Federal versus State Regulation: A Thorny Issue
May 2001
In this article, IRMI Update editor Jack Gibson
provides reader responses to the question of who should handle insurance regulation.
Although no consensus is reached, the views expressed are both interesting and
entertaining.
by
Jack P. Gibson
IRMI
In my April
17, 2001, editorial, I discussed the inefficiencies caused by state regulation
of insurance within the United States and asked if we might be better off with
one regulator, the federal government. This drew more reader responses that
any of my other editorials to date, which demonstrates the importance and controversial
nature of this issue.
When you read the readers' responses below, one of the first things that
will strike you is that there is no consensus on what should be done to solve
the problems that practically every responding insurance or risk professional
admits the industry faces. Frankly, I thought there would be more consensus
among the various constituencies. For example, I expected local agents and insurers
to favor state regulation, with risk managers, national brokers, and national
insurers favoring federal regulation. However, there was less uniformity even
among the constituencies than I expected. Of course, we must keep in mind that
this not a scientifically conducted poll, and such a poll might demonstrate
more uniformity among the various factions.
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For Further Info on the NAIC's Initiatives
For more information on the
NAIC's
work to standardize regulations, visit these Web pages:
The National
Insurance Producer Registry (NIPR) is the public-private partnership
supporting the reengineering and streamlining of the insurance producer
licensing process through uniformity for the benefit of consumers, industry,
and regulators.
NARAB FAQs This page within the NAIC Web site provides information
about the National Association of Registered Agents and Brokers (NARAB)
provisions of the Gramm-Leach-Bliley Financial Modernization Act.
Coordinated Advertising Rate & Form Review
Authority (CARFRA) This is a report from the NAIC's Speed to
Market Working Group on the status of its recommendations to establish
multi-state regulatory processes and procedures that are integrated
with individual state regulatory requirements to provide a responsive
regulatory environment for insurers and consumers.
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What follows are most of the comments we received on this editorial. We have
done some slight editing to enhance readability.
The Federal Government Can't Do Anything Right!
"Are you out of your mind? The last thing we need is to have the federal
government regulate insurance. As a matter of fact the Mc. Ferg bill already
gives the Feds the ability to regulate insurance if they see fit. I have been
in this business since 1960 and I don't mind that states have different ideas
—Dick Holliday ARM, LUTCF, Fresno, CA
"I've never seen the federal government do anything right. Granted, the current
system of having 50 different insurance commissioners is not very efficient,
but I have less faith that the federal government can do it any more cost efficiently.
One only need to look as far as the rates (and benefits) involved with the USL&H
Act as opposed to state workers compensation and you see how inefficient and
expensive a federally run program can become. I do agree that there should probably
be two levels of regulation, one for personal lines and small commercial and
one for larger more complex accounts where there is less need for form and rate
regulation."
—Bill Hughs, Vice President, Willis of Louisiana, New
Orleans, LA
"I agree that a single federal authority regulating insurance would benefit
some insurers and some agents. But, the purpose of insurance regulation is not
just to facilitate and smooth the road for insurers and agents but to make sure
the citizenry of the various states are well served also. It would appear the
issue of states rights to self-determination is acceptable as long as it does
not affect corporate profit.
"The ink on GLB is barely dry and the states are already making major strides
in standardization, where it makes sense. They will never agree on every issue,
and I am thankful for that. The state's governance is supposed to reflect the
uniqueness of the citizenry. What flies in California or Maine may not suit
Virginians or Texans. Ultimately, independent agents, captives, and consumers
would be the losers in a federally regulated environment and the only winners
would by the national insurers and larger brokers."
—William D. Cundiff Jr., CIC, AAI, President, Wm. Cundiff
& Associates, Inc., Fredericksburg, VA
"I strongly favor the efforts made by the NAIC to achieve uniformity of results
and potentially a model or uniform act. However, I don't agree with your suggestion
that we propose that the federal government step in. In general, it has appeared
to me that the federal judiciary in many jurisdictions is less friendly to the
insurance industry than state court judges. Moreover, the current partisan attitudes
in Congress lead me to believe that any such bill would be flawed and poorly
thought out. If there is a bad provision in a federal statute, the insurance
industry would be stuck with it in all 50 states. Now, if the California legislature
comes up with a loony statute, the industry only has to deal with it in California,
not in the rest of the country."
—William McVisk, Shareholder, Johnson & Bell, Ltd., Chicago,
IL
"Uniformity of statutes is great—witness the UCC. Federal regulation would
be bad—too much power in one place."
