1. Specific Expertise As to Managing General Agents (“MGAs”) in General
Watch insurance expert Bill Hager describe his expertise in regard to managing general agents.
A. MGA Expertise as an Insurance Regulator. I have had extensive and substantive experience relating directly to MGAs including determining the MGA and insurer’s obligations under their contracts. As a regulator, I approved the formation and authorization to conduct business between insurers and MGAs and oversaw MGAs on a daily basis as they carried out their various contracted duties.
As a regulator for eight years in three positions ((i) Assistant Attorney General assigned to the Department of Insurance (Iowa), (ii) First Deputy Commissioner of Insurance and (iii) Commissioner of Insurance), along with my staff, I approved (or disapproved) of the MGA contracts as entered into between MGAs and regulated entities. This regulatory action also included the approval of and regulatory oversight of their work under the MGA contract as well. In addition, I regularly served as an Administrative Law Judge in matters relating directly to MGAs.
B. MGA Expertise: NAIC. While Commissioner, I also served as a member of the National Association of Insurance Commissioners (“NAIC”), (including membership on its Executive Committee), the nationwide organization of all state insurance commissioners. That organization has responsibilities for establishing model insurance administrative regulations and model statutes for consideration by all of the states including provisions relating directly to MGAs.
C. MGAs Expertise: American Academy of Actuaries. Along these same lines, I served as general counsel and chief lobbyist to the American Academy of Actuaries, Washington D.C. The Academy is the national professional association for actuaries. These professionals are part of organizations (insurers and self insureds) that routinely utilize MGAs. Further, many larger MGAs routinely employ actuaries.
D. MGAs: CEO of a Major U.S. Insurance Entity. After serving as a regulator, I served as President and Chief Executive Officer for the National Council on Compensation Insurance (“NCCI,” New York City), a nationwide industry-owned organization with about 1,500 employees with annual revenues of about $150 million that did (and does) business in about 40 states. NCCI was domiciled in Florida and did business throughout the U.S.
Florida Domiciled and Regulated by the FL OIR. This means while CEO, NCCI was subject to the full authority of the various state Departments of Insurance (“DOIs”) including that of Florida and because NCCI was domiciled in Florida it was subject as well to that regulation of the Florida Office of Insurance Regulation (OIR) that relates to domiciled insurance organizations. Of course, NCCI was subject as well to the various state Insurance Codes throughout the U.S. including that of Florida and subject as well as the jurisdiction of all state and federal courts.
Among my responsibilities at NCCI was (together with my staff) to formulate all workers compensation insurance policy forms as used in our 40 states of operation. This work included drafting all policy language (tailored to the specific state’s insurance code) as well as drafting all endorsements and all other policy forms. In addition, my responsibilities included gaining state insurance department approval of all such policy forms as a condition precedent to their use as submitted by some 600 insurance companies. Many workers compensation insurers and self insured workers compensation employers utilize extensive MGA facilities in connection with the workers compensation policies and benefits. I know MGAs in connection with insurance and self insured facilities.
MGAs in Workers Compensation: NCCI. The health benefits under workers compensation are pivotal coverages and those health benefits are provided frequently through the use of MGAs to deliver services. I am very familiar with the meaning and relevance of MGAs in this regard.
E. MGAs Expertise: Reinsurance Arbitrator. I am also one of about 400+ certified reinsurance arbitrators (by ARIAS-US) and have sat as an arbitrator on various matters in which MGAs were part and parcel of matters in disputes between reinsurers and their insurers.
2. MGAs: Expertise as to Duties and Obligations of Managing General Agents.
A. MGAs: Expertise as to Duties and Obligations of MGAs as a Regulator. I have also had significant experience and responsibility in connection with determining and passing judgment on MGA’s responsibilities as to retail agents, insureds and insurers such as those involved here. In particular, in my three regulatory positions previously described, I had daily responsibility to assure and to hold accountable all of the state’s 1,500 insurers in connection with MGA relationships. I did so through a series of action steps and tools. The action steps and tools included the following:
1. MGAs: NAIC Market Regulation Handbook. As Commissioner, I had as an available tool, the NAIC Market Regulation Handbook (“Examiners Handbook” or “Handbook”). Among other things, this Handbook sets forth standards to assess MGAs behavior relating to (i) MGA operations, (ii) complaint handling, (iii) marketing and sales, (iv) producer licensing, (v) policyholder service, (vi) underwriting and rating, (vii) claims, (viii) MGA contracts and written agreements. The Handbook is used by every department of insurance in the United States. The standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC. The standards of the Handbook are universally recognized as appropriate standards (among other standards and custom and practice) against which to judge MGAs in carrying out their various contracted functions.
