Posted On: June 6, 2007, 2:21 pm CDT

Posted By: Actuary

I too agree that Federal Regulation is much needed. The most compelling argument for chosing between a federal based regulatory agency vs. the current 50 Individual State program is which system best favors consumers. I would argue that a federal system would serve customers better. The current systems results in far too much time, effort, and money spent on compliance with 50 different systems that often have different and even contradictory approaches. While I'm sure the transition to Federal regulation wouldn't be without its bumps, I think the long term reduction in cost that could be passed on to the consumer is well worth it.

In my opinion, supporters of state regulation are those companies and agencies that benefit from the barriers to competition that it erects.

Lastly, for anyone who is thinking about posting it, please spare me the plea that we should give state regulators more time to standardize things themselves. They have had over 50 years to do that and have made very little real progress, even when given a kick in the pants by legislation such as GLB. There is no way 50 state legislatures will ever pass identical and reciprocal laws that provide for true uniformity and the cutting of red tape that insurers need to become truly customer focused instead of regulator focused. Too many state DOI's are interested merely in maintaining and expanding their political power more than they are concerned with legitimate customer welfare.

For those that want to preserve data sharing, the repeal of McCarran Ferguson would not necessarily end that practice. Federal anti-trust laws have safe harbors to protect practices that help consumers and I think a pretty clear and convincing argument can be made that data sharing does. Also, many federal regulatory proposals such as that from Sununu/Johnson provide insurers the option of remaining in the state regulatory system if they so desire.