Agency Associations Address Congress on Federal Insurance Regulation

The House Financial Services Committee’s Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises held a hearing yesterday, Wednesday, October 3, to review proposals on modernizing insurance regulation and the possibility of creating a federal insurance regulator.  
 
Following are excerpts of testimonies at the hearings by three of the insurance agency associations: PIA, AIA, IIAA:  
 
National Association of Professional Insurance Agents (PIA)  
 
In testimony submitted to the House Financial Services Committee's Subcommittee on Capital Markets, Insurance, and Government-Sponsored Enterprises for its October 3 hearing, PIA said that consumers are best served by an insurance system that is regulated by state Departments of Insurance.  
 
"In response to the constantly changing needs of a dynamic insurance marketplace, PIA supports state efforts to simplify and modernize insurance regulation through the established state regulatory system," the PIA said in its statement. "These efforts include the establishment of interstate compacts to streamline state-to-state regulatory activities."  
 
PIA pointed out that lawmakers in Alabama, Colorado, Michigan, New York, North Dakota, Ohio, Rhode Island and Texas, among other jurisdictions, either have passed or are in the process of adopting resolutions urging Congress to keep insurance oversight a state prerogative. In addition, groups including the National Governors Association, the National Conference of Insurance Legislators, the National Conference of State Legislatures and the National Association of Insurance Commissioners all oppose the creation of a federal insurance regulator.  
 
The PIA statement also expressed opposition to proposals to establish a bifurcated, dual regulatory structure under an Optional Federal Charter scheme.  
 
"Permitting a subset of competitors in the insurance marketplace to evade state law artificially confers upon large, national entities that are positioned to accommodate dealing with an alternate federal regulatory scheme an unfair competitive advantage over their smaller, regional or local competitors," the statement continued. "PIA believes that the federal government should not attempt to pick winners and losers in the insurance marketplace by enacting legislation favoring one group of competitors over another."  
 
"Whether optional or not, dual or exclusive, PIA strongly opposes a federal regulator for the business of insurance, for one overarching reason: one is not needed."  
 
The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”)  
 
Alex Soto, CPCU, ARM, president of Miami, Fla.-based InSource, Inc., and Immediate Past Chairman of the Board of IIABA, testified on the importance of insurance regulatory reform. Soto expressed the Big “I”’s support for the state system of insurance regulation but acknowledged that there are inefficiencies today in the regulation of insurance. He stated that the system needs to be modernized and that reform should be accomplished through targeted federal legislation.  
 
“As we have for over 100 years, IIABA supports state regulation of insurance – for all participants and for all activities in the marketplace – and we oppose federal regulation, optional or otherwise,” said Soto.  
 
“Yet despite this historic and longstanding support of state regulation, we do not believe the state system can effectively address its problems on its own.”  
 
Soto outlined IIABA’s ideas on how federal legislative action could reform the state regulatory system, and how two overarching principles should guide such efforts. First, Congress should attempt to fix only those components of the state system that a