The current insurance regulatory structure inhibits innovation and actually perpetuates commoditization of insurance products to the detriment of consumers, according to Joseph J. Beneducci, president and chief operating officer of Fireman’s Fund Insurance Company, who called for an optional federal charter to address this problem at a U.S. Senate committee hearing today.
Beneducci represented the American Insurance Association (AIA) during the Senate Committee On Banking, Housing, And Urban Affairs hearing on “Insurance Regulation Reform.” He spoke to the committee about the urgency of overhauling the insurance regulatory landscape to empower consumers by having a more innovative insurance marketplace that meets their ever-expanding needs for product and pricing options.
“Government regulation should focus on those areas where government oversight protects consumers in the marketplace, such as financial integrity and market conduct, rather than on those activities that distort the market, such as government price controls and hostility to innovation,” Beneducci said. Regulation should also be “uniform, consistent and efficient.”
The vehicle for accomplishing the necessary regulatory changes has been introduced by Senators John Sununu (R-NH) and Tim Johnson (D-SD), said Beneducci. “We strongly support the bi-partisan National Insurance Act of 2006, S. 2509.”
This legislation provides insurers the option of being nationally regulated, while at the same time preserving the current state regulatory system. Importantly, it also would preserve critical elements of the current state system, such as state premium taxes, the state guaranty fund system, and certain local prerogatives with respect to workers’ compensation and motor vehicle insurance coverage requirements.
Insurance regulatory reform has been a topic of discussion by the National Association of Insurance Commissioners (NAIC) for more than a century, noted Beneducci, and such reform “is critical to providing a solid foundation for underwriting the risks necessary to advance a strong U.S. economy.”
Although the NAIC has been and continues to be sincere in their efforts, “no one has come close to delivering a modern system that empowers consumers and focuses on real consumer protections,” Beneducci stated.
Source: American Insurance Association
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