Quote of note:
"Americans are going to get ripped off…Insurance is not like other products. The policies are complex legal documents. Most people can't look at an insurance policy and tell whether they have a good one. It's hard to compare prices because coverage can vary greatly. You need someone looking out for the customer. The insurance companies aren't going to do that."
New Momentum for Letting U.S. Help Regulate Nation's Insurers
By JOSEPH B. TREASTER
The prospect that Washington will seize a role in the regulation of insurance is gaining momentum after more than 150 years of control by the states.
At a meeting that ended Tuesday in New York, state regulators were given an outline of proposed steps for federal oversight and several leading regulators suggested in interviews that while they preferred to remain fully independent, giving ground to Washington seemed inevitable.
The message, said Ernst Csiszar, the president of the state regulators' association, was unmistakable: "Either you do it, or we do it."
Over the weekend, Representative Michael G. Oxley, chairman of the House Committee on Financial Services, spelled out plans for legislation later this year that would create a council of federal and state officials to oversee insurance nationally with a presidential appointee as its head.
Mr. Oxley's legislation, to be discussed at a hearing in Washington in late March, would force the states to adopt uniform standards and permit the market to determine insurance prices rather than have them determined by regulators as is generally the case now.
That is music to the ears of many of the biggest insurers. Once content with sluggish state regulation as long as it remained relatively lax, they have been campaigning for a single federal regulator to replace those in each of the states as competition with banks and mutual fund companies has intensified. The insurers say they want efficiency: one-stop shopping and quicker approval of new insurance and investment products. Their critics say that they want less regulation and that customers would suffer.
One force driving the initiative is a desire to end what Mr. Oxley called "the travesty of price controls" in the insurance industry by allowing the market to set prices. He said his changes would increase profits for an industry that has been lagging behind banking and other financial service businesses and would give customers more choices.
But consumer advocates are worried. They say Mr. Oxley's proposals gravely undermine protections for insurance customers. J. Robert Hunter, a former insurance regulator in Texas and now the director of insurance for the Consumer Federation of America, is particularly concerned about letting insurance companies set their own prices.
"Americans are going to get ripped off," Mr. Hunter said. "Insurance is not like other products. The policies are complex legal documents. Most people can't look at an insurance policy and tell whether they have a good one. It's hard to compare prices because coverage can vary greatly. You need someone looking out for the customer. The insurance companies aren't going to do that."
Posted by P6 at March 18, 2004 06:22 AM
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