Senate Banking Committee Urged to Back Federal Insurance Regulation
National News • July 30, 2008
The U.S. regulatory structure for the insurance industry puts companies at a disadvantage overseas and stifles innovation and competition for consumers, the industry told U.S. lawmakers ...
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Subject: Innovation from weaker regulation
Posted On: July 31, 2008, 8:31 am CDT
Posted By: MAP in A2
Comment:
Senator Dodd said "The ability of insurers to spread U.S. risk broadly around the world has enormous benefits for American consumers, as it increases insurance capacity here at home." That seems to belie a fundamental misunderstanding, or at least an industry-slanted view, of insurance. Spreading risk also means absorbing risk from the rest of the world. This appears to be the same slipperly slope of logic that lead Wall St. to declare that risk was dead, since it was spread so well around the world in so many players...gosh, didn't that work out well.
Insofar as stifling "innovation", from a consumer perspective, this has much less to do with "innovation" than marketing. The insurers that favor this proposal want to be able to offer a single package of products in each state to streamline their marketing and work through a federal regulator that will undoubtedly be incompetent and underfunded (like all federal regulatory agencies). I guess all those record profits just weren't good enough, not only for their owners but to fund so-called "innovation"!
In short, this is propoganda code for less-stringent regulation, since it seems clear that the insurers that favor this proposal are arguing that the existing state regulations are too strict and vary too much by state to allow for product "innovation" (whatever that might be). To be fair, I'd like to see what kinds of "innovation" the industry believes it could produce under a federal charter system, as well as detailed analyses of the impact to consumers. Then, instead of talking in high-minded oratory, they could introduce some meaningful details into the proposal.
States are much closer to their residents than the federal gov't, and each state has different insurance needs. And why should I, living in Michigan, subsidize insurance premiums for disaster-prone areas like Florida? I don't live there and I certainly don't think that I should have to subsidize people that choose to (of course people are free to live where they want, I just don't see why other people should absorb part of the risk they undertake in doing so).
Insurance is one industry where tighter, state-controlled regulation has kept it largely in check, and has worked for many years and continues to do so (even while insurers rake in record profits). Federal regulators have proven themselves to be asleep at the wheel time and again, so why is it that we should trust they'll do any better with this?
Subject: Innovation from weaker regulation
Insofar as stifling "innovation", from a consumer perspective, this has much less to do with "innovation" than marketing. The insurers that favor this proposal want to be able to offer a single package of products in each state to streamline their marketing and work through a federal regulator that will undoubtedly be incompetent and underfunded (like all federal regulatory agencies). I guess all those record profits just weren't good enough, not only for their owners but to fund so-called "innovation"!
In short, this is propoganda code for less-stringent regulation, since it seems clear that the insurers that favor this proposal are arguing that the existing state regulations are too strict and vary too much by state to allow for product "innovation" (whatever that might be). To be fair, I'd like to see what kinds of "innovation" the industry believes it could produce under a federal charter system, as well as detailed analyses of the impact to consumers. Then, instead of talking in high-minded oratory, they could introduce some meaningful details into the proposal.
States are much closer to their residents than the federal gov't, and each state has different insurance needs. And why should I, living in Michigan, subsidize insurance premiums for disaster-prone areas like Florida? I don't live there and I certainly don't think that I should have to subsidize people that choose to (of course people are free to live where they want, I just don't see why other people should absorb part of the risk they undertake in doing so).
Insurance is one industry where tighter, state-controlled regulation has kept it largely in check, and has worked for many years and continues to do so (even while insurers rake in record profits). Federal regulators have proven themselves to be asleep at the wheel time and again, so why is it that we should trust they'll do any better with this?