—Robert G. Mahan, Esq., PE, Managing Member, Mahan Insurance
Brokers, LLC, Anaheim, CA
"I belong to the Professional Independent Insurance Agents of Illinois's
commercial lines technical committee. I have seen several times that most states
have agreed to accept changes in insurance forms that our state or some other
states have refused as being against the interests of our clients. I think a
great example is the 72-hour waiting period for business income coverage. When
it came through, only one state, Louisiana, would not allow the change unless
an endorsement was provided to allow the waiting period to be deleted. Once
that endorsement was provided for Louisiana, the rest of us in the other states
also wanted the same endorsement. Would the efficiency of a centralized system,
have allowed that to happen?
"I also serve on the Mid America Technical Conference. We work with ISO to
improve insurance forms to respond more to the needs of the insurance consumers.
I have seen ISO decline to make certain changes that would benefit insurance
consumers. Some of our members were then able to get their state to require
the changes in their state. Would this be available under an efficient centralized
system? It may seem to be an obstacle to efficiency, but I believe that we need
checks and balances in the insurance industry to preserve the interests of all
the parties. I have not seen any indication that a centralized efficient system
will do that."
—Chuck Schramm, CIC, CPCU, ARM, AAI, Lamb, Little & Co.,
Rolling Meadows, IL
"I agree with your concern to the effect that it would be unlikely that 50
state jurisdictions would agree on reasonably similar legislation for the insurance
industry. Perhaps it would help if some differentiation were made between personal
and commercial insurance, thereby allowing greater freedom and liberty in offering
flexible programs without inefficient and expensive regulation. Certainly another
approach would be to pass federal legislation, but again there is no guarantee
that each state would embrace the federal regulations.
"You seem to be implying that a singular, common regulation is the desired
effect, which may not be feasible given the issue of state's rights versus federal
regulation. I feel that an even better solution would be to allow the insurance
regulations for the named insured's state of domicile to control. So, while
a company may have operations in California, it insurer would be controlled
by Illinois regulation because the parent company is based in Illinois. This
would set up a competitive environment similar to what we have concerning captive
insurers. One would try to out do the other so as to attract cooperate domiciles—and
insurance tax revenues. I anticipate the NAIC could engineer such an agreement,
given that their intent is for the common good as opposed to a more local agenda.
While there may not be uniformity, there would certainly be a more accommodating
environment to the advantage of commercial risks."
—Bruce J. Birney, Director of Risk Management, Midas
Inc., Itasca, IL
"I still have more faith in the NAIC than I do the federal government. In
my opinion, the only thing that the U.S. Government does well is collect taxes.
The reason it is effective at tax collection is because the private sector,
states, and local governments do it for them!
"I feel that we should give the states the opportunity time to pull their
uniform policy together. It is my view that 50+ insurance commissioners can
probably accomplish more in less time that 452 Congressmen and 100 Senators,
given the make up of the two houses. While I agree that changes are needed,
I don't feel that Washington is the place where equitable changes can be made."
—Fred Marshall, Director of Risk Management & Claims,
City of Winston-Salem, Winston-Salem, NC
"I agree [that we should start over with a new centralized system], particularly
in the arena of Licensing and Continuing Education. We should start over but
not with Uncle Sam. I would suggest we subscribe to a system that provides qualified
individuals with a universal application run under the auspices of the NAIC
with the $$$$$ proceeds flowing to the applicant's state of residence. As one
who resides in a state that has not required CE (which I secure in NY which
will not certify same for nonresidents) let me tell you, the labyrinth is not
easy to navigate.
"Again, we should have a universal standard licensing procedure with selected
testing deferring to the peculiarities of the applicant's state of residence.
The matter of Continuing Education and the thorny issue of reciprocity should
be standardized. CE has to be ratcheted up. For a multi decade commercial producer
to sit through a primary personal lines course simply to build up the required
CE classroom hours is an exercise in futility, at best. I have floated a few
ideas, but to date have found no subscribers!
"Again, using an individual's acquired Continuing Educational level weighted
for experience ... I would like to see a graded "All-States" license. If one
is a "certified" personal lines producer in their place of domicile, why not
have access to all jurisdictions for personal lines? If one is a commercial
producer, allow the same. The current state of affairs reminds me of a fishing
reel backlash. One need go no further than the producer who receives a call
from a major commercial account advising him/her that they are on the verge
of acquiring a new subsidiary in a state the agent/broker only remembers faintly
from a primary geography class."
