The Insurance Industry’s GREAT ESCAPE

NAIC President Questions Motives of OFC Supporters

KANSAS CITY, Mo. (Feb. 15, 2008) — Sandy Praeger, President of the National Association of Insurance Commissioners (NAIC) and Kansas Insurance Commissioner, in a letter yesterday, reiterated the strengths of state-based regulation and reasserted opposition to federal legislation that would establish an optional federal charter (OFC).

A few relevant parts of the letter:

…allowing insurers to pick their regulator threatens a regulatory “race-to-the-bottom.” This scheme would be especially dangerous in property/casualty insurance, where families and businesses faced with a storm, fire, illness or injury often rely on a hands-on regulator to make insurers keep their promises and to help rebuild quickly after an unforeseen disaster. The push for an OFC is, in reality, nothing more than a call for little or no regulation.

There are presently more than 11,000 individuals working in state insurance departments across this country who help to protect insurance consumers. It takes quite an imagination to assume the Treasury Department could assume even a partial role in regulating insurance without creating a huge bureaucracy. The plain and simple truth is optional federal chartering would create a new federal bureaucracy from scratch and allow insurance companies to “opt out” of comprehensive consumer protections and state oversight. Current proposals would gut consumer protection, while outsourcing most critical regulatory functions to an industry-run self-regulatory organization.

2 thoughts on “The Insurance Industry’s GREAT ESCAPE”

  1. Pot meet kettle.

    Marc Racicot is a lame duck right along with his Washington based benefactor George Bush. Racicot’s proposal will not see the light of day but not because the NAIC opposes it, rather, no self respecting democrat in Congress save Senator Christopher Dodd will support another insurance industry giveaway.

    We do need federal regulation, just not the kind the industry wants where the so called federal regulator wears a blindfold.

    sop

  2. In the 70s everyone thought the insurance industry had it great because they didn’t have to deal with the federal regulators.

    A little bit of regime change will go a long way toward changing the pro-fed bandwagon.

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