The regulation of the insurance industry is best left to the states said a National Association of Mutual Insurance Companies (NAMIC) witness in testimony before a House Financial Services subcommittee in Washington, D.C. June 4.
Wayne F. White, president and chairman of Home Mutual Fire Insurance Company in Conway Ark., testified before Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises hearings on “Insurance Regulation and Competition for the 21st Century.”
White discussed insurance regulation, including a perspective on the National Association of Insurance Commissioners, advisory organizations such as the Insurance Services Office, rating organizations such as A.M. Best and Standard & Poor’s, and, provided NAMIC’s position regarding the future of insurance regulation.
“Regulation of the insurance industry is best left to the states,” White said. “The issues we are dealing with are not new, but have simply gained a higher profile as a result of the convergence of the financial services industry.”
White cited NAMIC’s recently released public policy paper, Regulation of Property/Casualty Insurance: The Road to Reform, which outlines the major action items in need of regulatory attention. The paper also points out the flaws in a federal solution to insurance regulation.
“Flaws such as the propensity of federal bureaucracies use of the regulatory process to promote social engineering; the potential for an unfair environment for thousands of smaller companies; the additional costs associated with a dual regulatory system that must still deal with the tort laws unique to each state; and the recognition that the costs of a new federal system must inevitably be passed on to the consumer,” White commented.
“Many of the issues put on the table by those desirous of federal involvement are simply to make it easier for large companies to do business,” White said. “Legislative history does not seem to indicate that it is the intent of Congress to involve itself in the detailed internal operations of business, but rather that the role is one of oversight.
“The areas for reform have been clearly defined. Now it is up to the states to enact changes in public policy that will make the difference and we urge you to give it time to work.”