—Jim Mulligan, Berg, Carmolli & Kent Inc., Barre, VT
"I am very opposed to federal regulation. If individual state regulation
is less efficient, that is a small price to pay to have the benefits, such as
the fact that having 50 departments innovating, deciding, analyzing results
is a sort of best practices in the long run. Having only one results in a stagnant—way
too powerful/bureaucratic— regulator. Not a good thing at all in the long run.
"If you recall the fiascos that have occurred over the years where insurers
have had to withdraw from some states, you will understand the value of having
multiple regulators. When a single state becomes irrational, business and insurers
have the option of choosing not to do business in that state. The wayward state
will get the message as businesses choose to do business elsewhere as tax receipts
and population decline.
"We need to reduce the amount of influence the federal government has in
all aspects of our lives as it does stifle the 'best practices innovation' (and
often, common sense) component of having the 50 states develop what they believe
to be in their best interest. Just think what this country would look like today
if the federal government regulated electricity like the California regulators
did!"
—Larry Andreano, The Campbell Agency, Inc., Byron Center,
Michigan
"I probably should not comment because I am out of my league on many of the
issues concerning regulation, and I know I probably do not have all the facts
to have a truly educated opinion. However, because of my involvement in our
local independent agent's association (currently the Austin local president),
I have had a couple of occasions to visit with our current Texas Insurance Commissioner,
Mr. Jose Montemayor. I found Mr. Montemayor to be very informed on most issues.
He is a CPA by profession and I feel a trust level with him in the position.
I could be wrong, but I feel that he would look out for the best interest of
all parties concerned.
"I do understand and to somewhat agree with the concept of single license
clearinghouse. At the same time, I have concerns about giving up another state
right to a federal entity. With giving up regulation, do we also give up enforcement?
I'm beginning to believe that we are giving up too many freedoms for the sake
of security and safety and might end up in the long run with neither."
—Jim Sammons, VP, CIC, Vice President, Austin Branch
Commercial Insurance Manager, Guaranty Insunance Services, Inc., Austin,
TX
Surely the Feds Would Do It Better Than the States
"The present system of state regulation of insurance is as antiquated as
the horse and buggy, and creates massive inefficiencies on the part of brokers,
risk managers, and insurance companies. The only people who seem to gain are
the various bureaucracies in each of the state capitals. Insurance, as part
of interstate commerce, crosses state lines more so than staying within state
boundaries. Just look at products, automobiles, WC, etc., where the exposure
has become much more mobile and should not be limited to any specific state.
While I'm leery of federal bureaucracy, can it be worse than what we are presently
dealing with, not to mention the fact that some state Insurance Departments
spend their time generating political funds for the ruling party, and others
are just plain dishonest?"
—Luke Halley, Insurance Services Manager, Halliburton
Company, Houston, TX
"I think your hearty praise for the great work of the NAIC is largely misplaced.
For years, the NAIC championed the right of each state to run their insurance
department as a private empire, with little regard for the impact it had on
agents, brokers, and clients. Only after the broker community was able to push
NARAB legislation through Congress did the NAIC sit up and take notice. NARAB
would never have been passed, or even proposed, if the NAIC had shown even the
slightest interest in seriously addressing the issues of multi-state licensing!
"Only when NARAB passed did the NAIC come to the table. Had NARAB died in
committee, it would have been back to business as usual, and the NAIC would
have resumed their fierce opposition to any licensing modernization!"
—Robert E. Joyce, Executive Vice President, The Harry
A. Koch Co., Omaha, NE
"Large commercial accounts need regulatory protection like a fish needs a
bicycle. Most accounts employing a broker and an in-house risk manager have
a formidable skill set and access to counsel and consultants that regulators
can only dream of. Greater minds than mine will need to determine exactly where
the cut-off should be, but in the case of sophisticated commercial buyers, few
if any have ever availed themselves of any protection from regulators, and most
will complain that access to innovative products and rate reductions are sorely
hampered by state regulatory requirements.
"Medium-sized, small commercial accounts, and household consumers who lack
sophistication and who buy largely first-dollar insurance programs arguably
need some protection from unscrupulous companies and agents. Perhaps it is worth
examining a split system where the states retain the consumer protection aspect
and the remainder of the regulatory scheme is federalized.
"Relieving states of the burden to examine the books and records of insurance
companies and maintain financial oversight would allow them to focus on the
market conduct examinations and fraud by agent, broker and company that arises
from time to time. The issue would be making the information from the states
and federal regulators available (via the Internet) so that all consumers could
go and look up the insurer/agent/broker they are considering and get a good
look down at the relevant information. An informed buyer is a happy buyer."
