Federal Oxley-Baker Bill Would Require Competitive Rating and Uniform Regulation by States
National News • August 24, 2004
Sweeping legislation being drafted by federal lawmakers would end state approval of insurance rates and require all states to adopt competitive rating for most types of insurance.
States would ...
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Subject: Oxley-Baker Bill & Comopetition
Posted On: August 25, 2004, 10:37 am CDT
Posted By: Donald Pachner
Comment:
Consumers have seen the results of deregulation in the energy markets, airlines and numerous other commercial segments of our economy...those in power cry out for deregulation to "survive" then the industry falls into chaos, consolidation removes competition from the smaller players and the consumers suffer. Everyone knows the story of the Enrons of the economy.
While I appreciate the difficulty and cost imposed by an irregular matrix of regulatory requirements from state to state, rate regulation does protect consumers and provides competitive stability within the industry, despite the models offered for a national regulatory framework.
The models offered always seem to come from states such as S.C. where competition is less intense (both in the insurance industry and commercially in general.)
I have seen P&C middle markets disappearing over the years (e.g. little Aenta, big Aetna, Travelers, Kemper, etc.) and the decreased competition along with demutualization has pushed insurers to focus in general more on dealing with investors than on underwriting through hard and soft markets.
This trend can not be beneficial to the average consumers of insurance.
One also must worry about the trend toward writing only large profitable accounts...25 years ago before consolidation, brokers/agents could easily find insurers willing to provide direct appointments to achieve growth.
Now, only a handful of insurers will write directly with small growing firms, for they have fallen into the trap of looking for immediate profit, and many small, growing agencies equate to additional overhead to these new consolidated operations.
By deregulating the rating process, Oxley-Baker would give larger insurers more flexibility and regulatory certainty through a Federal style "file and use" type law, but at the same time allow large insurers to squash competition from smaller firms through unfair rating practices which will harm competition in the long run by driving the smaller, dynamic players out of the market.
America is the land of opportunity and competition, and we achieved our economic strength on these principles. To deregulate the insurance industry and squelch competition this way would imperil our great legacy and the foundation of our greatness.
Subject: Oxley-Baker Bill & Comopetition
While I appreciate the difficulty and cost imposed by an irregular matrix of regulatory requirements from state to state, rate regulation does protect consumers and provides competitive stability within the industry, despite the models offered for a national regulatory framework.
The models offered always seem to come from states such as S.C. where competition is less intense (both in the insurance industry and commercially in general.)
I have seen P&C middle markets disappearing over the years (e.g. little Aenta, big Aetna, Travelers, Kemper, etc.) and the decreased competition along with demutualization has pushed insurers to focus in general more on dealing with investors than on underwriting through hard and soft markets.
This trend can not be beneficial to the average consumers of insurance.
One also must worry about the trend toward writing only large profitable accounts...25 years ago before consolidation, brokers/agents could easily find insurers willing to provide direct appointments to achieve growth.
Now, only a handful of insurers will write directly with small growing firms, for they have fallen into the trap of looking for immediate profit, and many small, growing agencies equate to additional overhead to these new consolidated operations.
By deregulating the rating process, Oxley-Baker would give larger insurers more flexibility and regulatory certainty through a Federal style "file and use" type law, but at the same time allow large insurers to squash competition from smaller firms through unfair rating practices which will harm competition in the long run by driving the smaller, dynamic players out of the market.
America is the land of opportunity and competition, and we achieved our economic strength on these principles. To deregulate the insurance industry and squelch competition this way would imperil our great legacy and the foundation of our greatness.