Memo to State Insurance Regulators: Pack Your Bags!
It's time for the group representing the states' insurance regulatory experts to pack up its bags, computers and name badges — and move to Washington, D.C.
The National Association of Insurance Commissioners (NAIC) currently makes its home in America's heartland, in Kansas City. In most situations, this would be fine, particularly in an age of telecommuting, videoconferencing and email. It even worked well in the old days of phone and fax.
But apparently Kansas City is no longer visible or accessible from Washington, D.C.
It seems that to some in Congress, information or expertise doesn't exist unless it cavorts on K Street. That's why they think a new federal insurance information office is needed in Washington.
Chairman of the House Capital Markets Subcommittee Rep. Paul Kanjorski, D-Pa., has introduced legislation that would establish an Office of Insurance Information within the Treasury Department. The Democrat Kanjorski's proposal is similar to one of the recommendations contained in the Treasury Department's recent Blueprint for a Modernized Financial Regulatory Structure. That blueprint called for a federal Office of Insurance Oversight.
The otherwise sensible Kanjorski has been advocating on behalf of such an office for years.
"Shortly after September 11, it became very clear to me that the federal government lacks the expertise it needs on insurance policy. Our experiences after Hurricane Katrina and the ongoing problems in the bond insurance marketplace have only reinforced my views," he told a subcommittee recently.
Washington is acknowledging that it does not have the knowledge of the insurance industry it needs to regulate the business. But rather than conclude that therefore Washington maybe should not regulate the industry or that perhaps the expertise exists elsewhere, the answer becomes…. establish a new Washington bureaucracy.
According to Kanjorski, close to 90 insurance bills are currently before the House Financial Services Committee. "Regardless of whether or not the federal government directly regulates insurance, we must educate ourselves on insurance policy and build a knowledge base in the federal government on these matters," the Pennsylvania official said.
Hello, Washington! The country already has a knowledge base of infor-
mation on all insurance policy and regulation. It's called the NAIC and it's got quite a history. It's been around since 1871. The NAIC has databases on financial results, consumer complaints and lots more. It has consumer offices in every state. It has people working for it who have insurance designations and college degrees. It even has people who know all about international insurance issues. Imagine! People outside Washington who know something!
The NAIC is superior to any federal office because its knowledge is derived from real businesses, markets and consumers — not from musing over martinis in Dupont Circle.
The one thing the NAIC doesn't have is a fancy Capitol Hill penthouse presided over by an overpaid former politician who parties with Congressional lobbyists and staffers. The NAIC does have a Washington office but its presence is apparently much too low profile.
The NAIC's Washington office informs states about what's going on in Washington but what it really needs to do is educate Washington about what's going on in the states.
Let's face it: Kanjorski and others in Congress aren't coming to Kansas City any time soon for a cocktail party. So the NAIC should save Congress the hassle and expense of building a new bureaucracy and just move itself to K Street. The regulators will all have to move eventually anyway. Because if Washington insists upon creating its own federal insurance office, it's going to need to lure all the best minds in insurance regulation to staff it. They're all working in Kansas City and the state insurance offices across the country now.
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