—Eric F. Ewing, Chairman, Commercial Insurance Associates,
Inc., Pittsburgh, PA
"I share your concern over the vast difference between the states regarding
insurance law and regulation. I, too, would like to see uniformity but am not
sure that it is feasible, or even reasonable, to expect. Due to the vast difference
in civil law between each state, and the varying exposures based on geographical
areas, I do not believe that we will ever be able to achieve true uniformity.
I am very interested in seeing what proposals come to the table and how the
industry will continue to work to resolve this problem but hope that the industry
uses great caution in what is done."
—Marti Dickman, CIC, Risk Analyst, Chesapeake, VA
"One of the issues not addressed by the Insurance Commissioners is regulation
of insurance adjusters on a national basis. Currently, each state has its own
licensing, with some exchange of privilege for out-of-state adjusters, often
with substantially different requirements for the certification. Further, the
issues and fees addressed in the license process are often not related to the
actual performance of service to the public.
"The issue is further defined in that many of the carriers, and by that I
mean most, are using 'regional offices' to adjust claims in multiple states.
In four of the five carriers I queried on this issue, I was advised their adjusters
and the managers were not licensed for all the states in which they were adjusting
claims. It was assumed that if they were caught, this was simply a cost of doing
business, and they would pay the fine and move on.
"Another issue is the licensing of carriers in multiple states and their
ability to commingle assets to confuse state examiners regarding the viability
of the carrier. One has only to look at the Reliance Nationals, et al., to see
that their financial integrity has been a shell game for an extended period.
And they are not the only carrier that has been doing this for an extended time
either.
"This business has become so large and consolidated, that intervention by
the federal government is the only manner in which the industry can be controlled.
In addition, it is only with the clout of the federal government and the consolidation
of the resources to actually do the job the Commissioners were intended to do,
that appreciable intervention into the financial issues can be addressed. Just
a thought or two."
—John M Beringer Jr., LPCS, RPA, Beringer & Associates,
Inc., Orange, CA
"Speaking personally, not for any organization, I believe the several state
commissioners and their respective legislatures and governors may do enough
to forestall federal regulation temporarily, but they will implement only what
minimum standardization they have to accept in order to retain their territories.
That will not be enough to make the system an efficient one, and so the pressure
for federal—or, arguably, dual—regulation will continue little abated. As was
the case with banks in insurance, I believe the issues now are 'how and when,'
not 'whether.' I'll be very interested in the results of your survey, especially
if accompanied by a demographic profile of respondents."
—Don Way, CPCU, CLU, ARM, Chairman and CEO, Thoits Insurance,
Mountain View, CA
"I too despair of the NAIC model being adopted. Having watched the progress
of insurance regulatory oversight in my state for more than 20 years, it is
my observation that despite NAIC and department intentions, it becomes politics.
As Tip O'Neil is credited with observing, all politics are local. Insurance
regulation is no different. Legislators have to tinker so that 'it fits the
situation' when the reality is the tinkering is pressured by interest groups
who feel their ox is about to be gored. (translate: lower commission revenue).
"As the full-time risk manager of a firm that spends mid-seven figures for
a variety of risk management options, the current regulatory climate makes no
sense to me. Even though the current archaic regulatory scheme in my state provides
a partial exemption from oversight, I still pay surplus lines tax on risk transfer
products exempt from oversight. No one has yet given me a straight answer on
whose public interest is served other than revenue for the insurance department
without any corresponding scintilla of service. I don't want protection from
myself, anyway. My board of directors provides me all the oversight I need or
want.
"Should there be different models of oversight? Absolutely. I think it ought
to be aimed at personal lines and small (under $50,000) premium, and leave large
sophisticated policyholders out, including taxation of premium no insurance
department is able to regulate under current regulations. Sadly, probably uniform
federally dictated standards will accomplish the task of uniformity. There will
have to be sufficient incentive—either negative or positive—to motivate recalcitrant
parochial legislative bodies to pass the standards."
—Evan Mandigo, CPCU, ARM, Risk and Insurance Administrator,
Basin Electric Power Cooperative , Bismarck ND
"I'm sure many fixes and innovations have been/are being tried by NAIC to
get all states into some type of general compliance with uniform standards.
