NAIC, PCI Issue Statements in Response to Consumer Group Criticisms on Regulatory Reform

March 3, 2004

The National Association of Insurance Commissioners (NAIC) and the Property Casualty Insurers Association of America (PCI) issued statements in response to a letter from two consumer groups that criticized the insurance market philosophy of Ernst Csiszar, president of the NAIC and director of the South Carolina Department of Insurance.

According to NAIC, comments released by the Consumers Federation of America and Consumers Union were inaccurate and mischaracterized the association’s position on regulatory reform.

“I have absolutely not abandoned state regulation nor any NAIC established policies,” said Csiszar, who also is South Carolina’s Director of Insurance. “The NAIC continues to work with members of Congress to ensure that ongoing regulatory reforms will preserve state regulatory authority and essential consumer protection initiatives. Congress is calling for ‘radical’ reforms in state regulation, and may take certain steps with or without state regulator involvement,” said Csiszar in a press release statement.

The PCI also issued a press release statement in defense of Csiszar’s free market philosphy.

“The statements contained in the CFA news release criticizing the free market philosophy of NAIC President Ernst Csiszar and the value of a competitive market to consumers across the country are simply out of touch with the reality of insurance regulatory modernization efforts currently underway in a number of states and in Congress, said Robert Zeman, senior vice president, insurance and regulatory affairs for PCI, in a statement. “It is not secret that insurers, regulators and consumers are frustrated with the current regulatory system. In 2003, four states – Texas, Louisiana, New Hampshire, and New Jersey – enacted regulatory reforms that reduced the excessive price controls that plagued insurance markets in those states for decades. Insurance availability increased almost immediately as a result of these reforms, enhancing consumer choice and helping to control the cost of insurance. At least a dozen states are likely to consider similar reforms in 2004.”

With regard to personal lines deregulation, the NAIC stated it has not taken any position on the issue and Csiszar personally has not advocated any position on behalf of the NAIC.

Zeman stated that PCI continues to be a strong proponent of free enterprise and a regulatory environment that allows competition to thrive. “Insurance markets in which competition is the primary regulator of price and product best serve consumers.”

Zeman referred to Csiszar’s home state of South Carolina as a prime example of the benefits of free market reforms.

“By 1996, South Carolina’s price control system had resulted in only 78 companies offering policies in the state and over 40 percent of insured drivers being placed in the assigned risk pool. Since the state adopted a flex-rating system backed by Director Csiszar in 1999, 105 new insurers have entered the market, average auto insurance rates have decreased, and the state’s residual market plan insures less than 60,000 drivers, compared to more than one million less than a decade ago, ” Zeman added. “Congress has held at least 10 hearings and public policy roundtable discussions on the issue of excessive regulation over the past year.”

Congressional hearings on state insurance regulatory reforms will resume this month.

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