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Hearing on Insurance and State Regulation

The House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on state insurance regulation April 10, 2003. Insurance regulation in four...
April 21, 2003

The House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on state insurance regulation April 10, 2003. Insurance regulation in four states -- Louisiana, South Carolina, New Jersey and Illinois -- was the focus of the hearing. House Financial Services Committee Chairman Michael Oxley (R-Ohio), in an opening statement, said the current crisis in insurance availability in some states is due in part to what he termed "wrong-headed regulation that drives out competition and leaves consumers without coverage."

Oxley pointed to his own state of Ohio as one that "has a relatively free market competitive system" and has some of the lowest auto and homeowners rates in the nation. He criticized Louisiana and New Jersey for over-regulating the industry, causing carriers to withdraw. Jim Donelon, Louisiana's chief deputy insurance commissioner, said life insurance companies lend themselves to being regulated nationally, but property/casualty companies don't.

Statements and testimony

What It Means to Agents:  This is the first in a series of hearings held to discuss state regulation. While not about a specific bill, these hearings are being held against the backdrop of possible action to establish an optional federal charter for insurance, which PIA opposes. Two bills providing for a federal insurance regulator were introduced last year, but failed.

PIA's legislative contacts on Capitol Hill say a renewed push for such proposals may not materialize until 2004. But that is not a sure bet. National Association of Insurance Commissioners (NAIC) President Mike Pickens, speaking to PIA leaders on April 6, issued a warning. "The threat of a federal insurance regulator is still hanging over our heads," Pickens said.