However, I agree that it's unlikely that the needed efficiency and standardization
can be achieved through a 50-state network. Just in the last couple of years,
our company has gone from a primarily single-state headquarters to a global
corporation attempting to live by the laws and regulations imposed by all these
entities (countries and states alike). The cumbersome reporting we are forced
to develop just to comply with workers comp regulations that vary between states
results in redundancies and prevents our standardizing more procedures in the
United States alone, and for what purpose? We are providing the same benefits
to all employees regardless of location. In welfare, disability, and retirement,
these are all consistent, but we can't attest to that in each state even though
the same carrier covers most, except for the monopolistic state funds.
"I don't know where you would draw the line on what NAIC should oversee,
but I believe there is more in common with personal lines and small business
accounts than with large multi-state and global corporations. These would derive
much greater efficiency from being able to look at the big picture and live
with less rigid regulations that allow a variety of solutions to meet the spirit
rather than the letter of law."
—Mari-Jo Hill, CPCU, ARM, Risk Manager, Finance Division,
SAS Institute Inc., Cary, NC
"Standard insurance regulations throughout the country would be wonderful.
But making it a federal agency may not help and only give the industry a new
set of problems. We won't know, though, until we try, so I'm in favor of starting
over on a federal level, maybe even having some non-governmental people sit
on a board or something like that."
—Leslie Kazmierowski, Insurance Programs Manager, National
Roofing Contractors Association, Rosemont, IL
"I can appreciate the industry's frustration in the maelstrom that now exists
for filings. However, I'm not sure if rebuilding with a federal system is the
best solution. The turf battles could be bloody! It would be like watching Congress
discuss the new OSHA ergonomic standards that were just recently killed. Having
said that, the state-versus-federal bickering might actually be entertaining.
"To begin, I'm not 100% knowledgeable about the subject matter but I'd like
to add this: I do like the idea of some federal regulations but only on those
issues most if not all states would agree with. I suspect it would mostly be
administrative. In this fashion, you introduce federal laws in any violation,
and that would hopefully make any violator's life that much more difficult.
This will require a federal office, however. The arrangement could be similar
to the federal EPA and the state EPA . I'm not sure whether federal extradition
treaties with other countries have more weight than the states, but if they
do, it's an added weapon in enforcement and punishment.
"On the state level, what about seeing what the states have in common and
try and build from there? Would state groupings, such as 'these regulations
are acceptable in these states, and these regulations are acceptable in those
states' be an option? Or are all 50 states at odds with each other? I could
be wrong, but there appears that the possibility exists for at least reducing
the number of forms from 50 to maybe a more manageable number. This view just
might be too simplistic, but I thought I'd say it anyway."
—Sonny Chan, Director, Risk Management, Blyth, Inc.,
Greenwich, CT
"My view is and always has been that a uniform set of regulations would make
the insurance industry far more efficient. States' rights are important, and
where there are demonstrable reasons to deviate from a national standard, they
should be given due consideration. Having said that, I believe there are very
few areas where differentiation is warranted.
"I certainly cast my vote for pressing for national standards pertaining
to consumer protection and regulation of the insurance industry. I believe this
will only come about through federal regulation as I concur that each state
will deviate from any guidelines established to the point where the effect is
nil."
—Duane K Ludwig CPCU ARM, Senior Vice President, Marsh
Risk & Insurance Services, San Francisco, CA
"In response to your request, I must say no matter how much I may not like
it, going with national legislation will be far quicker, and I do believe easier,
to control in the long run that 50 different versions state-wise. As to the
split, personal lines should stay independent from commercial, be it small or
large. Small commercial lines can become large commercial accounts and small
accounts do not necessarily translate into 'low-risk' exposures. Therefore,
I would comment that personal lines and commercial lines stay separated. I don't
see any reason, however, not to split the commercial section between small and
large for ease of handling."
—Margie K. McBride, Risk Management Administrator, City
of Seattle, Department of Finance Contracting Services Division, Seattle,
WA
"I definitely feel that nationwide uniformity is needed. I've worked in 6
different states in my career and have had to take a written test 6 different
times. Other than a few minor changes, I am taking the same test time and again.
I also firmly believe in continuing education and there are some states (Arizona
for one) that do not require CE. Standardization could/should make CE a requirement
in all states.
"I also would have preferred to not have had to learn personal lines. I have
never been involved in personal lines or life/health, and spending my time learning
these lines for various state tests was a waste. I would like to see commercial,
personal, life/health, and surety all as separate options.
"I do not believe 'small' and 'large' commercial should be separated. Although
I work on relatively larger accounts, on occasion I need to place a BOP-type
program as an accommodation.
