WASHINGTON, October 3, 2007 – Congress should reject proposals to create a federal insurance regulator and instead support improvements to the state system of insurance regulation, according to the National Association of Professional Insurance Agents (PIA).
In testimony submitted to the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises for its October 3 hearing, PIA said that consumers are best served by an insurance system that is regulated by state Departments of Insurance.
“In response to the constantly changing needs of a dynamic insurance marketplace, PIA supports state efforts to simplify and modernize insurance regulation through the established state regulatory system,” the PIA said in its statement. “These efforts include the establishment of interstate compacts to streamline state-to-state regulatory activities.”
PIA pointed out that lawmakers in Alabama, Colorado, Michigan, New York, North Dakota, Ohio, Rhode Island and Texas, among other jurisdictions, either have passed or are in the process of adopting resolutions urging Congress to keep insurance oversight a state prerogative. In addition, groups including the National Governors Association, the National Conference of Insurance Legislators, the National Conference of State Legislatures and the National Association of Insurance Commissioners all oppose the creation of a federal insurance regulator.
The PIA statement also expressed opposition to proposals to establish a bifurcated, dual regulatory structure under an Optional Federal Charter scheme.
“Permitting a subset of competitors in the insurance marketplace to evade state law artificially confers upon large, national entities that are positioned to accommodate dealing with an alternate federal regulatory scheme an unfair competitive advantage over their smaller, regional or local competitors,” the statement continued. “PIA believes that the federal government should not attempt to pick winners and losers in the insurance marketplace by enacting legislation favoring one group of competitors over another.”
“Whether optional or not, dual or exclusive, PIA strongly opposes a federal regulator for the business of insurance, for one overarching reason: one is not needed.”
“As you consider reforms to our nation’s system of insurance regulation, please be aware that, contrary to what some groups may tell you, the system is not ‘broken’ and it does not need to be ‘fixed.’ It is functioning well, as evidenced by the continuing profit performance of insurance carriers and the robust financial health of the industry as a whole. What is needed are continuing modernizations to the state-based regulatory system,” the PIA statement concluded.
Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America (SM). PIA’s web address is www.pianet.com.
PIA statement to the Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises (PDF file, 10/3/07)