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PIA President Auerbach: Royce-Bean Bill is a Deregulation Bill, Not a Reform Measure

WASHINGTON, February 13, 2009 - The president of the National Association of Professional Insurance Agents (PIA) said a bill soon to be introduced...
February 13, 2009

WASHINGTON, February 13, 2009  - The president of the National Association of Professional Insurance Agents (PIA) said a bill soon to be introduced in Congress is a proposal for greater deregulation, not reform, that threatens to dismantle the successful state insurance regulatory system.

"This bill is just more of the same," said PIA National President Kenneth R. Auerbach, Esq. "It is another bill to create an optional federal charter for insurers. This is the same tired, old proposal that its backers have tried and failed to advance for many years. It is still a bad idea, and applying perfume and lipstick to it will not make it acceptable."

"Congress and the Administration cannot afford to take their collective eyes off the ball with a bill like this. Their foucs must remain on correcting the failures in the federal regulatory system that led to our current financial crisis. Deregulating insurance does not accomplish this task," he said.

The Consumer Protection and Regulatory Modernization Act is anything but. It is being presented by its supporters as a proposal that strengthens insurance oversight when, in reality, it would significantly weaken insurance oversight, Auerbach noted.

"This proposal does not seek to fix any of the problems that led to the financial meltdown," Auerbach said. "At a time when, out of necessity, the federal government is determining how to strengthen regulation, this proposal goes in the opposite direction. It attempts to take a proven, efficient system of state-based insurance regulation and supplant it with a Washington bureaucracy - and we all know how unsuccessful that has been.  President Obama recently said, 'If we help Main Street, ultimately we're going to help Wall Street.' But I don't think the President envisioned moving Washington bureaucrats to Main Street in order to help Wall Street."
 
"The state regulatory system has performed well in safeguarding insurance companies and their stakeholders, including consumers, compared to the crisis in the federal regulatory system," Auerbach added. "Why would we let this success story be dismantled in favor of a federal regulatory system that has proven itself to be a failure?"

This bill provides for an optional federal charter for insurers and insurance producers, despite the fact that its sponsors are no longer calling it by that name. It would set up a dual regulatory system at the federal and state levels. One new element in this year's version of the bill is that it takes affirmative steps to begin to dismantle the state insurance regulatory system. It does this by providing authorization for the formation of a separate guaranty fund for federally regulated insurers, along with a requirement that federal insurance offices be set up in all 50 states.

"Supporters of this bill seek to link it to reforms to the federal supervision of banking, securities and capital markets, which are needed and which PIA supports," Auerbach said. "This is not a reform bill, it is a deregulation bill. Congress and the Administration should be very wary of those who would try to pull a fast one on them."

Congress needs to concentrate on repairing the systemic flaws in the failed federal system for financial services, not take action that would disrupt and undermine the successful state insurance regulatory system, he added.

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.

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