State Insurance Regulators Invoke Jefferson to Limit Federal Role

By Zachary Tracer, Bloomberg | September 18, 2013

  • September 18, 2013 at 1:55 pm
    Susan says:
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    Let’s review history. When AIG went down, all the state regulated entities remained solvent. Wasn’t it the federally regulated entities that had the trouble? I don’t know but it seems like a good point to make. The federal government only does a few things well – defense and our military come to mind. Perhaps some agencies within the Department of Agriculture (food inspections) work but most is just a bureaucratic mess that should be vigorously downsized.

  • September 18, 2013 at 1:55 pm
    Jake Peters says:
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    Hidden due to low comment rating. Click here to see.

    • September 18, 2013 at 3:07 pm
      Anonyman says:
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      because the government deciding things worked so well in the Soviet Union but hey, at least they had plenty of vodka to allow them to forget about their horrific lives.

    • September 19, 2013 at 8:21 am
      GL Guru says:
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      what private sector monopoly are you talking about?

      • September 19, 2013 at 8:33 am
        GL Guru says:
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        My mistake, I was glossing it over to quickly. My apologies. Moodies? S&P? Fitch?(LOL)

    • September 19, 2013 at 9:37 am
      jw says:
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      Why does A.M. Best need to be broken?

  • September 18, 2013 at 2:12 pm
    Original Bob says:
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    Was it Berkley who once said he would prefer to deal with one gorilla rather than 50 monkeys? After working in a position to insure company compliance I can think of a few monkeys I’d like to see on their way.

  • September 18, 2013 at 2:30 pm
    Ted Hall says:
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    Mr. Nelson forgets to mention the federalization of insurance regulation via the organization that he represents (the NAIC). The NAIC (the “N” stands for National)has done much more to rob the States of their independence as regards insurance regulation than the federal government could ever hope to accomplish.

    • September 19, 2013 at 2:18 pm
      JohnS says:
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      Us in the industry understand that NAIC is an an acronym for “No Action is Contemplated”.

      NAIC is basically a shill for the big states.

      New York, is not even a member of the NAIC.

      While they do try to standardize some things, generally, they are ineffective.

  • September 18, 2013 at 2:32 pm
    Rusty says:
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    I don’t think that Jake’s issue gives reason for government to get regulate even more. Existing regulations allow for lawsuits over issues like monopolies or anti-trust violations as they have for generations. I do agree with what Susan said. The federal government’s power was deliberately limited by the Constitution precisely because of what see emerging now, with its intrusion into every aspect of life using the the excuses of making things better, safer or anything else it can conjure up. The founding fathers well knew man’s weakness and the seduction of power. The federal government should only exist for the purposes that were originally granted to it, like defense, etc. Unfortunately it is growing like a weed. I recently read that there is a provision in Obamacare that will require doctors to ask a lot of personal questions about patient’s sex lives and other habits, the answers to which will all go into the files that will be kept on everyone who utilizes healthcare. In turn, those files will be available to any governmental agencies and bureaucrats that can recite a reason to have them – not to mention hackers who have successfully hacked government records already. How’s that for power – and privacy?? As for privacy, those of us in any sort of financial services business are required to protect the privacy of customer information , but the government doesn’t abide by the same rules it sets up for the rest of us. Once the government builds its database on all of us, I can only imagine what will happen to private medical information. Besides the possibility of hacking, it will get out via some excuse that will be created by agencies. Or it will simply be distributed it as bureaucrats see fit and they’ll make up an excuse once discovered. Our government working for us!!! And some folks want to give it more power??

    • September 19, 2013 at 8:24 am
      GL Guru says:
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      Growing like a weed the size of a sequoia tree.

  • September 18, 2013 at 3:03 pm
    JohnS says:
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    The Supreme Court ruled that the Feds could regulate insurance. There is no question and no issue of Constitutionality and the Jefferson arguments are silly from the a legal standpoint. See below Wikipedia discussion.

    The McCarran Ferguson Act of 1945 passed by Congress delegated regulation of insurance companies to the states from the Feds. Note this is a law by Congress PERMITTING the states to regulate.

