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.