Changing the Face of California’s Insurance Marketplace

IBA West’s O’Kane Reflects Back on 22-Year Tenure

There are few people in the insurance industry that have truly made an impact on behalf of independent agents and brokers. Jerry O’Kane is one of those people. An innovative, strong and persistent industry leader, O’Kane’s career is one that is decorated with many successes for agents and brokers. As O’Kane prepares to hand over the reins as executive director of IBA West to Clark Payne, his achievements during his tenure are highlighted by the impact he has had on the industry.

“He’s a true workaholic,” former IBA West president Bud Wilson said. “He immerses himself in what he does and he does it his way.”

Legislative advocate Steve Young said O’Kane “… consistently had this ability to anticipate political or business developments in advance—and had the ability to deal with them. He is an amazing guy—one of the smartest people I’ve ever met. It was Jerry’s unique vision that put the association in place to make changes.”

When O’Kane came on board at the Independent Insurance Agents and Brokers of California (IIABC) in 1982, the association was the oldest and perhaps most revered, yet still highly competitive with two other agent associations: Professional Insurance Agents (PIA) and the Western Association of Insurance Brokers (WAIB). But the associations were not so competitive that they did not work closely alongside on several issues, specifically education.

In fact, O’Kane met and married his wife, Marjorie, who was at the time the executive director of the PIA. “By the time I arrived in 1982, she had built PIA into a highly competitive organization,” O’Kane recalled. “Some days we would have more members and some days they would have more members. It literally was that close.”

Eventually, the IIABC and the WAIB merged in 1995 and took on the name IBA West. Now representing approximately 750 member agencies statewide, IBA West flourished under O’Kane’s guidance, and continues to do so today.

Remarkable achievements
O’Kane’s long and storied career is marked by many milestones in California’s insurance history. Most notably, O’Kane was the driving force behind opening up the State Compensation Insurance Fund to independent agents and brokers. While IBA West was conducting seminars to teach agents and brokers to compete with the State Fund, O’Kane and other industry leaders were simultaneously working to convince State Fund management that a broker program would benefit the giant workers’ comp carrier.

O’Kane noted that the association had made some progress in the late 1980s and into the early 1990s, when then-State Fund president Jack Webb finally agreed to allow agents and brokers to write for State Fund. This was a huge victory for the association, as well as for independent agents and brokers.

Wilson explained that prior to O’Kane’s achievement, “State Fund was our worst nightmare when it came to renewing and writing workers’ compensation,” he said. “We tried many times to get them out of the business and never could succeed. Every agent in the state of California owes Jerry O’Kane a tremendous economic debt; perhaps their very existence was enhanced by what Jerry did. It was an unbelievable feat. Those of us who are old hats at this couldn’t believe it when they did it.”

State Fund officially opened to agents and brokers in 1994, right about the time the industry turned to open rating in California. Webb felt that State Fund needed a distribution system that would give their clients access to health insurance products and IBA West provided that opportunity.

“We worked very carefully with the State Fund to do an experimental pilot program initially for brokers and then to build it into a full-fledged program which of course is enormously successful today,” O’Kane said. “The Fund tells us that about 80 percent of its volume is now produced through the broker program and the services that agents and brokers offer to their clients has made it possible for the State Fund to carry the load that it has-especially over the last three or four years where it’s attempted to assure that there is a market in the wake of all of the private company insolvencies.”

Wilson said it was O’Kane’s insight into the independent agency system that proved crucial when approaching the Fund. “I think Jerry understands the nature of the independent insurance agent and he was able to go to the State Fund and talk to them from the standpoint that we write a better class of business in general, we have closer contacts with our customers, we’re able to impart a great deal of information to our customers that perhaps wasn’t getting done through their direct system, and proved to them and offered the suggestion to them that we could do it better. And in fact we did. They shut down their direct system because the independent agents supplied them with the business that they wanted. It’s a wow, there’s no question about it. It was huge.”

Workers’ comp then and now
O’Kane’s influence in the workers’ comp marketplace didn’t stop there. He continues to be a strong advocate on behalf of the association. A year ago, O’Kane spearheaded efforts to create the California First Advocacy Plan, which was adopted by IBA West’s Board of Directors. The plan consisted of five parts designated to prepare the association for future industry battles. O’Kane said members were responsive to the Fund, contributing almost $500,000 in the first year.

“The Fund has made it possible for us to be involved in coalitions in the workers’ comp effort and make contributions to many different aspects of that,” O’Kane said. “We’ve also used it to be involved in public policy issues that are well beyond our industry. It’s a role that we need to take and we’re pleased to do. We’ve expanded our lobbyist role into regulatory advocacy and that’s helped us a great deal.”

