How to Regulate Insurers in a Global Economy

National Journal hosted policymakers and insurance-industry representatives to talk about the future of insurance regulation in the United States.

National Journal
Clara Ritger
April 29, 2014, 5:57 a.m.

In­sur­ance ex­ec­ut­ives, state in­sur­ance com­mis­sion­ers, and fed­er­al of­fi­cials de­bated the role of the fed­er­al gov­ern­ment in Amer­ica’s state-based in­sur­ance reg­u­lat­ory over­sight mod­el at a Na­tion­al Journ­al event Tues­day un­der­writ­ten by Zurich.

Rep. Ed Royce, a Re­pub­lic­an from Cali­for­nia who be­lieves great­er fed­er­al over­sight could lead to lower prices for con­sumers, said Amer­ica’s frag­men­ted in­sur­ance reg­u­lat­ory sys­tem — gov­erned by the states — will leave the United States be­hind as the glob­al mar­ket presses ahead.

“I’ve seen the enorm­ous frus­tra­tion on the European side in the reg­u­lat­ory com­munity,” Royce said. “I’ve seen the frus­tra­tion that the Europeans have felt in deal­ing with state in­sur­ance com­mis­sion­ers who are not on the same page.”

On a loc­al level, state-by-state reg­u­la­tion hurts con­sumers be­cause their plans aren’t port­able, Royce said. Con­gress is soon ad­dress­ing the prob­lem faced by the mil­it­ary — the in­ab­il­ity of troops who trans­fer to a dif­fer­ent base to carry their plans with them — but even chil­dren who go to col­lege still have trouble, Royce said.

“Hav­ing at­ten­ded work­ing groups over the years on the ques­tion of in­sur­ance and com­pat­ib­il­ity across mar­kets, I have watched that struggle in the U.S.,” Royce said.

Royce, along with Mi­chael McRaith, the dir­ect­or of the Fed­er­al In­sur­ance Of­fice, de­livered the key­note ad­dresses at the event in The Hamilton in Wash­ing­ton.

McRaith said that the fed­er­al gov­ern­ment already plays an im­port­ant su­per­vis­ory role in reg­u­lat­ing the in­sur­ance in­dustry, and that it makes sense for states to take the lead be­cause state in­sur­ance de­part­ments provide im­port­ant loc­al sup­port for con­sumers.

“We should be sup­port­ive of ef­forts to de­vel­op in­ter­na­tion­al stand­ards and en­cour­age a level play­ing field [for U.S. in­sur­ance com­pan­ies],” McRaith said.

“We need to build on the strengths of the state sys­tem,” he said. “The fed­er­al gov­ern­ment plays an im­port­ant role, but we did not call for a fed­er­al reg­u­lat­or.”

Na­tion­al Journ­al‘s Nancy Cook, eco­nom­ic and do­mest­ic policy cor­res­pond­ent, mod­er­ated the event.

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