Insurance Coalition Applauds Nobel Laureate’s Comments
Greg Wren, executive director of the Coalition Opposed to a Federal Insurance Regulator (COFIR) today praised an article published in the February 12, 2007Wall Street Journal by 2006 Nobel Laureate in Economics Edmund S. Phelps.
According to Professor Phelps, “[T]he Continental economies’ root problem is a dearth of economic dynamism—loosely, the rate of commercially successful innovation.” Professor Phelps also contends, “ Germany, Italy and France appear to possess less dynamism than do the U.S. and the others. Far fewer firms break into the top ranks in the former, and fewer employees are reported to have jobs with extensive freedom in decision-making—which is essential at companies engaged in novel, and thus creative, activity.”
In addition, Professor Phelps added, “It is reasonable to infer that the economic systems on the Continent are not well structured for high performance.” The Nobel Economics Laureate continued his analysis by stating, “Further, I argue that the cause of that dearth of dynamism lies in the sort of ‘economic model’ found in most, if not all, of the Continental countries.”
“Proponents of the optional federal charter for insurance who often praise the European system should rethink their position once they read Professor Phelps’ article,” said Wren. “His insightful assertions suggest that the European economic systems may not be the standard for the U.S. financial marketplace,” Wren further stated.
Federal legislation to create an optional federal charter to regulate property and casualty, life insurance and health insurance companies is again expected to be introduced in 2007. “Creating a massive new federal bureaucracy far removed from the states and centralizing it in Washington will only complicate issues for insurance companies, agents and brokers and, most important, the consumers of insurance services,” Wren added.
Wren said COFIR supports targeted federal reform efforts such as the surplus and excess lines legislation which has bipartisan support in Congress and throughout the insurance industry.
A copy of Mr. Phelps’ article, Entrepreneurial Culture, can be found at http://online.wsj.com/article/SB117124449952605357.html
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