U.S. Senate considers federal insurance regulation

If Canadian insurers have complaints over the confusion between federal and provincial regulation of insurers, their U.S. counterparts may soon follow suit.
U.S. Senator Ernest Fritz Hollings of South Carolina has introduced a bill, (S. 1373, the “Insurance Consumers Protection Act of 2003”) that would place some control over insurance issues with the Department of Commerce.
An independent commission within the department, the “Federal Insurance Commission”, would regulate the interstate sale of insurance, and potentially other issues.
Insurers are leery of the new legislation. The National Association of Mutual Insurance Companies says it has concerns the new legislation will lead to further regulatory burden and confusion between state and federal authority.
Issues include that the bill would create one system for single-state insurers and another for multi-state insurers, potentially creating an uneven playing field and confusing consumers. Also, the creation of a national guaranty fund by the bill would take away funding from state guaranty funds and further burden single-state insurers. NAMIC notes that bill also “appears” to create a federal mechanism for rate approval that could drag out the rate application process and delay new products getting to market.
“In general, NAMIC strongly supports state insurance regulation and opposes any legislation that creates a federal insurance regulator,” says federal affairs director Jennifer Gibson. “State insurance regulation has served consumers well, and NAMIC is working at the state level to modernize and improve this system.”