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U.S. Rep. John D. Dingell, D-Mich., rocked the insurance industry in 1990 when the House Oversight and Investigations subcommittee that he chaired released its report "Failed Promises." The report, which blasted the quality of state insurance regulation, rekindled the debate over what role, if any, the federal government should play in insurance regulation, which has traditionally been a province of the states.
Rep. Dingell, 71, who was first elected to fill his late father's congressional seat in 1955, later introduced a bill to provide federal insurance solvency regulation, but it was never enacted. His 1994 follow-up report, "Wishful Thinking," was no more complimentary to state regulation of insurance than his initial report. By then, significant portions of the insurance industry had endorsed the idea of federal solvency oversight for multistate insurers. But any chance of federal insurance regulation seemed to vanish when voters gave Congress its first Republican majority in 40 years in the 1994 elections.
Rep. Dingell, whose 14 years as chairman of the House Energy and Commerce Committee made him one of the most powerful people in Washington, recently discussed the quality of insurance regulation, the outlook for product liability and Superfund reform and one of his longtime legislative goals -- radical reform of the nation's health care system -- with Washington Editor Mark A. Hofmann.
As a proponent of federal regulation of insurance solvency, do you think the issue is ever likely to re-emerge? Do you see any appetite for it now with the Republican majority?
Are you speaking about me personally, or are you speaking about the issue in the abstract?
First of all, I continue to have an interest in insurance solvency. And I do that because I'm convinced it is going to be an ongoing problem that is going to afflict business, which is going to afflict the insurance industry generally -- particularly the honest and responsible insurers -- and it is going to affect the insured, because they're going to confront on a continuing basis questions associated with solvency. It's also going to cause significant problems for state and local government units and federal government, which is not infrequently going to be called upon to pony up money to deal with insurance collapse. It's going to be a major problem with regard to fraudulent behaviors on the part of overseas insurers, the inability of state insurance regulators to reach across state lines outside the boundaries of the United States to address either incompetence, inadequate reserves, insolvency or -- quite honestly -- outright fraud and criminality.
It also is going to be a very major problem insofar as reinsurance, and the fact that foreign nations are becoming the havens of scoundrels who will take advantage of American companies, American individuals and businesses by selling inadequate insurance.
I remember at one point British insurance regulators talking about how they were going to take care of British insureds (of insolvent insurers), and then the question was what they were going to do about American insureds. They said that is an American problem.
Is there any appetite in this Congress to revisit that question?
Do you see anything on the horizon that might change that?
A Democratic Congress.
A major insolvency?
A major insolvency would be helpful.
What led you to become involved in the solvency question to begin with?
A wave of insurance company collapses, massive frauds, misbehavior across state lines that state regulators were incapable of reaching, misbehavior outside of this country taking advantage of U.S. insurance companies and U.S. insureds. Also, significant problems in terms of state regulators being able to reach wrongdoers who had run outside the country or across state lines to do business to the detriment of American business, individuals and insureds of different kinds and categories. And a succession of massive insurance failures that had to be made up by honest people in the insurance companies, by the stockholders, the insureds and quite honestly by the policyholders of the mutual companies who were compelled to pony up to deal with the problems of other insurance companies.
And also the rampant incompetence and incapacity of state regulators to address these problems.
Speaking of state regulators, what's your opinion of the National Assn. of Insurance Commissioners' accreditation program to improve state oversight?
We had a number of interesting hearings on that. We had them in to discuss those matters and I found that in many of the meetings where they discussed the question of accreditation they were more interested in the menu and the solicitation of funds to provide adequate entertainment for the state regulators than they were ever in addressing the question in a real and vigorous fashion.
Do you think there's been any improvement in the quality of state regulation since you began looking into it?
No. As a matter of fact, if you look you will find that there was a very significant problem about one company that moved overseas to escape U.S. regulation and U.S. controls. They went into bankruptcy.
Are you referring to EMLICO?
In "Wishful Thinking," you singled out Bermuda as a domicile with lax regulation....
