A Message from PIA's President

April/May 2008

For the past several years, PIA National has been warning that a battle was brewing over who controls insurance oversight.  Now, the battle has become an all-out war.

This issue of PIA Connection is filled with what can best be described as dispatches from this war.  Most heartening is reading about how many allies we have in the fight to defend the effectiveness of insurance regulation at the state level.

PIA has been reporting continuously on the run-up to this war. The introduction in Congress of the first version of the National Insurance Act was the opening salvo. Soon, it became clear that the supporters of federal insurance regulation would stop at nothing to defeat our state system of insurance regulation.

All preparations for war require propaganda, a justification for going to war. Opponents of the state regulatory system have conducted a relentless campaign of distortions. Phrases like “the state insurance regulatory system is broken” and “the state system is antiquated and hopelessly inefficient” were repeated again and again, in an attempt to create a false perception which would then be articulated as the reality.

If it sounded like a lot of people were speaking from the same talking points, it is because they were. The fact that they were saying many things that were not true was to be expected. After all, this was propaganda.

Congressional sponsors and industry supporters have said that OFC will not be paid for by siphoning off state insurance premium tax revenues. But then, during this Congress, a clause doing just that was “inadvertently” inserted into a draft of the OFC bill, only to be yanked out after the press noticed and reported it industrywide. Yet, in the face of this, advocates continue to say that the insurance premium tax is safe.

As somebody once said, “Tell a lie often enough and people will begin to think it’s true.”

A structure to undermine the state system began to be built. For example, a group that purported to be a grassroots association of agents wanting an optional federal charter was formed. But a closer look reveals that this group received start-up assistance from an association that represents the nation’s largest banks.

Still, the National Insurance Act kept going nowhere.

Then, the forces pushing for federal regulation of insurance rolled out the heavy artillery: the Treasury Department. Secretary Paulson’s report, which PIA already had concluded would call for optional federal charters, did.  But it also laid out a vision of insurance ultimately being folded into an integrated financial services structure with banking and securities, all regulated by one federal regulator.

This is the Treasury Department’s New World Order for our economy, sweeping up insurance in the process.

PIA’s battle plan is to continue to defend the superiority and the integrity of state supervision of insurance, counter the actions of those advocating for federal regulation and move with speed to finish the reforms to modernize the state system that are already making significant progress.  

This must be a collective effort, fought in the trenches through continuous grassroots actions at the state level. As this war is fought, PIA will need to issue calls to our members to engage in these grassroots actions. You need to be prepared to answer these calls, quickly!

All PIA members, together with their PIA affiliates, must present a united front to defend our agencies against the kind of changes to the system now being proposed that threaten our businesses and the protection of our customers.

Robert P. Page
President