PIANY Supports State-based Regulation of Insurance Industry

Speaking at a public hearing at the invitation of the New York State Assembly Standing Committee on Insurance, the Professional Insurance Agents of New York State Inc. last week said it favors adoption of Assembly Bill A.8068. The bill would enable New York state to join the Interstate Insurance Compact, which seeks to create uniformity in the industry without requiring federal regulation.   
  
“The proposed legislation represents an opportunity to act on an initiative that would benefit state insurance regulators, consumers and the insurance industry,” PIANY immediate past President David Dickson told the committee. “The manner in which insurance products are filed, reviewed and approve would be streamlined, creating a more effective, efficient system.”  
  
The IIC was created by legislators and regulators to promote uniformity in the industry by providing a single point of product and rate filings, and hold insurers to a set of uniform, national standards. The compact advances the objective of insurance regulatory modernization, and effectively responds to ongoing calls in the U.S. Congress for the creation of a federal insurance regulator. To date, 31 states have joined the IIC.  
  
“The compact is no longer an experiment, rather a crowning achievement of state legislative and regulatory communities coming together,” Dickson told the committee. “Passage of the compact is nothing less than crucial to our state.  
  
Dickson also voiced PIA’s opposition to an optional federal charter. “Make no mistake about it, proposals to impose federal regulation of insurance are merely attempts to reclassify insurance products as banking products and represent competition for market share by major players at the expense of consumers and smaller regional carriers,” he said. “Look no further than the advocates of these proposals: large banks, securities firms and a few carriers. These proponents want to expand their market share by using a federal regulatory system to gain an unfair advantage over their competitors, particularly the regional and mutual insurance carriers.”  
  
Federal involvement would not make insurance regulation more efficient, PIA says. “Recall that the sub-prime mortgage meltdown occurred under federal regulation,” Dickson said. “At the same time, the insurance industry, under state regulation, has remained on a firm financial footing.”  
  
Dickson concluded by reinforcing that the state regulatory system, a work-in-progress, as the best option for residents of New York state. “Yes, it [the system] needs improvements. Yes, it needs more modernization. But we shouldn’t toss out a system that works well for our industry and consumers. States have already demonstrated that they, as opposed to the federal government, can best ensure a robust insurance sector. The compact allows consumers to get access to more competitive insurance products much quicker.”  
  
PIANY is a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state.