John Norwood is one of California’s best known legislative advocates for the insurance and financial services sectors.
Norwood, principal of Norwood & Associates, has garnered recognition for his political work dating back to the early 1980s, including political battles to amend the state’s insurance rate regulations, and reforming insurance agents and brokers licensing laws.
His client list is lengthy. Among his long list of clients, Norwood represents IBA West, California Wholesalers Association, Liberty Mutual Group, Pacific Life Insurance Co., The Surplus Line Association of California and Zenith Insurance Co.
Norwood spoke to the Insurance Journal about legislation and regulation, including a proposal by a consumer advocacy group that would establish prior approval for healthcare insurance and would make major changes to auto insurance and homeowners insurance in California, Norwood said. (Listen to the full podcast of Norwood’s interview).
It looks like there could be two competing initiatives on California’s November ballot that will impact Proposition 103. One offers portable persistency. And the other is backed by a consumer group and addresses health care, but it also addresses auto insurance.
The consumer group working to put an initiative on the ballot is Santa Monica, Calif.-based Consumer Watchdog.
The group filed the Insurance Rate Public Justification and Accountability Act in November, and must get 500,000 signatures to qualify it for the Nov. 6, 2012 ballot. If the group gets the signatures, the health insurance rate initiative could be placed on the same ballot as the 2012 Auto Insurance Discount Act, which has qualified for the ballot.
The stated purpose of the Consumer Watchdog health insurance initiative is to “ensure fair and transparent rates for health, home and auto insurance.”
If it gets enough signatures, it would compete with the 2012 Auto Insurance Discount Act, which is being sponsored by the American Agents Alliance, which says the initiative’s new law “will allow consumers to receive a discount for their years of continuous automobile coverage regardless of the company where they seek insurance.”
“The Consumer Watchdog’s health rate regulation initiative is out there and being circulated, but it hasn’t qualified yet, and it’s not clear that it will qualify, but if it does, I think it’s going to be a very tough fight for the industry,” Norwood said. “This reminds me of Proposition 103 in 1988, when consumers were pretty much fed up with the high cost of auto insurance. Health care costs a lot of money, and whether you’re paying for it personally or businesses are paying for it, it is a real concern. It’s also a top item in national debates, and there seems to be a common sense that the health-care system in the nation is broken.”
But only one initiative can be successful.
Norwood said he believes “it was a very good trick of Consumer Watchdog to take advantage of the situation, where if two initiatives are on the same ballot, on the same topic, the one with the most votes wins. So they’ve attached the provisions that would cancel out the persistency initiative, by prohibiting the use of persistency as a rating factor.”
He added, “So this is going to be a real dogfight, I think, if both initiatives qualify, in terms of the advertising campaigns and that type of thing.”
Norwood offered a focused looking at the all-important workers’ compensation issue, and he gave his thoughts on health insurance exchanges. In fact, Norwood forecast that 2012 will rank as an important one when it comes to workers’ comp reform, and the year will bring even more dramatic change, or at least debates, on health insurance.
“Coming into this new year, certainly, workers’ compensation is an issue everybody expects to be a top-tier issue for the 2012 legislative session,” Norwood said. “(California Insurance Commissioner Dave Jones) has already been involved somewhat in workers’ compensation, with the change of the way that Workers’ Compensation Rating Bureau does its annual filing, so I think he’s getting comfortable with that issue. So we’re certainly going to see his interest in that area, I think.”
Jones has several pieces of workers’ comp legislation he backed get to the governor and get signed, on issues ranging from suitability for annuities to retained asset accounts to collateral agreements in workers’ compensation.
In fact, California Gov. Jerry Brown signed nine bills sponsored by Insurance Commissioner Dave Jones this legislative year, giving Jones a perfect record on bills that reached Brown’s desk.
Norwood also expects workers’ compensation will be a major issue in the 2012 legislature.
“Ever since the 2002-2003 workers’ compensation reforms, labor has been concerned that they really got the short end of the stick,” Norwood said. “There have been some recent studies that (permanent disability) benefits, as a result of that legislation, were cut over 50 percent, maybe as high as 70 percent. And that’s been a top priority for labor, was to change the PD rates.”
He added, “I think we’re going to see a number of individual bills on workers’ comp, and ultimately there’ll be one or two major reform bills that will trade reforms for benefits. So we expect that.”
Health insurance, of course, is another top item on Norwood’s radar screen.
“Health insurance is one we really have our eye on this year,” Norwood said. “More and more property-casualty agents, a significant portion of their income is coming from employee benefits, including health insurance. Most of our members are telling us now, 25 to 40 percent of their income is coming from employee benefits.”
Chief among health insurance issues on the horizon in California is the Health Benefits Exchange Board, which has monthly meetings, and that’s something of which Norwood his colleagues are a regular part.
“We’re looking at how they’re trying to set up and establish that exchange,” he said. “And some of what the exchange is doing will affect legislation, because there’s certain current statutes and things that have to be changed to comply or to parallel what’s going on with the exchange in federal law. So we’re paying close attention to that, because it has the potential of affecting what role agents and brokers play in health-care delivery from now on and what their compensation could be.”