Tuesday
Jul292008
Insurance regulation: U.S. needs to get with the program
Tuesday, July 29, 2008 at 6:27PM
The main problem with insurance regulation is many states are not following federal regulations, which creates hurdles for consumers and prevents regulators from forming a cohesive, national system, said the American Council of Life Insurers (ACLI). A panel of witnesses testified before the Senate Committee on Banking, Housing, and Urban Affairs about a proposed optional federal charter (OFC) that would improve the situation.
Unified national insurance regulation and oversight are disrupted by the unwillingness of states to adapt federal policies, said John Pearson, CEO of Baltimore Life Insurance Company, who spoke on behalf of ACLI. For instance, the National Association of Insurance Commissioners supported a 1998 law that would require insurance companies to deliver buyer's guides to consumers, but only 16 states have adopted this rule in the last ten years, Pearson said.
The United States needs to update its regulatory structure because companies like Zurich Financial Services Group, the third largest writer of commercial property and casualty insurance in the U.S., are impeded by the current system, said Alessandro Iuppa, Senior Vice President of Government and Industry Affairs for Zurich North America. The problem is when U.S. regulators meet with other countries to set standards, the U.S. representatives are unable to take the standards home and make states adopt them. This is a big problem because the international market requires the U.S. to adapt these standards quickly, Iuppa said.
Chairman Chris Dodd (D-Conn.) said three principles are at stake: Strong consumer protection, regulation structure must be implemented, but also promote competition among companies, and regulation must be efficient. Iuppa said consumers have trouble moving from state to state because they have to apply for new insurance when they move. With the OFC, consumers would be able to choose if they wanted the state or federal system, Iuppa said.
Unified national insurance regulation and oversight are disrupted by the unwillingness of states to adapt federal policies, said John Pearson, CEO of Baltimore Life Insurance Company, who spoke on behalf of ACLI. For instance, the National Association of Insurance Commissioners supported a 1998 law that would require insurance companies to deliver buyer's guides to consumers, but only 16 states have adopted this rule in the last ten years, Pearson said.
The United States needs to update its regulatory structure because companies like Zurich Financial Services Group, the third largest writer of commercial property and casualty insurance in the U.S., are impeded by the current system, said Alessandro Iuppa, Senior Vice President of Government and Industry Affairs for Zurich North America. The problem is when U.S. regulators meet with other countries to set standards, the U.S. representatives are unable to take the standards home and make states adopt them. This is a big problem because the international market requires the U.S. to adapt these standards quickly, Iuppa said.
Chairman Chris Dodd (D-Conn.) said three principles are at stake: Strong consumer protection, regulation structure must be implemented, but also promote competition among companies, and regulation must be efficient. Iuppa said consumers have trouble moving from state to state because they have to apply for new insurance when they move. With the OFC, consumers would be able to choose if they wanted the state or federal system, Iuppa said.
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