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The merger of two major producer organizations will build upon an already close working relationship to give insurance agents and brokers a louder voice on Capitol Hill.

The National Assn. of Insurance Brokers merged into the Council of Insurance Agents and Brokers earlier this year, with the new group retaining the CIAB's name (BI, June 1). Half of the NAIB's 26 members already belonged to the much-larger CIAB -- which now has about 275 members -- and the two Washington-based producer groups had supported each other in legislative efforts.

To qualify for membership in the CIAB, agencies and brokerages must generate annual retail revenue of at least $2.5 million.

Joel Wood, senior vp-government affairs for the CIAB, noted that there had never been any significant differences of opinion between the two groups.

In fact, the two organizations shared office space in the 1940s, when both groups were based in New York, according to Ken Crerar, the president of the CIAB. "We have a history of 25 to 30 years of working together," Mr. Crerar said.

The merger "is going to allow a focus on the political clout" of brokers, more than in the past, said Mr. Crerar. With one organization, large commercial insurance agencies and brokers are "all in the same camp, all working toward the same goal," he said.

"By putting everybody in one camp, we can talk with one single voice," said Mr. Crerar.

And, according to Mr. Wood, the newly enlarged CIAB will be speaking on carefully targeted issues.

"We're not going to tilt at windmills on issues that don't seem to be going anywhere," he said. "The frustration factors on tort reform and Superfund reform have been high over the past year. We're simply choosing to spend our time on the issues that can make a difference for our members. Chief among them is H.R. 10."

H.R. 10, the financial services modernization bill, won House approval but still awaits Senate action. Mr. Wood said that, despite the rapidly shrinking legislative calendar, he isn't ready to write off H.R. 10 as a lost cause.

Mr. Wood said he doesn't want to be "naive" about the bill's prospects, but he pointed to its history to date as reason for some optimism. "Everybody said that it was never going to survive after it got out of the Banking Committee and the Commerce Committee would never take it up. And then (Rep. Michael) Oxley (R-Ohio) took it up in the subcommittee, and the full committee took it up."

"Then everybody said it was going to die, that the leadership wasn't going to try to reconcile those two competing versions," Mr. Wood said. "Then the leadership reconciled them, and they said they'd never put it on the floor. Then they put it on the floor with the credit union stuff, and that blew up. They said they would never get through another humiliating experience like that, and you couldn't do it without the credit union bill. They put it back on the floor in three weeks, and it passed."

"Now, everybody's saying that it's not going to get done in the Senate. I think there's a little bit more of a chance than people think," said Mr. Wood.

He added that he believes the Senate Banking Committee could approve financial services reform legislation by early next month if some key individual banks and other industries affected by reform can agree on the shape it should take.

"Irrespective of the clock, we can get this done," he said.

Another issue Mr. Wood pointed to as a legislative priority for the enlarged CIAB is the extension of the so-called Subpart F provision, which stemmed from the Balanced Budget Act of 1997.

The provision, which was enacted for one year, allows U.S.-based brokerages, insurers, banks, securities firms and other financial services entities to defer the U.S. taxes on their active earnings overseas until that income is returned to the U.S. parent company. This permits financial services to be governed by the same tax rule that governs most other non-financial services firms doing business abroad.

"I am very upbeat we will get" at least a one-year extension, said Mr. Wood.

"Fortunately, when you talk about the implications of the NAIB merger. . .not only have we been in sync on legislative goals for many years, particularly on federal issues, we also have shared the same tax counsel," he said. The tax counsel is Matt Dolan, a partner in the Washington office of Baker & Hostetler.

Mr. Wood said that the most important "emotional issue" the organization faces on the federal level is to avoid "punitive" repercussions of patient rights legislation.

Many CIAB members are involved in placing benefits as well as property/casualty insurance business, and they fear they could become targets of suits for the mistakes of managed care organizations, he said.

On another benefits related-issue, the CIAB is attempting to encourage -- "to whatever extent we can" -- the rights of small-group self-insured plans to enjoy pre-emption from state benefit mandates under the Employee Retirement Income Security Act. Mr. Wood added, though, that he thinks congressional Democrats want to keep health care alive as a campaign issue for the fall elections.

Mr. Crerar said that the CIAB is still determining exactly how its legislative team will work as a result of the merger, though Mr. Wood will remain the group's chief federal lobbyist. He will be backed in this role, when needed, by Barbara Haugen, a senior vp who formerly served as the NAIB's director of federal affairs.

Ms. Haugen will also play a role in the CIAB's international efforts. "We've quietly been involved in the international area for a long time, since 1991, 1992," said Mr. Crerar, who added that Coletta Kemper, the CIAB's vp for industry affairs, will become increasingly involved in international issues as well.

As part of the merger, the CIAB created a "global issues committee" that gives some of the larger members -- those that may be interested in issues that don't affect all members -- a way to quickly move on something and self-fund it, he said.

Mr. Wood said the CIAB is looking for ways to increase its international activities and the international clout of its members.

He said that trade protection issues cut both ways, and that the United States erects some barriers to commerce that Europeans are tearing down. Mr. Wood noted, for example, that European nations have "done more to harmonize and streamline the access that brokers have" in crossing national borders than U.S. states have done in crossing state borders.

On the international front, the CIAB is a member of BIPAR, an international broker group that lobbies the European Community, and of the Coalition of Service Industries, which focuses on insurance and financial services regulation worldwide.

One direct result of the merger is that the CIAB will become more active in state insurance affairs, said Mr. Crerar.

Anne Flanagan, another former NAIB staffer, has been named the new director of state affairs. In the past, the CIAB's director of industry affairs devoted perhaps a quarter of her time to state issues. Now Ms. Flanagan will work on those issues full time, he said.

State issues that interest the CIAB include commercial lines deregulation, license streamlining, and surplus lines tax issues. "We'll play a more aggressive role than we have in the past," said Mr. Crerar.

The new state effort "dovetails very nicely with our federal effort, and it only proves a point: We don't care where we get this licensing reform and streamlining and efficiencies. We don't care if it's at the state level or the federal level. We want it done, so we're going to put resources on both sides of the equation to drive that issue so we can resolve it."

Mr. Crerar said he believes the merger has created a CIAB in which the whole is "greater than the sum of our parts," removing any reason for perceived conflict or competition.

That's particularly critical, said Mr. Wood, because competition in the agent community has proved to be "a significant drag on overall resources, not to mention a diversion from the primary goals of serving our members in an increasingly consolidated marketplace."

Mr. Crerar said that the merger does not mean that there will never be differences of opinion, arguments and internal fighting among members at times. "But at the end of the day," he said, "I think our message will be clear, and I think there will be no confusion.'