AAIS CEO Ed Kelly sat down with Bob Rusbuldt, CEO of the Independent Insurance Agents & Brokers of America (Big I) to discuss the impact of the Biden Administration and COVID-19 on insurers – and what may be ahead in the legislative and regulatory arena.
Mr. Rusbuldt was candid in conveying that more government intervention was ahead with the new Biden Administration. “We’re going to see Congress and some of the state governments look at things like risk-based underwriting and community-based underwriting and rating.” Mr. Rusbuldt added that Congress may look at Congressional Review Act (CRA) for insurers, HUD disparate impact rules for insurance industry, labor rules, and the Federal insurance Office (FIO) and the Treasury Department will have different agendas.
Taxes are also on the radar, with potential negative impact on independent agents. President Biden campaigned on raising taxes from 37% to 39.6% for certain individuals. Two-thirds of Big I’s members…pay individual rates, so Mr. Rusbuldt is familiar with many that are likely to be adversely impacted. Biden’s plan to raise the corporate tax rate from 21% to 28% will negatively affect every insurance company in the country, according to Mr. Rusbuldt. He also pointed out that should the President’s remove a cap on Social Security payroll taxes, it will have a huge impact on individual companies.
All of this comes at a time when independent agents and brokers have seen their small business clients struggle immensely during the COVID-19 pandemic. According to Mr. Rusbuldt, “A lot of small business people thought that if the government mandated a shutdown of their business, they would count as business interruption (BI). Of course, that’s not what the vast majority of policies say.” Exclusionary language can make it very clear that a policy’s BI coverage doesn’t cover pandemics or viruses, yet there has been understandable confusion. “Independent agents and brokers have been working overtime to educate their clients on what’s covered, and what isn’t covered.”
On the other hand, Mr. Rusbuldt predicts that we’ll see a mini economic boom after widespread vaccinations, because of “pent up customer demand.” And this will be good for the insurance industry and independent agents and brokers. “With more people buying houses, the more cars they buy, the more washing machines, the more opportunity for the insurance industry,” he noted.
Most independent insurance agents and brokers have come through the financial strain of the pandemic unscathed or minorly effected, but for hospitality-based organizations, which have seen some challenges. Still, Mr. Rusbuldt pointed out that “Every state is different; economies are different and therefore independent agencies and brokers have been affected differently.”
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