval of rating based upon a positive regulation by the several States individually, in my estimation, is the only way that true insurance rates can be obtained. As you well know, insurance is broken down into many fields and the several States can best know what transpires as to premiums received and losses paid. This is the guide to what rating of insurance premiums really are. After all, aside from the acts of God, the public makes the rates. There are some companies that want to be set aside in rating and be treated like a spoiled child, but in a business like insurance they should be grown up enough to play the game in fairness to the industry as well, and most of all, to the people that they serve-John Q. Public. Each State has adequate personnel to handle their particular rating problems and this duty should be left to them. Prior approval. Thanking you for your consideration in this matter and trust that you and your committee will work this out with the industry and most of all fairness to mem. bers of the public. Yours very truly, B. B. BOWEN, Jr. |