"Can this be accomplished separately with each state? I doubt it — at least
not as quickly as if the process was consolidated. My guess is there would be
too many politics involved and too many personal agendas affected to pull consolidation
off in a timely manner if left up to the individual states to come to terms
with each other.
"Standardization and uniformity??—You've got my vote!!"
—Lisa D. Jacobson, CIC, Marketing Specialist, Willis
Insurance Services of California, Inc., San Francisco, CA
"I fear that we have little choice, for federal regulation appears to be
dual regulation —making the cure worse than the 'disease'. I believe that the
answer is uniformity dictated at the federal level, but I do not know how to
get there. However, my prediction is that it will be done piecemeal by the states,
and some day it will be federal, with or without duality."
—Frank Cooke, CPCU, Retired, Park Ridge, IL
But Let's Not Wind Up with 51 Regulators!
"I agree with your hope for a single, national, insurance administration.
There should be no hope that the federal government could regulate the insurance
industry any better than the current state regulation. The goal is to have one
consistent administration, not 50 separate bureaucracies. We have seen the Insurance
Commissioner's Office used in many states as a politician's training ground.
Often, there is abysmal management, while the politicians promote their own
self-interests toward being elected to another office. If we could trade 50
of these for one federal post, the simplicity itself would be a big improvement.
"The only downside is that unless there is a true and complete transfer of
authority, this will only add the 51st bureaucracy. As you noted, we cannot
get all 50 to agree on model acts now. How are we going to get all 50 to agree
to disband in favor of a national administration? If the negotiations leave
some token control within the states, then we are all faced with dealing through
two factions in every state. We want to win this, but if we can't accomplish
a knockout, we are better off never starting the fight."
—Jim Chambers, CPCU ARM, Producer, Redmond General Insurance
Agency, Redmond, WA
"If we could substitute one regulatory body for 50, it should be more cost
effective for everyone, assuming the activities and requirements of the one
body were 'reasonable.' Currently, some states seem to lack the talent, interest,
or resources to provide a significant safeguard to the public in evaluating
the financial condition of insurance companies. Once a company is actually dead,
most state regulators can detect a complete lack of pulse. But they are better
at issuing death certificates and administering the disposition of the estate
assets than doing diagnostics on the living patient. Perhaps this could be improved
on with one regulatory body, using a common yardstick, and having resources
to police the financial situation at each company.
"Unfortunately, state regulators abolishing their own empires requires more
imagination than I possess. And, from an insurer perspective, my concern is
that we will have 51 hoops to jump through in lieu of the current 50. And, for
product filings applicable to just one state, we may have 2 hoops to jump through
in lieu of 1. Certainly, if that is the outcome, it wouldn't be an improvement.
For the short term, let's see if the devils we know can get their act into some
semblance of alignment. If they can't, we can always opt to start over with
'big brother' from DC.
"Finally, deregulation of insurance form and rate filings for commercial
operations that are larger than the 'mom and pop' operations (a 25+/- employees,
or sales over $2-3mm +/-, account premium of $10,000.+) seems a reasonable idea.
It would better reflect the reality of the individual risk judgment and negotiations
that go into final coverage program and pricing in the marketplace. Thanks for
the opportunity to share opinions."
—Robert W. Whitman, Division V.P., Great American Insurance
Company, Cincinnati, OH
Let's Try Something Different
"Based on virtually everything it has touched so far, the federal government
as an insurance regulator is a scary thought, no matter which party is in power.
In theory, a centralized regulator at the federal level would simplify and streamline
the process. In practice, it will become another way for the federal government
to generate taxes, manipulate businesses and consumers and create a gigantic
bureaucracy whose prime mission will be to grow and intrude with no offsetting
benefits.
"As you point out, state regulation of insurance from multiple jurisdictions
is no picnic either. I favor state regulation of personal lines and no regulation
of commercial lines. Rating agencies, other independent watch groups, good faith
and fair dealing principles of common law, and free market supply-and-demand
factors should be adequate checks on the commercial insurance marketplace. Will
this approach produce an environment where no one will be hurt? No. But the
current approach doesn't either. In fact, one could argue that the inefficiencies
and ineffectiveness of insurance market regulation guarantee that all consumers
pay more and receive less."
—Michael M. Kaddatz, Managing Director, ARM Tech, Lake
Forest, CA
"More protection through disclosure and uniformity needs to be afforded to
the individual than the corporation. I would prefer to see the industry set
guidelines and regulations than have the government do it."
—Mary E. Donato, ARM, Director of Risk Management, Albuquerque,
NM