Insurance regulation and the federal government probably neverentered your mind at the same time, but you may need to change theway you think. Currently, each state regulates rates, agent andcompany licensing, company financial oversight and pretty mucheverything related to insurance. This allows states to affect lawsand regulations that take into account regional issues. Althoughit's not a perfect system, it's still a lot more responsive thanfederal government usually is.

Over the past few years, major national insurers have beenpressuring Congress to take control of insurance regulation. Thefirst proposal, the optional federal charter for insurers, wouldessentially allow insurers to decide whether to be regulated by thestates or by the federal government. If an insurer decides to gowith the federal oversight, then the company would be exempt fromstate regulations.

Another element of the campaign for federal insurance regulationis the misleadingly named Insurance Information Act of 2008 (H.R.5840). When this bill was first introduced, it was presented as theanswer to a need to have a source of information about theinsurance industry, similar to a library. But then H.R. 5840 beganto morph. By the time the bill emerged from the House ofRepresentatives Capital Markets Subcommittee this summer, it hadbeen changed significantly.

The bill, as it is currently written, effectively puts the U.S.Treasury Secretary in charge of most insurance matters in thecountry, with the final authority for insurance issues of nationalinterest, and the power to determine which state laws, regulations,and industry practices will be preempted. The bill effectively gutsthe McCarran-Ferguson Act of 1945 and the Gramm-Leach-Bliley Act of1999, which establish and affirm that the states are the regulatorsof the business of insurance.

The bill's supporters say that it is actually a narrow bill thatdoes not pose a threat to the authority of the states in insuranceregulation. But that is not reflected in the language of the bill.Fortunately, as more state officials, governors, attorneys general,legislators, and state insurance officials fully review it,stronger opposition mounts.

“This goes way beyond simply creating an insurance informationoffice,” said PIA of Florida president Phil Zelman. “The currentversion of this bill would effectively allow the Secretary of theTreasury to review and amend the laws and practices relating toinsurance here in Florida and in any other state. That it simplyunacceptable.”

Federal involvement is being marketed as a way of makinginsurance regulation more efficient. Some would argue thatcentralizing control of anything is better, but we need only lookas far as the recent sub-prime mortgage meltdown to question that.That occurred under federal regulation, and at the same time thatthe insurance industry under state regulation remained on a firmfinancial footing, achieving record profits and lower prices forconsumers.

The last thing we need is a new federal bureaucracy. Localinsurance agents deserve local insurance oversight-where we cankeep a closer eye on it.

We must never forget that even though modernization ofstate-based oversight must continue at the state level, the currentsystem is far from being broken and has yielded an insuranceindustry that is the envy of the world. Our success is also theenvy of big banks and large securities firms, who are major moversbehind the drive to replace state oversight with federalregulation. They want the success we have achieved, but instead ofcompeting with us on a level playing field, they want the fieldtilted in their direction.

Our fight to support state regulation is not just about Floridaagents. It's about our responsibility to our friends and neighbors,who are our clients. If the kind of personal service and caringthat we provide becomes another casualty of the push to makeeverything into a commodity, consumers will lose something theyvalue highly: the ability to protect their dreams by working withMain Street agents who truly care about them.

When it comes to control of the insurance industry we can nolonger ignore what is happening in Washington — and we won't.