Let's see, I could mention Bermuda, the Cayman Islands, Turks & Caicos, and a number of other impecunious offshore islands where they're less interested in American insureds than they are in getting the necessary filing fees, and becoming offshore banking centers for things like money laundering and other things of equal interest to the United States government.
Switching gears a little bit, you've been a longtime supporter of federal product liability reform. What aspect of reform do you feel is the most important and what kind of changes are necessary in order to get the president to go along with reform? Or is that an impossible question?
First of all, getting meaningful reform is the important purpose, and getting it in early and getting something that the president could sign is important. To go beyond that I think would be unwise for me at this particular time because I have negotiations going on with the White House and with my colleagues on both sides of the aisle to try to come up with a piece of legislation that the president can sign.
The parameters were the bill that was sent to the president and the veto message. We'll try to see what we can get that will enable us to get something that will pass the House and Senate, and be supported by the leadership in both the House and Senate and ultimately be signed by the president. That's my purpose.
Having said that, there's not a whole lot I can go into in specific details because, quite honestly, I don't want to occlude my prospects by defining specific goals.
I'm sure you're aware of the fact that our product liability compensation system is one which drips unfairness to everybody. It inhibits our competitiveness. It creates a situation where innocent sufferers are oftentimes not treated justly, are not compensated fairly, and wind up being victimized by a system that is supposed to help them.
In a similar situation, oftentimes, innocent manufacturers and innocent providers of important services wind up being highly victimized to no particular benefit on the part of anyone.
Regarding Superfund reform, do you think risk managers and insurers ought to drop their efforts to repeal retroactive liability?
Well, remember, I am a pragmatist. What I want to do is make progress in the public interest and not spend my time in vast theological arguments about what ought to be done or what ought not be done.
There are easily identifiable questions that we need to address, and within a realm of reason we can deal with those in an intelligent fashion.
Having said that, we have a fine beginning in the proposal which we put out of the committee under my leadership when I was chairman in 1994 by a vote of 44 to nothing. In an unfortunate burst of partisanship, my Republican colleagues decided they did not want that piece of legislation enacted (BI, May 23, 1994).
So, in '94 they took over and in another burst of partisanship they decided they were going to write a most curious piece of legislation which would essentially have the taxpayers and the public pay the polluters, which was a piece of assininity that I've rarely seen exceeded in this place.
Having said that, I think if we were to take as a beginning point what we did in '93 and proceed forward we could achieve some meaningful relief for industry and could have something which was supported by industry, by the environmentalists and by government.
And perhaps it would be possible to achieve some additional changes in the law that could again help industry and might expedite the entire process, eliminate a lot of litigation and a lot of the huge and costly wastes of time, money and effort that are now a regular component of the Superfund problem.
You've been an advocate of comprehensive health reform for a long time, including a single-payer system. President Clinton's effort didn't go anywhere. Do you think the time is going to come when a single-payer system or other broad changes in the health-care system are going to be possible?
Well, again, I am a pragmatist. I have my ideas of what perfection would be. I happen to think that the country needs an intelligent single-payer system. I can establish that it costs less, entails less fraud and misbehavior, is more efficient in terms of delivery of services and the basis of cost and the needs of employers and ordinary citizens as well as doctors and other health-care professionals.
I will tell you that the current system pleases no one. It costs too much. It's riddled with waste, fraud and abuse. It leads to numbers of people being uncovered, without any health care whatsoever. It results in people paying costs that they should not pay, people paying for the costs of services provided for others. It disregards oft times the needs of the patient. It intrudes into doctor-patient relationships in a most curious and extraordinary and vicious fashion and it leads to a situation where the doctors are losing faith in the system because they're finding that no longer do they relate to their patient but rather to some faceless bureaucrat in some kind of private entity that is not even responsive to government.
So, we are going to have to do something about it and as soon as people realize it costs too bloody much and affords too little in the way of what people want from a decent health care system, we'll get on to doing something.