2. MGAs: Market Conduct Examinations. On a regular basis, my regulatory agency conducted Market Conduct Examinations of MGAs to determine whether in fact they were meeting all of their obligations to their insureds and others. This action entailed physically going into the MGAs files to determine any errant action or inappropriate actions. As further discussed below, errant MGAs were warned, disciplined and prosecuted as required.
3. MGAs NAIC Financial Examiners Handbook. As Commissioner, I had available another tool, namely the NAIC Financial Examiners Handbook (“Financial Examiners Handbook”). Among other things, the Financial Examiners Handbook sets forth standards to assess MGAs work in relationship to regulated insurance companies on a triennial basis. Among other documents reviewed by examiners in reaching financial conclusions are MGA matters. As with the Market Conduct Examiners Handbook, the Financial Examiners Handbook is used by every department of insurance in the United States. Similarly, these standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC. The standards of the Financial Examiners Handbook are universally recognized as appropriate standards against which to MGAs.
4. MGAs Financial Examinations. On a regular basis, my Department conducted financial examinations of MGAs utilizing the Financial Examiners Handbook to determine whether in fact the MGAs were solvent. As with market conduct exams, financial examinations entailed physically going into the MGAs’ operations and studying, among others, files to (i) assure compliance with policyholder duties and (ii) to assure that financial reporting matters were properly carried out. As further discussed below, errant MGAs were warned, disciplined and prosecuted as required.
5. MGAs: Complaints From the Public. On a daily basis, my Department received incoming consumer complaints as to MGA practices. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and equally important, those lawyers also determined whether a MGA evidenced unacceptable practices — that is to say, whether the incoming consumer complaints in fact constituted a red flag as to the MGA’s potential behavior across the board.
6. MGAs Prosecution. To the extent plan provider behavior required formal action (whether a result of complaints from the public or a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such MGAs under the state’s civil Administrative Procedures Act. In connection with such prosecutions, I served in various capacities during my eight years as a regulator, including serving as (i) prosecutor (as Assistant Attorney General), (ii) as the decision maker as to whether to initiate prosecution in the first instance (while First Deputy and Commissioner of Insurance) and (iii) as the Administrative Law Judge (“ALJ”) who presided over the prosecution and entered findings of fact and conclusions of law as to MGA practices. I have served as an ALJ in scores of such cases where the MGA practices were the primary issues and I entered final decisions and orders in such matters.
B. MGAs: Expertise As to Duties of MGAs as an Insurance Industry Executive: CEO of a Major US Insurance Organization. I discuss my executive experience at NCCI under this section because in addition to expertise as to MGAs (discussed above), my experience at NCCI also resulted in expertise as to MGA responsibilities.
While I was President and CEO, NCCI was subject to the full range of authority of the various state DOIs as discussed above. As such, I am very familiar with the duties of DOIs’ licensed MGAs relating to their obligations and responsibilities to their brokers and the regulatory scheme in place by the various DOIs as to such matters including the FL OIR.
While President and CEO of NCCI, I visited and physically toured and reviewed in excess of 400 insurance companies and gained direct exposure to the procedures and processes and standard industry practices of the U.S. MGA community in that any number of those insurers utilized MGAs in conducting their insurance operations.
C. MGAs: Expertise as to Duties of MGAs: General Counsel to the American Academy of Actuaries. As stated above, I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. I mention it again here in connection with the duties of MGAs because Academy members included affiliation with virtually every MGA of significant size and every insurance company in America who utilized MGAs. The Academy’s Board of Directors was likewise made up of leading insurance company executives utilizing MGAs.
D. MGAs Expertise: Attorney in Private Practice Iowa. As an attorney in private practice, I represented a number of insurer and self insureds and became familiar with applicable industry standards of practice relating to MGAs, including MGA duties to their contracting entity and the related duties of the insurer or self insured organization that had contracted with the MGA. Those interests also included intimate involvement with MGAs as counsel to the (i) Professional Insurance Agents of Iowa (property casualty agents) and (ii) the Iowa Association of Life Underwriters (life, disability, health and annuity insurance agents) and (iii) Property Casualty Insurers Association of America (“PCIAA”). Each of these organizations had pivotal relationships with MGAs.
Contact Bill Hager at 561-306-5072 or via email to discuss your case.