    Congress can take away this authority, just as it granted it.

    The feds have proved themselves good regulators in many areas.

    This state regulation of insurance companies is a rats nest increasing costs and complexity and acting as a bar to competition. It should be eliminated, or at least allow companies to opt out.

    All the arguments to the contrary are 1. from state regulators trying to save their jobs, or 2. entrenched insurance interests which benefit from the bar to competition.

    AIG’s non-insurance entities were not regulated by the feds….they were regulated by no one. The Commodity Futures Modernization Act of 2000 passed by Congress at the behest of the big banks eliminated all regulation of Derivatives and Swaps. Yes, they felt the banks would self regulate well…….

    “The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, also known as Public Law 15,[1] is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. The McCarran–Ferguson Act was passed by the 79th Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution.” Wikipedia

    • September 19, 2013 at 8:29 am
      GL Guru says:
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      The Supreme court also said that blacks are 2/3s of a person. They said that the federal government can tell a farmer that is not selling produce across state lines, in fact giving it away,he can only grow so much of a crop. The constitution says nothing about that. They don’t get it right all the time. Quite often they get it wrong and more frequenlty they are legislating from the bench.

      Unless it is specifically put in the constitution, the fed does not have that power.

      • September 19, 2013 at 2:23 pm
        JohnS says:
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        Well, you are entitled to your opinion and to make up facts.

        However, the fact is that the Constitution gave the Supreme Court the power to interpret the Constitution. So, unless you remove that from the Constitution, they have that power. See the Constitution Article III.

  • September 18, 2013 at 3:04 pm
    Anonyman says:
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    I think at this point it’s spitting in the wind. The Federal government has become an all consuming vacuum which is so big, so intrusive, so warmongering, and so indebted at this point I don’t think any of this is reversible. As the government prints more money and goes deeper into debt while passing more regulations, the economic destruction that it causes will ensure that evil and government educated (stupid) people call for even more intervention. The Federal Reserve today made it obvious that there is no chance that anyone in Washington has the stomach for tapering. The insurance industry is benefiting from this as well since asset and stock prices are being artificially driven higher and higher by the inflation so I doubt that any of it’s members will lead the revolution.

  • September 18, 2013 at 4:51 pm
    No Doubt says:
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    I agree with @Anonyman. Our form of limited government has been steadily eroded over the course of time-really since the end of the civil war when the federal Gov’t asserted its supremacy over the individual states.
    Its probaly not reversible in a conventional sense, but rather something huge has to go wrong that the feds are supposed to do before the vast majority of the populus rethinks the role of government in our lives.
    its been a while, but the Roman Repbublic/Empire went though similar expansion into their citizens lives until catastrophe changed things. The downside to that parallel is that it would imply that only a dictatorship will forestall an ultimate collapse as the heathens stormed the gates.
    It’d be an interesting conversation to have with any of the Founding Fathers to see if they ever saw the potential for how our Republic looks today vs 1800.

  • September 18, 2013 at 5:06 pm
    sl says:
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    And you think the state governments are better than the federal government? Some states are doing extremely crazy stuff and the intrusion into personal life by them
    is beyond belief!

    • September 19, 2013 at 8:31 am
      GL Guru says:
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      Yes they can do silly stuff but I have 49 other states I can do business in.

  • September 19, 2013 at 1:19 pm
    Bruce says:
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    The Feds SHOULD regulate reinsurance…the states are not doing it and it definitely should be done. The whole idea that both parties are equally sophisticate and have equal bargaining power is absurd, but for the major insurers.

    GL what case did the USSC say that blacks are 2/3 person?

    The Three-Fifths Compromise was a compromise between Southern and Northern states reached during the Philadelphia Convention of 1787 in which three-fifths of the enumerated population of slaves would be counted for representation purposes regarding both the distribution of taxes and the apportionment of the members of the United States House of Representatives.

    Insurance is clearly interstate commerce which to be federally regulated. What is your arguments that it is not?



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