The insurance industry has a long history of governmental intervention. During World War I, when German U-boats began sinking U.S. commercial vessels in the north Atlantic, commercial insurers balked at insuring the vessels, and the federal government stepped in.

In 1993, when President Clinton introduced his (wife's) plan for reforming health care, The Economist magazine evoked the nationalizations that occurred during World War II, observing, "Not since Franklin Roosevelt's War Production Board has it been suggested that so large a part of the American economy should suddenly be brought under government control."

The United States clearly is not embroiled in another World War, but the financial crisis has placed the insurance industry under intense government scrutiny. Treasury Secretary Timothy Geithner wants to create a federal systemic risk regulator bestowed with broad authority to monitor companies, including insurers that may pose a systemic risk. If this regulator is given resolution authority similar to the FDIC, any publicly traded insurer suffering financial hardships could find itself in federal receivership or conservatorship.

Under this milieu, imagine insurance executives in discussion about how to bring a new insurance product to market.

"Since becoming Federal Insurance Co. No.389, our product portfolio has become downright stale," said business exec No. 1. "We need agility to react to changing market conditions."

Business exec No. 2 agreed. "Legislative protocol requires us to submit economic, marketing and budgetary analysis forms for any new product initiatives to the Office of Insurance - Economic, Marketing and Budgetary Analysis. After we file all the forms with that Office, the forms go to the Office of Insurance - Economic, Marketing and Budgetary Analysis Authorization for a policy decision."

"How many forms are we talking about?" asked business exec No. 1. "Hey, I heard the forms filed by Federal Insurance Company No. 265 were tabled in committee. That's good for us."

Business exec No. 2 wanted to stay on topic. "The bad news is that there are 282 forms for a new product initiative, but the good news is that they're now electronic! Nevertheless, don't we need to prove that we can scale up for this?"

"Sure," offered IT exec No. 1, "but since our centralized, interactive data management repository merged with the Office of Management, Business, and Information Services, it's been restricted and classified. To enhance it we need access to it. To get access, we need clearance from the U.S. Chief Financial Officers Council."

"How many forms does that require?"

(c) 2009 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.

http://www.insurancenetworking.com/ http://www.sourcemedia.com/

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