NAIFA CEO Kevin Mayeux and the CEOs of 13 other insurance and financial services trade associations sent a letter to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy urging Congress to address concerns with the Protecting the Right to Organize (PRO) Act (H.R. 842).
The PRO Act would change the definition of “independent contractor” in federal labor law, potentially affecting the status of insurance and financial professionals and disrupting established and effective business models. The industry serves more than 112 million American families, providing products, services, and advice that help their clients achieve financial security and prosperity.
“There is no reason for insurance and financial professionals to be included under the PRO Act,” Mayeux said. “The insurance and financial services industry is highly regulated, and that includes the relationships between agents and advisors and insurance companies and financial firms. For many financial professionals, reclassifying them as ‘employees’ would stifle the independence that allows them to effectively serve the diverse market of U.S. consumers. Including insurance and financial services professionals under the PRO Act would harm their ability to serve clients as an unintended consequence of legislation that aims to address problems that simply do not exist in our industry.”
The compensation of insurance and financial professionals is carefully recorded and reported on IRS Form 1099. Concerns over cash payments and unreported income do not apply to the insurance and financial services industry. Furthermore, the “independent contractor” classification better reflects the reality of how these professionals operate.
Many insurance and financial advisors have relationships with multiple insurance companies, broker-dealers, or registered investment advisers, giving them diverse lines of products and services to offer consumers. They are small business owners who have contractual agreements with these companies. Affiliated insurance and financial advisors are also properly classified as “independent contractors” under current law and long-standing precedence.
The CEOs’ letter asks congressional leadership to “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 themselves and their families.”