Federal regulation of banking and securities works fairly well, but translating that model to insurance would be a real challenge given the “parochial” nature of state insurance coverage mandates and laws, according to Thomas Hampton, commissioner of the District of Columbia Department of Securities, Insurance and Banking. “You can’t have ‘one rate or policy form fits all’ in insurance,” he said.
Hampton, who was reappointed to his post by Mayor Adrian M. Fenty in January, reported that the District’s campaign to attract captive insurers has seen a “growth spurt” to 70 entities since it switched from targeting association-backed captives to hospital and liability risks. The District now is going after medium-sized firms with $50 million to $100 million in capitalization.
Renewal of the federal terrorism reinsurance program is “very, very important” for the District, but a similar federal backup for natural disasters would probably be unfair to the Midwest, he offered.
His department supports the use of credit scoring by insurers in developing rate classifications. “If you take out credit scoring, there will be less rating classes and more people would be paying higher rates,” he explained. However, Hampton said he will be conducting a market analysis to verify that this practice is not unfairly discriminatory, as insurers claim.