New American Agents Alliance Director Looks Forward to 2005

Ken Nigohosian, the new executive director at La Verne, Calif.-based American Agents Alliance, talked to Insurance Journal about California Insurance Commissioner John Garamendi’s proposed agent/broker disclosure regulations and what’s ahead for the American Agents Alliance.

Insurance Journal: Let’s begin by talking about the broker disclosure regulations that Commissioner Garamendi has proposed. Tell me why the American Agents Alliance is opposed to them.

Ken Nigohosian: We don’t feel that the regulations meet the required test for authority and consistency. Regulations must be consistent and not in conflict with a current statute or proven necessary. And that also includes recognizing that the Office of Administrative Law proscribes to a governing code that also includes areas of consistency, necessity and clarity. Under those terms, we feel that because of the consistency, necessity and clarity of the proposed regulations, we don’t feel that they’re either required or that the Commissioner has the authority to do so.

IJ: How will the disclosure regulations, if put into effect, affect brokers, agents and the insurance industry as a whole?
Nigohosian: Let me first address another two areas. Two areas that we are really focusing our attention on are the areas of necessity and clarity.

Based on our interpretation of what we have of current law, these proposed regulations aren’t necessary. There are current regulations that have been created, proposed and implemented by the Department of Insurance which address the issue of broker fees. At the time the agents do receive a broker’s fee, they must disclose that they could receive compensation from the carrier. From the standpoint of necessity, we don’t think it’s necessary.

From the standpoint of clarity, under current law, it states that brokers have a duty to exercise reasonable care, diligence and judgment in the procurement of insurance. But with these new regulations specifically addressing the issue of best available insurer, wow. How do you actually identify what a best available insurer component is when you’re dealing with areas like price, coverages, service and stability?

Those are the two areas that we’re really going to focus our attention on, what we did focus our attention on and will continue to do so with the Department of Insurance.

IJ: What are some of the things the Alliance is planning on doing to express its opposition to the proposed regulations?

Nigohosian: First of all, we have been working closely with an attorney, Bob Hogeboom from Barger and Wolen, and he has a tremendous amount of experience working with the regulatory environment itself. He has helped us with our position paper itself. We have made our position paper public. He’s in the process of refining it. We have sent our position paper to the Department of Insurance for written comments that must be made available to them prior to the deadline. Hopefully we will be participating in the hearing on Jan. 6 to present our case as well. Bob will be there and I may be there, or perhaps we will have one of our agents attending and give them an opportunity to speak on behalf of the Alliance. And then [we’ll participate in] any subsequent hearings for the Department of Insurance.

We’ve also worked with other industry associations and made our position available in public to them. They’ve had an opportunity to look at that and we’ve shared some ideas with them. They will be in the process of introducing their position papers as well. We are addressing primarily the same issues based on our interpretations of our position papers, which have been made public. We will be prepared to participate in the Jan. 6 hearings.

IJ: Besides the broker regulations, what are you hoping to accomplish at the Alliance as its new executive director?

Nigohosian: The biggest thing, and this is looking at the big picture (recognizing that there’s a lot of little things that we will be doing), is public perception of the industry itself. The public’s perception of the insurance industry certainly hasn’t been good over the years and that’s been pretty consistent and we’ve got to be able to change it.

Despite what’s been going on in the past couple of years, and more specifically over the past couple of months with the situation involving New York and the Attorney General of New York, we, especially the agents and brokers and carriers, are the good guys. We’re not really greedy, and we aren’t self-interested. We care. We really do care. There are a few bad apples out there and those bad apples have to be recognized and they have to be dealt with in a fashion that’s necessary.

The Alliance and other associations represent thousands of independent agents out there who are independent business people in their communities and they employ thousands of people as well. These people are actively involved in their communities, whether they’re members of PTAs or Kiwanis clubs, or Rotary clubs, or even 4-H clubs, they are active members of the community and they give something back to the community.

What I hope to accomplish in working with them, and they’ve already done a good job, is to change the public’s perception of the insurance industry itself and creating a picture that we’re not really the bad guys. We’re the good guys and we’d like to help.

IJ: What changes, if any, will you make at the Alliance?

Nigohosian: My long term goal is going to take some time obviously because you have to build up a fair amount of credibility of which the industry’s done a relatively poor job of doing in most situations. But short term goals for the Alliance itself is to evaluate our current array of member products and services, identify their future needs and try to fulfill their needs. Whatever their needs are, that’s what my intent is. Doing that will certainly help us as an association and help them and that’s what we’re there for, to fulfill their needs.

We also want to become a stronger voice in the regulatory and legislative arena. We certainly want to defeat any poor regulations and poor legislation that has been introduced. The Department of Insurance’s proposed regulations are poor regulations and we want to help defeat those the best that we possibly can. We also want to take it to the legislative level. If there’s anything at the legislative level that has to be defeated, we’ll do so.

In contrast to that, we want to become more proactively involved in developing legislative and regulatory agenda items that benefit the agents, benefit the carriers and ultimately benefit the consumers. We think we’re capable of doing that, so we need to identify what those needs are and pursue them from there. We want to become more proactive from that perspective and ultimately I think that will have an impact on our Alliance and building membership and sponsorship up to a level where we can have more of an impact on what goes on in California.

What we’d really like is to be seen as the go-to Alliance. When people have some questions or have some issues or would like to get some things done, we want to be known as that Alliance or that association that’s capable of doing that for them.

IJ: How do you plan on following up on former Executive Director Lorelle Kitzmiller’s work at the Alliance?

Nigohosian: The Alliance has developed a good base to work from. All I can say from my perspective is that I have a great deal of respect for the previous administration. They’ve done a good job and I want to continue to build from that base. It’s almost like developing a foundation. Now I have to put the framework up. I want to build on that the best we possibly can and I think we’re capable of doing it. We’ve got the staff to do it and we’ve got a lot of support from our members and we continue to hope to gain additional members so we can gain additional support out there. We feel we’ve got the momentum going and it’s just a matter of continuing on with that momentum.