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At the Dawn of the Reagan Era

Editor's Note: On June 5, 2004, Ronald Reagan, the 40th President of the United States, passed away at the age of 93. Since...
June 25, 2004

Editor's Note:  On June 5, 2004, Ronald Reagan, the 40th President of the United States, passed away at the age of 93.  Since then, much has been written in tribute to Reagan and the changes he brought about. We thought it would be instructive to look back to the start of what was to become the Reagan Era and see how state regulation of insurance was being affected by the arrival of a new president. Here is an excerpt of an article from Professional Agent magazine:

By Patricia A. Borowski
September, 1981

There is no doubt that change has come to Washington, D.C. The vast turnover in the Senate and House, coupled with the conservative, assertive and action-oriented Reagan Administration, even shocked some Washington political analysts.

However, as close observers and participants in the state political scene, we were not surprised that change had risen to the top. The blueprint for November 1980 election results had been developed over the last five years in state houses. The messages for stronger states' rights and for fiscal austerity were clear. Remember California's Proposition 13. State officials felt that if only their more conservative philosophy could reach Washington, all would be well.

While the chief executive is keeping his promise to cut the budget and taxes, state executives are having second thoughts about the new so-called federalism, now that the financial impact on states is being realized. That was the decided, unspoken sentiment of attendees at the 73rd Annual Meeting of the National Governors Association (NGA), held this past August in Atlantic City.

For insurance people, the changes could be a mixed blessing. While the business side will fare better due to corporate tax changes, insurance companies could find themselves the target of increased premium taxes along with the financial industry, another less-than-popular business entity with the public.

Insurance departments which have not moved previously to get a bigger share of general revenue are going to have an even tougher time. The need to be cost-effective will heighten, and regulators will see to it that the true cost of regulation will be borne by the regulated.

In recent years, some inner-city groups have reminded the private sector that business has just as much stake as private citizens in preventing communities from deteriorating. So, it was no surprise when members of NICO (National Insurance Consumers Organization), a Bronx, New York-based citizens group, asked the NAIC Executive Committee to consider model legislation requiring insurers to reinvest a portion of their profits into inner-city developments (similar to the Federal Community Reinvestment Act).

This should not be viewed as an isolated incident. The appeal to community groups and city and state officials, who are desperate in the face of federal cuts, could be all too real. On the heels of rising controversy concerning investment income, doesn't it warrant our careful attention?

While state's rights for self-determination is becoming a truer reality, the burden of that reality weighs on each of us. It may have come with a higher price tag than we first expected.