It calls for the creation of an Office of National Insurance, which would act under an extensive set of regulatory and supervisory powers. These powers would be modeled after those exercised by federal banking agencies. Additionally, there would be a Division of Consumer Protection as well as a Fraud Division within the national office.
Those in favor of a new federal agency include the Automotive Service Association (ASA), the American Insurance Association, the American Bankers Association, the Financial Services Roundtable and the American Council of Life Insurers.
“The Automotive Service Association (ASA) believes the current state insurance regulatory system falls woefully short of meeting the needs of consumers and small businesses,” said Bob Redding, ASA Washington, D.C., representative. “Although federal regulation certainly will be a step in the right policy direction, a voluntary federal system is not the answer.
“The committees of jurisdiction have had extensive hearings on the federal regulation of insurance. Major insurers have stepped up and testified that they want federal regulation. It will benefit consumers and collision repairers for the Congress to establish a mandatory federal regulatory system for insurers. To let another term of Congress pass by with no action on insurance reform will be costly to consumers, collision repairers and the small business community. In addition, the 110th Congress should move forward Senate Judiciary Committee Chairman Patrick Leahy’s Senate Bill 618 that repeals the McCarran-Ferguson Act.”
Testifying in support of federal regulation, Bill McCartney, senior vice president of the United States Automobile Association (USAA), said: “Some argue that, because state tort laws, property risks, automobile insurance requirements are so state-specific, a national regulator for property and casualty insurance products could never work. I strongly disagree. USAA, and I believe this to be true for other insurers, could readily develop standardized products that we could offer to our members that take into account all these state variations. The reason insurers have not done so – and the reason for an almost complete lack of innovation in this industry – is because it is so difficult and time-consuming to gain national approval of the innovations.”
Opponents of the bill, including the National Association of Insurance Commissioners and some consumer groups, oppose the federal charter. Opponents believe prices for automobile and home policies would likely rise and deprive customers of contact with local regulators.
Walter Bell, Alabama commissioner of insurance and president of the National Association of Insurance Commissioners, testified against the proposed regulation. According to Bell, “One of the great strengths of state insurance regulation is the fact it is rooted in other state laws that apply when insurable events occur. Federal laws that appear simple on their face can have devastating consequences by limiting the ability of state insurance departments to protect the public.”
To send a letter to your senators and representatives supporting repeal of the McCarran-Ferguson Act, visit ASA’s legislative www.TakingTheHill.com and click on “Legislative Alert Center” in the left menu; then see the featured alert, “Support Repeal of McCarran-Ferguson Act,” and click the “Take Action” button.