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Professional Insurance Agents Insurance Foundation Publishes White Paper on the Future of Insurance Regulation

WASHINGTON, August 26, 2009 - The Professional Insurance Agents Insurance Foundation has published a major white paper that addresses the current status of...
August 26, 2009

Former Director of Illinois Department of Insurance Assesses Prospects for Business Disciplines, Regulation and Oversight of the U.S. Insurance Marketplace

WASHINGTON, August 26, 2009  - The Professional Insurance Agents Insurance Foundation has published a major white paper that addresses the current status of insurance regulation, its public purposes and benefits, and poses critical considerations and questions to be answered should current federal financial services reforms further engage in the business and oversight of insurance in U.S. markets.

The PIA Insurance Foundation engaged Mark Boozell, the former Director of the Illinois Department of Insurance (1995-1998) under Gov. Jim Edgar (R) to author the white paper entitled: Future of the Business Disciplines, Regulation and Oversight of the U.S. Insurance Marketplace.

"As lawmakers, regulators and industry officials continue to define what is meant by insurance regulatory reform, our foundation wanted an author that brought a solid and successful record of hands-on experience as a former state administrative and executive official from a significant U.S. state insurance jurisdiction. That's why we are pleased to bring Mr. Boozell's well-informed perspective into the debate," said Terry R. Adams, President of the Professional Insurance Agents Insurance Foundation.

"No matter the state or federal reform involving insurance, Mr. Boozell's paper is a valuable and serious factual assessment of what's required for insurance oversight to work, benefit, and safeguard U.S. consumers and our economy," Adams said. "The PIA Insurance Foundation believes it should be must-reading for every policymaker when determining the future direction of modernizing the U.S. insurance system."

In his preface to the white paper, Boozell states that the public never takes government interference in the free market lightly.

"In the United States, neither the people nor their governments take lightly the standards and processes by which government interferes with and monitors the free market," says Boozell. "In the case of insurance regulation and oversight, the debate over whether federal involvement should be expanded is a debate that has only just begun."

Boozell notes that the core principle driving oversight of the business of insurance by the states, together with the enforcement of state insurance laws, is protection for consumers.  "This means a state oversight and regulatory system that is compatible with state common law; addresses insurance-related matters in courts; and assures a robust, well-ordered insurance marketplace with adequate capacity to meet the needs of consumers. This system also ensures that all insurance participants in U.S. markets conduct their insurance activities in a fair, equitable and nondiscriminatory manner, as well as be legally and financially responsible for errors and/or wrongful actions."

He adds that the existing federal bureaucracy as it currently relates to insurance is broad and diverse. "A plethora of federal agencies and entities have some measure of authority over various aspects of insurance...all letters in the cauldron of federal 'alphabet soup' which have some measure of responsibility that relates to U.S. insurance laws, regulations, insurers and insurance producers." These federal entities work regularly with state insurance departments and the National Association of Insurance Commissioners (NAIC) to coordinate their activities, because insurance remains a state-regulated business, he notes.

"Acknowledging these realities, the Obama administration has called for a new office of insurance within the Treasury Department, but will not propose federal regulation of the insurance industry as a part of its sweeping financial reform plan," says Boozell. "But the devil is in the details."

"As Congress and the Obama Administration continue efforts to mitigate past failures of federal regulatory agencies, certainly the insurance industry deserves prominent status as an existing stakeholder under existing authorities," Boozell says. "But should their involvement in the public policy debate be mistaken as the implicit stamp of approval on unprecedented changes in the regulatory landscape, particularly when the industry is not universally agreed?  Of course not."

"A variety of arguments, including the proper role of the federal government in facilitating international agreements regarding insurance, have validity and warrant further consideration.  But the very nature of the arguments themselves - relatively young, underdeveloped and ripe with disputable logic - render the overall debate a work in progress and desperately needing additional examination."

About the Author

Mark Boozell served the State of Illinois for over two decades in a variety of leadership roles in both the Executive and Legislative branches of government.  After his government service, he joined a Fortune 500 Company to lead a division of managing general underwriting groups responsible for over $100 million in gross written premium. 

Mr. Boozell was Director of the Illinois Department of Insurance from 1995-1998, serving as the state's chief regulator of over 1,900 insurance companies and 92,000 insurance producers. He led a staff of over 600 and implemented a budget of over $32 million. In addition, he was Chief of Staff to Illinois Governor Jim Edgar (R). He served as the Chief Operating Officer of the State of Illinois developing, implementing and communicating administration policy. In addition, he oversaw the state's $35 billion budget and 65,000 employees; and directed state government's response during crisis situations. Mr. Boozell served as Director of the Governor's Legislative Office with direct oversight and review of all legislation pending before the General Assembly and its committees and commissions. In this capacity, Boozell gave advice to the Governor on final action for all bills pending before him.

Mr. Boozell is currently a government policy advisor with the Chicago-based law firm Dykema Gossett PLLC.

The Professional Insurance Agents Insurance Foundation (c-3) is dedicated to fostering critical applied research and information that furthers the knowledge and understanding of the nature, scope, function, operations, and law of the business of insurance, primarily as practiced in the United States. The PIA Insurance Foundation continues the legacy vested in it by the George Baldwin Trust, established by the National Association of Mutual Insurance Agents (PIA National's predecessor organization) in the late 1950's to further the insurance knowledge and education of those engaged in the independent insurance agency system.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America(SM). PIA's web address is www.pianet.com.

The complete PIA Insurance Foundation White Paper is available online here (PDF file).