IRMI Update—Issue #136
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
May 3, 2006
In This Issue
Colleague,
Last month Sen. John Sununu (R-N.H.) and Sen. Tim Johnson (D-S.D.) reignited
the regulation debate when they introduced S. 2509, the National Insurance Act
of 2006.The Sununu-Johnson bill would establish an optional federal charter
for insurance companies (life, health, and property-casualty), creating a dual
system whereby insurers could choose between being regulated by a new federal
insurance regulatory authority or continuing to be regulated by state insurance
departments.
Producers would also choose between state and federal regulation. With a
federal license, the producer could sell, solicit, and negotiate insurance in
any state on behalf of federally licensed insurers and state licensed insurers
with state regulation of their activities preempted (with some exceptions).
Alternatively, if the producer chooses to remain licensed at the state level,
it will remain subject to the laws and regulations of the states.
The bill is strongly supported by those associations representing insurers
and producers with a national market focus and strongly opposed by those whose
members are predominately focused on a single state or region. The banking associations
also support it.
No one disputes that the current state insurance regulatory system is simply
too unwieldy, anticompetitive, and expensive. It has long needed a major overhaul,
and state insurance regulators have made impressive strides toward a more uniform
and efficient system. But they will never achieve it as long as there are 50
state legislatures and 50 state regulators around to exert their influence over
their state systems.
As much as I hate the thought of creating another federal agency, an optional
federal charter makes a lot of sense. We must face the fact that our large insurers
are competing not just here, but globally, and they need a regulatory system
that is fast and efficient. A dual system seems to work fairly well for the
banking industry. Why not allow insurers and brokers the option of a federal
charter?
What do you think? Is an optional federal charter a good idea? Or will it
result in even more costly and inefficient dual regulation of the industry?
[See reader responses.]
Thank you for subscribing to IRMI Update.
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Improve Workplace Safety by Monitoring Drug Abuse—While
75 percent of drug abusers are employed, and 8-10 percent of employees in any
organization are likely to abuse drugs, only 4.5 percent are detected. The impact
of drug abuse on a corporation is, for the most part, simply not measured. Traditional
techniques for managing workplace drug abuse include education, interdiction,
assistance, and urine-based preemployment drug testing, which have been only
marginally effective at managing drug abuse. While 90 percent of drug testing
is done only on a preemployment basis, this technique is little more than an
"IQ" test. Since most drugs are detectible for a maximum of 3-4 days, drug abusers
simply stop taking drugs for a few days, gain employment, and resume their risky
behaviors.
Some organizations are winning the war against drug abuse by adopting alternative
approaches, such as on-site oral-based drug screening, which derive the following
direct, measured benefits:
- 50+ percent reduction in on-the-job accidents
- Reduced workers compensation premiums
- Lower health benefit utilization rates
- Higher employee retention rates
- 30+ percent reductions in inventory shrinkage/employee theft
In addition to oral testing, other interesting alternatives to urine testing
such as hair testing have emerged. Drug testing is very easy to implement and
legal—if not actually encouraged—in most states. Package programs are available
which can be tailored to your firm. Drug testing commonly provides a 100x return
on investment. Not bad when you consider that you're likely paying out at least
$1 million every year for every 1,000 employees on your payroll due to not have
an effective drug free workplace program.
By: Peter Cholakis, Vice President, Marketing
Avitar Inc.
Canton, MA
pcholakis@avitarinc.com
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