Insurance Regulation: Should the feds take over?
General April 10th, 2008The U.S. insurance industry has traditionally been regulated by individual states, each with their own standards and deadlines. Some people find this system to be overly complex, anticompetitive, and unduly burdensome. The complicated state-by-state regulation increases the cost of compliance and can delay the launching of new products.
According to The NY Times, the Treasury Department is proposing that Congress give the Federal Reserve new authority to oversee financial markets. This “Blueprint for Financial Regulatory Reform” could mean the insurance industry would adopt a federal chartering system similar to that of the banking industry. The NAIC supports a modernization of the state system, including uniform standards of market conduct, licensing, and filing of new products, but they stop short of supporting federal control.
In a poll conducted by Insurance Journal, 66 percent of respondents favored keeping the power to regulate at the state level, while 34 percent thought federal regulation would be an improvement.
It could be a huge change in the way we do business, and there are positives and negatives on both sides. Which regulatory system do you think would be better for us in the long run?
April 11th, 2008 at 8:07 am
We live in an international world and most major “American” insurers are foreign ownwed - thanks in large part to an arthritic quaint regulatory structure.
April 11th, 2008 at 9:20 am
Although state regulation can sometimes be about as affective as trying to catch water with a strainer. I have a serious concern with handing over all power to the federal government. So I would have to agree with the majority on this issue, and also favor that regulation remain at a state level. Doesn’t Washington have enough on it’s plate already?
April 22nd, 2008 at 7:40 am
The last thing we need is another federal agency overseeing our business which is well regulated and organized on the state levels. To create another billion dollar drain, hiring beaurocrats who know nothing about insurance, to do nothing but make changes of some kinds to justify their jobs, and screw up a perfectly good system that is currently in place would be another expensive and unnnecessary move by our so- called representatives that would cause nothing but problems.
April 22nd, 2008 at 8:27 am
No the federal government should stay out of it. Let the state’s handle it. If we let the federal government help regulate, who will keep them in line? With fuel costs and cost of living rising consumers really don’t need to have any substantial increases in their insurance. The insurance industry will suffer if insurance premiums become too high and people will not purchase insurance. I agree with Joe’s comments.
April 22nd, 2008 at 9:01 am
Size will be the limiting factor for any one regulatory entity to take over at the federal level. Current insurance companies would rather deal with the different states and the various querks in requirements than have one entity be given the power to make sweeping decisions that impact policy and the end user in poorly thought out fashion.
April 22nd, 2008 at 9:09 am
Tell me again why state regulation is better. An agency that needs to have non-resident licenses in every state finds the process “punitive”.
April 22nd, 2008 at 10:45 am
I agree with the state level. The federal government is way to bogged down now as it is without have to wait 6 months for a license renewal or to issue a new license, and filings right now work very well. I think all states should really think about this and roll into compliance and the current level.
April 25th, 2008 at 6:45 pm
What it is that I don’t get is why some one always thinks that they have a better way of doing things. Fancy the fact that this Paul is a Democrat, but it doesn’t mean he even has a clue. Is he trying to “rob Peter”? My take on his wanting to introduce a Bill for insurance is that he may have had a claim whose the results didn’t suit his satisfaction. Now his being in political standings, he wants to fix it so he can have his way. Haven’t politicians screwed up enough with all these regulations, just look at our gas prices, not to mention our air travel expenses. It costs me an arm and a leg to mail something, and I don’t want to talk about shipping something. All the regulations that we have to day, has increased cost of whatever they try to regulate.
They want to control insurance so that they can continue to control the Health Care Industry. Think for a second, retirees can’t really get anything with the Medicaid “A”, so to help that a “B” was added and since [Regulations] limited what its uses are, retirees need a Medicaid Supplement.
Someone please explain to me, how is it that our country is supposed to be the most powerful and we have Third World Countries giving away health care. Figure that, so much for the regulations that we already have governing Health Care.
KEEP YOUR BILL TO YOURSELF PAUL!!!!
April 29th, 2008 at 12:08 pm
I’m with Paul on this. The balance of the financial industry is not hampered with redundant and unpredictable approval and business practice requirements. Banks have a choice whether to go with state or federal regulations and the sky did not fall when that choice was made available. And, before we go down the path of suggesting that the current mortgage crisis would have been prevented with a state regulatory scheme, we have to acknowledge that there will be scoundrels pushing the envelope with or without regulation - case in point the bid rigging allegations in our state regulated insurance business. Funny to think that the ‘white knight’ turned out to be living in a very glass house!
June 23rd, 2008 at 1:51 pm
In order to reduce healthcare costs there needs to be a standard across all states for healthcare. That is what the federal government is for. It is called consolidation and the leveling of the playing field so smaller health care providers can compete across different states without having to open up corporate offices, training for a new set of state regulations for each state it wants to compete in. Why is it that health care costs are 10x more in NJ than in Kansas? Because of all the NJ state government mandatory addons that aren’t really needed. For example mandatory podiatrist coverage for all. I don’t think that many people need to see a podiatrist, but it gives a reason to increase rates in that state and thus makes a profit since not many will take advantage of that mandate. Don’t be fooled. Those wanting to keep the regulation at the state level are the health care providers, especially the big ones with a number of lobbiests in their corner. God help them if they have to compete with smaller and leaner health care providers which will obviously benefit the consumers. I think the federal government should not own healthcare, but there needs to be a set of rules that all providers can adhere to at the national level and those rules have to be at a federal level. Then the addons can be electives. The states need to relinquish control for the common good.
June 23rd, 2008 at 1:55 pm
Better yet, deregulate it at the state level also, and allow the consumer to shop for what they need rather than have addons be forced down everyone’s throats