Making the Most of 2011

With a new, drastically different Congress taking their seats in Washington, 2011 promises to be a year of opportunity. As we at the National Association of Mutual Insurance Companies meet with new and returning Senators and Representatives, we’ll work to correct an onerous provision of the healthcare bill and address issues vital to our industry and the American economy.

The first order of business is working to repeal the onerous new 1099 filing requirements for businesses that were passed in last year’s healthcare reform bill. This provision will force any organization to file a 1099 with the Internal Revenue Service for expenditures paid to a single vendor totaling $600 or more, starting in 2012. This could include anything from phone and internet service to office supplies or gas for a company car.

From its shadowy beginning to its continued existence, this provision is a perfect example of why so many Americans think Washington is broken. No one’s claiming the provision as their idea. Now seemingly everyone wants to repeal it, but the requirement emerged unscathed from the most active “lame duck” session of Congress I’ve ever seen. Why? As best I can tell because neither side wants to let the other take credit for repealing it.

While pushing for repeal of the 1099 requirements, NAMIC will also be commenting on a slew of proposed rules expected this month. Under the Dodd-Frank Act, federal agencies will be proposing scores of new rules, perhaps as many as 85 in January alone, some which could affect the insurance industry. In many ways this process will be like starting over; we’re going to dust off the talking points on the unique nature of insurance and why insurers are not systemically significant. These arguments, made with ample supporting data, were important to our effort to educate Congress as they were crafting the bill, and we expect to face similar challenges in its implementation.

We’ll also be keeping a close eye on the new agencies established under Dodd-Frank, most notably the Federal Insurance Office. The FIO can be what it was intended to be, a thoughtful provider of important data for Congress, or it can be a duplicative and costly burden. Who is in charge will be an important factor in which of these becomes reality. Agencies usually take on the character of whoever is in charge, and all the more so when it’s the first.

NAMIC will continue to lead on natural catastrophe issues, working to explain to Congress the vital need for prospective, mitigation-based policies including reforming the National Flood Insurance Program. There’s bipartisan support on both sides of the aisle for common sense reforms, but for the past several years the debate has been weighed down by a proposal to absorb the windstorm insurance market into the NFIP. With that proposal’s supporter returning to the private sector, we hope to make significant progress putting the NFIP on the path to financial stability.

Another focus for us is legislation to incentivize the enactment and enforcement of strong building codes in the states by increasing the amount of mitigation funding they could receive. As we’ve seen through the work of the Institute for Business & Home Safety and their new facility in South Carolina, strong building codes are a cost effective way to reduce losses and save lives. This legislation would provide a carrot for the states to make the investment in stronger building codes.

A lot has been said about taxes lately, and in 2011 NAMIC hopes to tackle an issue that doesn’t get the headlines but is important to many small mutual insurance companies. Since 1986, property/casualty insurers with direct or net written annual premiums of $1.2 million or less have been allowed to be taxed on their net investment income. Unfortunately, that threshold hasn’t changed since, despite the dramatic changes in our economy. For many in rural farming communities, this has forced a decision between issuing new policies and staying beneath that limit.

By addressing these issues, Congress can accomplish much to help not only NAMIC members and their policyholder-owners, but also homeowners and businesses across the country. It’s up to them, and us, to make the most of the opportunity.