Regulatory modernization, restrictions on cost-based underwriting, and extension of the Terrorism Risk Insurance Act (TRIA) are the three of the most significant public policy issues facing insurers in 2005, according to the Property Casualty Insurance Association of America (PCI).
Approximately 200 PCI member company representatives, staff and local lobbyists attended the Associations’ annual Legislative Planning Conference in late October. PCI members identified the most pressing issues facing insurers in state legislatures and Congress and began developing a comprehensive political advocacy plans to advance PCI’s public policy agenda.
“This is one of our most important conferences,” said John Lobert, PCI senior vice president, state legislative affairs. “It brings together member company government affairs professionals, our local lobbyists, and PCI staff to discuss and determine the most important legislative and regulatory issues facing the industry, develop successful strategies to address those issues and allocate the resources necessary to win these important public policy battles.”
“Because so many issues are being debated at both the state and federal level, it is extremely important that our advocacy efforts are coordinated,” said Carl Parks, senior vice president, federal government affairs for PCI. “We need to make certain that our messages to state legislators, state regulators and members of Congress are clear and unambiguous. This meeting helps us to accomplish that objective.”
PCI members identified the following issues as the most important public policy issues facing the industry in 2005.
· Extension of TRIA
· Regulatory modernization (including the federal SMART Act and state efforts to enact regulatory reform) · Application of Sarbanes Oxley to non-publicly traded insurers · Judicial reform (including class action, medical liability, and asbestos litigation) · Restrictions on underwriting (including limitation or elimination of credit-based insurance scores and loss history databases) · Market conduct reform · Catastrophe risks/deductibles restrictions/assaults on rating · Medical cost inflation “While the issues have not changed dramatically in previous years, what has changed is the sense of urgency to address these issues,” said Parks. “TRIA expires at the end of next year and unless action is taken to extend the law, companies may not be able to provide this coverage to their commercial policyholders who want and need it. The financial fallout resulting from the unavailability of terrorism insurance in terms of jobs and growth would be a major setback to the nation’s economic recovery..”
Allegations raised in the investigation by New York Attorney General Elliot Spitzer will also reportedly affect the industry’s political agenda.
“It is still impossible to determine the impact that the Spitzer investigation will have on the industry’s public policy agenda,” said Lobert. “We are working closely with legislators to make certain that they understand the facts of the case and are not influenced only by the headlines. We think that any legislative or regulatory actions should address transparency and disclosure provisions that help make markets more competitive and help prevent illegal activities such as bid rigging.”
Lobert added that the growing pressure from Congress to reform the regulatory system may spur additional state action. “The authors of the SMART Act clearly understand the need for more uniformity and reform of the state-based system and the value of a more competitive insurance market to all consumers. The increased scrutiny by federal lawmakers is resulting in many state legislators and state regulators taking a much harder look at ways to improve the regulatory system to better serve consumers.”
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