Washington - A notice published in the Federal Register seeking comments for a broad Treasury Department review of financial regulation is biased in favor of federal regulation of insurance and foreign business entities, according to the Alexandria, Va.-based National Association of Professional Insurance Agents (PIA).The specifics of the Nov. 11, 2007 published notice "raise critical concerns about the direction, purpose and intent of the review process itself, concerns we are compelled to address directly to you at this time," states PIA in a letter to Treasury Secretary Henry Paulson.
Rather than soliciting comment from interested parties in an objective manner, PIA says the notice in the Federal Register poses a series of "loaded questions" designed to encourage predetermined responses.
"No attempt is made to disguise the clear bias of these questions," notes PIA Executive VP and CEO Leonard Brevik. "For example, three questions that specifically relate to insurance all attempt to elicit comments supportive of federal regulation of insurance. This survey clearly lacks objectivity and is slanted toward expanding federal regulation of insurance."
The PIA letter also finds fault with what is an apparent prejudice in favor of redesigning U.S. regulatory structures to make it easier for foreign insurance entities to compete with American insurance companies in the United States.
"PIA is concerned that the Treasury Department has presented itself and its agenda through this Notice as already prejudiced in favor of changing the U.S. marketplace in order to accommodate foreign competitors," says PIA senior VP Patricia Borowski. "We are also concerned by the apparent assumption that the best way to successfully compete is to abandon our own regulatory structures and replace them with those adopted by the European Union, or individual foreign nations."
Borowski notes that PIA opposes efforts to compromise our nation's own standards "in order to attract new alien entities who want things to be done their way to make it easier for them, not for the betterment of our U.S. carriers providing insurance domestically in the United States or for U.S. insureds."
In addition, PIA says that questions relating to European systems of "principles-based" regulation seem slanted toward adoption of that concept by the United States as an alternative to our current "rules-based" regulatory systems. A "principles-based" system is one that merely states broad objectives to companies and then puts the onus on them to meet the objectives. A "rules-based" regulatory system, like those the United States uses, relies on stating specific requirements, or prohibiting certain actions by law.
"While principles-based regulation may be fine for a small country with limited competitors somewhere in the middle of Europe, the U.S. is the center of the free enterprise system with 300 million people, $1.1 trillion dollars of insurance premium volume representing one-third of the world insurance market and thousands of insurance companies," Brevik says. "We simply cannot support Treasury throwing out the rules just to bring the Europeans in and put American insurance consumers out."
PIA supports continued state regulation and oversight of insurance, not industry-managed self-regulation under the guise of global competitiveness.
"We regret that the substance, tone and underlying assumptions contained in this Notice in the Federal Register lead us to conclude that the Treasury Department may have already made up its mind regarding the recommendations that it will make at the conclusion of this review process, an observation that we do not make lightly," the PIA letter to Secretary Paulson concludes. "We believe this will ultimately serve to undermine the validity of this review, compromise its effectiveness and detract from, rather than advance, your goal of increasing competitiveness."
Insurance Networking News previously reported that PIA publicly opposes the National Insurance Act of 2007, citing the results of a nationwide survey showing that small business owners oppose the idea of the federal government regulating insurance.
In a recently released poll of its members, the National Federation of Independent Business (NFIB) asked whether Congress should repeal the anti-trust exemption for insurance companies and regulate them at the federal level. Of respondents, 46% voiced opposition to the repeal, while 28% supported it and 26% remained undecided.
PIA is hardly alone in its opposition to repeal of the anti-trust exemption for insurers. Organizations such as Indianapolis-based National Association of Mutual Insurance Companies (NAMIC) and Alexandria, Va.-based Independent Insurance Agents & Brokers of America (IIABA) also have publicly opposed the legislation.
Source: National Association of Professional Insurance Agents and INN archives
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