As introduced, this legislation would allow companies to choose whether to be regulated by their respective state government or the federal Office of the Comptroller of the Currency Banks function in this similar manner.
Some companies complain that conflicting state laws and regulations hinder their attempts to provide the public new products. Others believe a federal standard could obstruct stronger state insurance laws.
In past years, Rep. Richard Baker (R-La.), House Financial Services Capital Markets subcommittee chairman, proposed a draft measure that would create uniformity in insurance rules and prevent some state price control but not create a federal charter.
"The Automotive Service Association supports the repeal or modification of the McCarran-Ferguson Act. ASA is concerned that there is little time for Congress to complete action on insurance reform this year. ASA is hopeful that discussions will continue in this Congress and legislation will move in the 110th Congress next year," said Bob Redding, ASA's Washington, D.C., representative.
Jaxon A. White, president and CEO, Medmarc Insurance Group, testifying for the Property Casualty Insurers Association of America, said, "Even considering where the regulatory system stands today and of the lack of progress in reform over the past four years, PCI strongly urges Congress to move with caution in considering changes to insurance regulation.
"PCI supports the state regulatory system and we would like to see the state system improved. Any reform proposals must take into account that insurance is a major part of the U.S. economy and a complex market that has evolved over time. We urge careful consideration of potential unintended consequences of changes before any actions are taken."
Critiquing insurance reform legislation now being considered before the House and the Senate, Travis Plunkett, legislative director, Consumer Federation of America, stated, "Insurers want competition alone to determine rates, they say. How about a simple repeal of the antitrust exemption in the McCarran-Ferguson Act to test their desire to compete under the same rules as normal American businesses?
"Another amendment to the McCarran Act we would suggest is to do what should have been done at the beginning of the delegation of authority to the states: Have the FTC and other federal agencies perform scheduled oversight of the regulatory performance and propose minimum standards for effective and efficient consumer protection."
Second day of hearings
A second hearing was held in late July. Senator Richard Shelby (R-Ala.), Senate Banking Committee chairman, has not indicated whether he will move insurance reform legislation this legislative session.
The Honorable Randal K. Quarles, undersecretary for Domestic Finance, Department of the Treasury, testified for the administration but did not endorse any specific legislation.
Quarles did provide encouragement to federal reform efforts. In his statement, he said, "Our current system of insurance regulation requires modernization to meet the challenges facing the insurance industry, and financial services generally, in the 21st century. Our existing system of regulation has the potential to lead to inefficient economic outcomes (raising the cost and reducing the supply of many insurance products), deters international participation in our domestic markets (again raising costs and limiting consumer choice), creates obstacles to our own insurance firms' international expansion, and limits the ability of any one regulator to have an overview of risk in the insurance sector and its contribution to risk in the financial system more broadly."
ASA's Redding concluded, "Congress continues to hear from constituencies who believe the current system for regulating the insurance industry is not working. Although there are several bills being considered by this Congress, substantive reform has a long way to go and with the brevity of time may be delayed until the next Congress."
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