Insurance groups clash over regulation
By
Sara Hansard
July 29, 2008
Insurance industry representatives and regulators could not
agree on moving ahead with comprehensive reform legislation at a
hearing today held by the Senate Banking Committee.
As a result, committee chairman Christopher Dodd, D-Conn.,
indicated he will try to move legislation that is narrow in
focus.
Most likely, the legislation would create a uniform system for
regulating surplus lines of insurance, which is insurance sold
in areas where insurance products are limited, such as coastal
areas.
Without consensus among industry groups, Mr. Dodd said,
legislation establishing an optional federal charter was
unlikely to be approved by the Senate.
The American Council of Life Insurers and other insurance groups
have been pushing for an optional federal charter for several
years. They cite the need for more efficient regulation, which
they argue a federal regulator would provide.
There has been an “inability of state regulators and legislators
to act collectively to transform a badly fragmented state
regulatory system into a uniform, efficient national system that
serves the needs of what is now a global industry,” John
Pearson, chairman, president and chief executive of The
Baltimore Life Insurance Co., said in testimony was given on
behalf of ACLI.
But Steven Goldman, commissioner of the New Jersey Department of
Banking and Insurance, argued in his testimony that the U.S.
insurance system has “grown exponentially in recent decades in
terms of the amount and variety of insurance products, and the
number of insurers,” with U.S. premiums topping $1.4 trillion.
“Clearly, this is not an industry that has suffered under state
insurance supervision,” said Mr. Goldman, who testified on
behalf of the National Association of Insurance Commissioners of
Kansas City, Mo.
“State regulators’ modernization efforts have led to a
competitive, profitable market for insurers and lower costs for
consumers,” he said.
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