The state insurance regulatory system hurts consumers because it is clogged with so much red tape, inefficiency and unnecessary rules, the American Insurance Association (AIA) said at a House subcommittee hearing .
Testifying for AIA, Roger M. Singer of OneBeacon Insurance Group in Boston, told the House Capital Markets Subcommittee that while an optional federal charter would be the best reform for state regulatory woes, the concepts proposed by the subcommittee, done correctly with an eye toward marketplace regulation, would be a significant advance. Singer also applauded the efforts of Subcommittee Chairman Richard Baker (R-LA) and House Financial Services Committee Chairman Mike Oxley (R-OH) for undertaking this necessary task.
“A new, market-based regulatory system will eliminate needless paperwork, replacing red tape with efficient regulation that protects consumers by assuring that insurance companies are around when consumers need them most,” said Singer, who is OneBeacon’s managing director, senior vice president and general counsel.
Singer has seen regulation from both sides of the insurance table, from his position at OneBeacon and from having served from 1987 to 1989 as Massachusetts’ insurance commissioner. He urged the committee to focus on market-based solutions, with no state review or approval for commercial products.
He also praised Oxley and Baker for their drive to eliminate price controls at the state level. “We applaud that goal, because government price controls do not work to the benefit of anyone – especially consumers,” Singer said.
For example, the average auto insurance premium in Massachusetts in 2001 was $1,103 a year, while drivers in Illinois paid an average of $748. Massachusetts has the highest government-mandated rates for auto insurance, while Illinois lets market competition determine the price.
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