Ark. commissioner: Regulators have dual role

Testifying before the United States Senate Committee on Commerce, Science and Transportation on April 11, Arkansas Insurance Commissioner Julie Benafield Bowman, told lawmakers that insurance regulators have the dual responsibility of ensuring the solvency of insurance companies, and making sure that those companies treat consumers and claimants fairly. Speaking in support of state-based insurance regulation, Bowman also discussed the overall state of the property/casualty insurance market, rate regulation and insurers’ claims settlement practices.

“The most important job of an insurance commissioner is to protect insurance consumers,” Bowman stated in her testimony. “This is accomplished by maintaining strong, cooperative regulatory oversight of insurer solvency and monitoring insurer marketing activities so that a healthy competitive marketplace exists.”

Bowman explained that rather than being one huge conglomerate, the insurance industry in the U.S. is made up of many “smaller markets that, when aggregated, yield a $1.35 trillion ‘marketplace.’ In comparison, the insurance market in Japan is roughly $475 billion and the UK is $300 billion. The largest state market is California with $124 billion in written premiums. Only Japan, the UK, France Germany and Italy have larger markets than California. Following California is New York with $116 billion, Florida with $92 billion and Texas with $82 billion. Of the top ten jurisdictions in the world, four are the states previously mentioned. My state, Arkansas, has $8.6 billion, slightly less than Poland and Mexico, but larger than the insurance markets in Argentina, Turkey, Israel and Thailand.”

She told lawmakers that the nature of insurance markets within states is diverse. As an example she noted the differences in availability of earthquake coverage in her state. Residents of western Arkansas, she said, “have no difficulty obtaining earthquake coverage, while the Eastern residents, particularly those living near the [New Madrid] fault line, have recently experienced some availability problems and the prices for the coverage, when offered, have risen sharply.”

Bowman’s testimony can be found online at: http://insurance.arkansas.gov/Administration/bowman_testimony.pdf