As for O’Kane’s views on the recent proposed reform package, he said that change will not come immediately; the reforms will take a year or longer to be fully implemented. “Naturally the California Applicant Attorney Association is hot on the trail of trying to blame the insurance industry for the reforms not working when in fact they haven’t even been implemented,” he said.

“It’s quite an amazing thought that they have a comprehensive public relations campaign to discredit SB 899 and the insurance industry when they know better—they know that it hasn’t been implemented. But that certainly isn’t stopping them. It’s going to be another year and thus far we are as concerned as we are pleased to get the reforms passed and we can see the benefits and the potential of the reforms.”

O’Kane also commented on Insurance Commissioner John Garamendi’s push for 24-hour medical insurance coverage. “He looks at it simply … that a business or even a household buys many types of insurance and feels that there’s some redundancy among them. Right or wrong, if this were a good business idea it would have happened by now not only in the small ways that it has, but in a major way. Unfortunately it’s been very difficult. The health insurance policy language and the workers’ comp policy language are substantially different in how they deliver their services and perform, meet their reason for being. And it just has not been easy. There have been a number of initiatives within the insurance industry to go in that direction because of course we want to be on the leading edge of not only reform but efficiencies within our own products. It just hasn’t happened because it hasn’t been able to happen.”

Surviving Prop 103
But O’Kane and the association have seen their fair share of setbacks over the course of the past two decades. O’Kane’s biggest disappointment was the passage of Proposition 103 in Nov. 1988, which had an adverse effect on agents and brokers. Among the challenges the industry now faced, the biggest battle for IBA West was going against then-Insurance Commissioner John Garamendi, who had decided that not only insurers should have to refund 20 percent of their premiums as required by Prop 103, but also agents and brokers.

But agents never had to give any commissions back due to IBA West’s advocacy, Young explained. The association fought Garamendi and insurance companies in court and succeeded.

Prop 103 had other repercussions for agents and brokers. “It eliminated historic laws dealing with rebating; it changed the way that the agents and brokers dealt with their clients; it changed the application of anti-discrimination laws in California; it changed the anti-trust laws as they were applied in California to the business of insurance and agents and brokers. We worked for several years to ensure that agents and brokers complied and were familiar with and understood the new laws and were able to find a way to work with them effectively,” O’Kane said.

O’Kane said that after the implementation of Prop 103, the industry went underground for awhile and membership declined slightly. Simultaneously, the mergers and acquisitions activities began to pick up, and the industry began to consolidate, a trend that is continuing today.

“We learned some tough lessons as an industry and as a result of that are much smarter and more conscious of who the opposition is in issues like this-and what lengths they’re willing to go to oppose tort reform and other things that need to be done in order for the insurance system to work smoothly and accomplish its purpose,” he added.

Making a difference
O’Kane maintains that IBA West’s first and foremost priority will continue to be, as it has in the past, strong, visible advocacy on behalf of its members. “The organization today is stronger than ever and that’s a legacy that I’d be more than happy to say that I had a hand in. The number one reason for members belonging is advocacy.”

Young recalls that O’Kane was always on the cutting edge of technology. “Jerry understood that the entire way of doing business was about to be changed by technology,” Young said. He worked hard to make IBA West a technological association. O’Kane further streamlined the association by eliminating its central headquarters. At times when the association wasn’t seeing the revenues it wanted, O’Kane cut association expenses, outsourced and downsized.

He also reduced IBA West’s Board of Directors from 23 members to 13 in order to keep the focus on the best interests of its members. “We rely less on geography and much more on qualification and talent,” O’Kane said, noting that the former board members were selected based on their geographic region. “We strengthened the caliber of our board while at the same time reducing its size, streamlining it so it could make better decisions. We gave it better sources of information; we reformatted and redirected committees so that they’d have specific goals in support of the organization’s objectives. We no longer had committees ‘just because.’ And we rebuilt our cash reserves.

“During that time we consistently kept our eyes on serving the members in spite of all of the ups and downs we had,” he continued. “The one place where we didn’t ever cut our costs or scrimp was on advocacy.”

O’Kane also credited his staff for their hard work and persistence in helping IBA West achieve its goals. “He inspires in his staff an intense loyalty,” Young added.

“IBA West and its predecessor organizations have always been member driven organizations,” O’Kane added. “We’re very proud of that heritage and that commitment on behalf of the members. The business has changed a lot over the years and the role of the staff leader or the staff executive has changed with it, leadership skills are more important than ever. I’m very pleased to say that we have a bright young leader in Clark Payne who will be succeeding me and who will do a great job. People will ask Clark how he’s going to fill my shoes and he’ll be smart enough to tell them that he brought his own shoes. He’s going to do a great job.”

Upon his Aug. 31 retirement date, O’Kane will continue to serve as a consultant to IBA West, as well as take advantage of some well-deserved leisure time.

Topics California Agencies Legislation Workers' Compensation Market