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CHICAGOThe shift in power in Washington likely will not trigger any efforts to shift insurance regulation out of the hands of state officials, according to a panel of insurance experts.
But insurance and brokerage executives and a state insurance director agreed that regulatory reform is needed--no matter who oversees the industry--to create more uniform regulations.
The panelists offered their opinions on what impact the Nov. 7 elections would and should have on the direction of insurance regulation during a panel discussion at the Professional Liability Underwriting Society's international conference in Chicago. PLUS held its 19th annual conference Nov. 8-10.
Democrats, who take control of both houses of Congress in January, may favor centralized regulation of the insurance industry, but they likely will not push for federal oversight of the industry, said Leib Dodell, president and chief executive officer of Media/Professional Insurance, a Kansas City, Mo.-based underwriting and claims manager.
Mr. Dodell said that while working in the administrations of George H.W. Bush and Bill Clinton, he found that the "agenda of the federal government doesn't change that much."
Rather than a shift in power from one political party to another, the event that might drive regulation from the states to a federal agency is "the next catastrophe," regardless of whether it is a natural disaster or a terrorist act, Mr. Dodell said.
But uniformity of regulation is important, he said during a follow-up comment to a remark by Illinois Insurance Director Michael T. McRaith. After Mr. McRaith noted that officials from China have sought advice from the National Assn. of Insurance Commissioners on establishing a regulatory system, Mr. Dodell noted that the Chinese officials sought advice from a single regulatory group and not from individual states.
Mr. Dodell also complained that the current system of state regulation is cumbersome and expensive for insurers, "which makes it difficult for us to get products out to the marketplace on an admitted basis."
But Mr. McRaith said state regulation, unlike federal chartering, takes into account the local and regional differences of the nation's insurance market. "The benefit of state regulation is no more clear than in solvency regulation," said Mr. McRaith, noting that "more companies are being formed now than at any point in our history."
Mr. McRaith acknowledged, however, that "states can do better" to standardize regulation through an interstate compact.
Through the efforts of the NAIC, more than half of the states are participating in an interstate commission that gives them the ability to use their expertise collectively to develop uniform national standards for life insurance, annuities, disability income and long-term care insurance products.
Mr. McRaith also agreed that surplus lines regulatory reform is needed so wholesalers can place multistate risks with nonadmitted insurers without running afoul of regulations in one or more states.
But the need for greater uniformity in regulation does not suggest that federal regulation would be better than state regulation, Mr. McRaith said.
Noting that the Illinois Department of Insurance receives 15,000 consumer complaints and comments annually, Mr. McRaith asked, "Where do these people go" under a federally regulated system?
"Do we want to have to go to another agency run by another Arabian horse breeder?" he asked, referring to the much-maligned Federal Emergency Management Agency and former FEMA Director Michael Brown. Mr. Brown was the judges and stewards commissioner for the now-defunct International Arabian Horse Assn. for a decade before joining FEMA, which was criticized for responding slowly to the crisis in New Orleans after Hurricane Katrina struck the city last year. Mr. Brown resigned from FEMA in the wake of criticism about the agency's response and his qualifications.
TV journalist Forrest Sawyer moderated the panel discussion.