An interesting confluence of recent events in Missouri very well illustrates the fickle nature of politicians when it comes to the regulation of insurance. First came a week of ceremonies in which brand new Republican Gov. Matt Blunt signed into law workers’ compensation and tort reforms that were long-sought by the insurance industry but just as long-denied by the man Blunt defeated last November, Bob Holden.
For more specifics on the reforms, see page 10, but in essence the comp reforms limit the circumstances under which compensation must be given, for how long, and how much. The tort reforms, meanwhile, cap various forms of damages and change other legal rules that would favor insurers in legal battles with policyholders.
These are the kinds of reforms insurers love, and of course their lobbyists whisper and imply but don’t ever explicitly promise that the reforms will result in lower rates. And they probably will. But once insurers get into the game of resorting to politicians to change the rules in order to help them turn a profit, it’s hard to argue against Blunt’s latest scheme–one his allies in the House of Representatives passed 141-11 on the heels of his signing the industry-backed reforms into law.
This reform (see page 8) also deals with the medical malpractice problem, but this time it’s the carriers who are taken to task. Starting in 2009, prior approval would be required for any rate increase 20 percent greater than a “market rate” set by the insurance department. It also requires that insurers notify policyholders 60 days in advance of a 10 percent-or-greater rate hike and submit more detailed information about how they arrive at their rates.
I happen to agree that these are bad ideas, but I’m not the decisonmaker here (and aren’t we all lucky for that!). If insurance lobbyists can’t even stop Blunt from getting carried away with using the force of law to magically lower rates, how are they to fare with everyone else. I mean, if insurance lobbyists were teen-aged girls, a glamour shot of Blunt would be taped to the insides of their lockers. Right or wrong, that’s how much he’s gone along with their agenda.
The substance of the issues aside, insurers should stop looking to politicians–sat the state and national level–to fix their problems and start making the tough pricing, underwriting and marketing decisions they need to make in order to serve their customers, their agent partners and their shareholders.
Asking politicians for a just a “little help” is like asking a buddy to help you move. Only with politicians, once you’ve moved all your stuff in they start telling you where it ought to go. Next thing you know the coffee table’s in the bathroom and a regulator’s arbitrarily determining the “market rate” for insurance coverage.
Move your own stuff, guys. It’ll do you good.
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