Industry Experts Ask: State or Federal Regulation’
Trying to determine the best road to travel for industry members, a panel of industry experts discussed state vs. federal insurance regulation Monday at the 81st annual meeting of the Alliance of American Insurers in the San Diego area.
Among those in attendance at the session moderated by AAI president Rodger Lawson, was Arkansas Commissioner Mike Pickens, who noted that, “State insurance regulation is evolving, however a large majority of NAIC (National Association of Insurance Commissioners) members agree that the state system needs to be modernized. Regulators need to strengthen their voice in Washington and get more involved.” Pickens, president of the NAIC, added that the industry maybe would see more federal regulation in 20 years or so.
Steve Bartlett, president of the Financial Services Roundtable, commented that, “The next step will be an optional federal charter. Financial Services views the best form of federal regulation as a charter.”
Bartlett, a former mayor of Dallas, added that, “I’m from Texas, and not mentioning any names, there are some states that are significant problems, that don’t seem to be getting it together. In the absence of some kind of option to go elsewhere, I don’t see how that changes.” Bartlett said that he sees authorization of a federal charter possibly in 2005 or 2006. “It will be an optional charter, and it will err on the side of choice in a rather dramatic way,” he added.
Ronnie Tubertini, a Mississippi agency executive who spoke on behalf of the Independent Insurance Agents and Brokers of America (IIABA), noted that such a major change did not appear feasible. “I don’t believe that we will see a federal charter because I think it’s driven by the political realities, and I don’t believe that the political realities will allow a federal charter when the states are opposed to it. The Big I absolutely endorses state regulation.”
Another attendee expressing slim hopes of a change anytime soon, was Bill Purmort, chairman and president of Ohio-based Central Insurance Cos.
Purmort commented that, “We’ve met the call of what state insurance regulation was asked to do. I will say though there has to be a faster pace of evolution.” Purmort noted that there is often a great frustration when it comes to data exchange, licensing procedures and rating applications within the 50 states.
“I think there is great motivation to push this evolvement, to make the efficiencies, the uniformities, where they can be made, and at the same time, protect the individual consumer within the state.”