Minnesota Agents Association Floats Legislative Collective Bargaining Draft; Seeks Input

In 1900, Texas independent agents approved a plan to unionize. The plan eventually faltered at the national level, but now, more than a century later, Minnesota agents are floating a similar idea. The board of directors of the Minnesota Independent Insurance Agents has drafted legislation for possible introduction in the state legislature this January that would permit agents to collectively bargain the terms and conditions of agency contracts with insurance companies.

“This is a radical proposal, but more and more agents are calling the association for help in determining how to deal with decisions made by insurance companies that drastically affect the well being of their agencies, ” said Daniel D. Riley, executive vice president for the association. “Agents are asking the association to become actively involved in the negotiations between agents and companies. Currently, the association’s hands are tied because of the anti-trust laws [that] prohibit the association and its agents from coming together to discuss issues facing them collectively.”

“Agents are getting unilaterally squeezed,” said Dominic Sposeto, the association’s governmental affairs director. “They don’t feel they have a voice.”

Sposeto said compensation is not the primary reason for the agents’ move, though it is a factor. “It’s also about how contracts are terminated and ownership of expirations” among other things.

“Our membership has seen a massive shifting of expenses and commission reduction passed down to the member agents over the years and it hasn’t stopped,” said Dave Szczepanski, president of the association. “Insurance companies have indicated that their margins need to improve; unfortunately, the cost is being shifted to the agent.”

The Minnesota agents modeled the legislation after a bill that was passed in Texas in 1998. That bill allowed Texas doctors to take part in “joint negotiations” with the supervision of the state Attorney General, according to Kim Ross, vice president of public policy at the Texas Medical Association.

Texas doctors created a firestorm when the concept of a “union” was presented back in 1998. However, as Ross explained, it is not a union as the doctors are independent contractors and are not in an employee/employer relationship. Since the bill has passed, no joint negotiations have taken place. Doctors were waiting for the 2000 legislative session to iron out three or four ambiguities that exist in the bill as it was passed.

However, according to Ross, the mere existence of the bill has softened the market, and HMOs and insurers are more willing to negotiate with doctors.

Under the terms of the proposed legislation, agents may communicate with each other with respect to the contractual terms and conditions to be negotiated with an insurance company. Representatives of the insurance agents and the insurance companies must meet with the attorney general to ensure that the collective bargaining is pro-competitive and in the public interest.

Sposeta says that the Michigan association is also looking into alternative ways to create a better working relationship with insurers. For instance, supporting a statute that would require companies to create agent committees. “This is something good companies already do,” he said. “Others have them, but don’t use them.”

The association, after polling its members more thoroughly and working with labor lawyers and insurer groups, will make a decision on whether or not to pursue the legislation in early March.

Both the Independent Insurance Agents of America and the Independent Insurance Agents of Texas say they have no comment on the proposal.

Topics Carriers Texas Agencies Legislation Minnesota