Pro act joint trades letter h r 842 insurance and financial

Published

March 09, 2021

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March 4, 202 1

The Honorable Nancy Pelosi The Honorable Kevin McCarthy
Speaker Minority Leader
U.S. House of Representatives U.S. House of Representatives
H-222, U.S. Capitol H-204, U.S. Capitol
Washington, D.C. 20515 Washington, D.C. 20515

Dear Speaker Pelosi and Minority Leader McCarthy :

As the Chief Executive Officers of trade associations that collectively represent more than 100,000
individual small business owners, broker -dealers and insurance companies providing financial
services to more than 1 12 million American families, we are writing to express our members’
strong concerns with H.R. 842 , The Protecting the Right to Organize (PRO) Act. This legislation
seeks to change the definition of “ind ependent contractor” in a way that would cause significant
disruption to the independent financial se rvices and property casualty insurance industr ies and the
customers we serve .

The current model provides financial services profession als with multiple avenues for advising and
helping American families and businesses build secure financial futures and protect their assets .
Some choose to engage in this work as employees, while many others prefer the freedom and
independence that comes fro m operating their own business utilizing the independent contractor
status . Many have substantial relationships with one or more insurance companies , broker dealers,
or registered investment advis ors, which allows them to offer expanded options to their customers .
These small business owner s enter into written agreements with insurance companies (or general
agents of insurance companie s), b roker dealers or registered investment advis ors that carefully set
forth the terms of the independent contr actor status. It would be enormously disruptive to negate
these agreements through Federal legislation.

By effectively reclassifying independent contractors as employees , the PRO Act would create
uninten ded consequences for the industry, and specifically insurance producer s and independent
financial advisors. These individuals are vital to ensuring that Main Street Americans have access to
the important advice, products and services necessary to achieve their financial goals and protect
their home s, families and businesses . In times of catastrophe, insurers engage independent
contractors to provide a faster response for consumers experiencing loss . The PRO Act’s “ABC
test ” could eliminate the choice a majority of practitioners have made to serve clients
independently. In turn that could drastically reduce client s’ ability to access high quality advice for
their insurance , investment and retirement security needs.

Additionally, affiliated financial advisors have a long history of appropriate classification as
independent contractors and are not involved in the worker classification problems found in other
industries. They are not employees for purposes of determining applicability of federal (ERISA and
EEO1) repor ting requirements and State wage and benefit provisions. Compensation practices in
the securities industry are carefully recorded, with IRS Form 1099 reporting universally required. As
a result, the problems of cash payments and unreported income that may exist in other industries
do not exist in the securities and insurance professions . Furthermore, the insurance industry and
independent broker dealer s are highly regulated.

As you consider H.R. 842 , we hope that you will be mindful of the negative impact that this
legislation will have on customers , agents and advisors working to ensure that their clients have the
resources to make wise financial decisions and ensure financial security for themselve s and their
families.

Sincerely,

Susan K. Neely
American Council of Life Insurers

David A. Sampson
American Property Casualty Insur ance
Association

Christopher A. Iacovella
American Securities Association

Marc Cadin
Finseca

Ken A. Crerar
Council of Insurance Agents and Brokers

Dale Brown
Financial Services Institute

Bob Rusbuldt
Independent Insur ance Agents and Brokers
Association of America

Wayne Chopus
Insured Retirement Institute

Jim Hodges
National Alliance of Life Companies

Chuck DiVencenzo
National Association for Fixed Annuities

Janet Trautwein
National Association of Health Underwriters

Kevin M. Mayeux , CAE
National Association of Insurance and
Financial Advisors

Chuck Chamness
National Association of Mutual Insurance
Companies

Kenneth E. Bentsen, Jr.
Securities Industry and Financial Markets
Association