Senate Banking Committee Chairman Richard Shelby (R-Alabama) says he plans hearings in November or next year on issues uncovered by New York Attorney General Eliot Spitzer in Spitzer’s investigation of Marsh & McLennan. That would follow hearings that his committee held earlier this year on proposals to reform insurance regulation.

The actions and allegations by Spitzer are being seized upon by longtime advocates of optional federal charters and advocates of outright federalization of insurance regulation to press their views. In a telephone interview with Bloomberg, Shelby said, “If the state regulators don't do their job, that adds to the debate of perhaps moving insurance regulation in a different direction. A good question is: Where were the regulators?”

New York Insurance Superintendent Gregory V. Serio said the Marsh actions prove that state regulation is working. “This shows that state regulation worked,” said Serio. No amount of regulation is going to stop people from doing illegal activities. That's like saying the police failed when they make an arrest.” California Insurance Commissioner John Garamendi, who is conducting his own investigation and considering filing lawsuits and adopting new regulations, remains opposed to federal regulation. “That's just not the way to go with this,” he said. “The feds have done zero, and I would expect them to do zero.”

What It Means to Agents: PIA agrees – federal regulation is a bad idea, and recent events prove state regulation and enforcement are working. PIA supports functional state regulation of insurance, with modernization driven by the states, not dictated by the federal government. A just-completed PIA member survey again demonstrated PIA members’ overwhelming support of this position.

Spitzer Probe May Give Push to National Insurance Regulation (Bloomberg 10/25/04)

PIA Says Actions by Spitzer Show State Regulation is Working (10/20/04)

October 26, 2004