The Council of Insurance Agents and Brokers is urging theFederal Insurance Office (FIO) to use its authority to change thecurrent insurance-regulatory system, either through the states or“through federal means.”

The Council expressed its views in a letter to the FIO onmodernizing and improving insurance regulation.

“The current state-regulatory scheme is inefficient and costly,with duplicative and inconsistent requirements that have little orno consumer benefit,” says the letter, signed by Council PresidentKen Crerar. “Outside the area of financial regulation, thestates have shown little ability to make comprehensive changes toimprove the process, and the changes that have been made arelargely due to federal pressure.”

Two areas that need urgent change, according to the letter, areinternational-regulatory issues and implementation of the new lawmodernizing and reforming regulation of the surplus-linesindustry.

Regarding that law, the Nonadmitted and Reinsurance Reform Act,Crerar says that “the implementation of the NRRA by the states haslacked the coordination and uniformity that Congress intended,resulting in confusion and costly compliance burdens rather thanthe simple process NRRA contemplated.”

Citing an example, the letter says, “A majority of states havenot joined any multistate agreement or compact and are pursuingtheir own taxation policies.

“As disappointing as it is that the states missed thisopportunity, we remain hopeful that through the efforts of FIO andothers, pressure can be brought to bear on the states, and thegoals of Congress can be realized.”

The letter also discusses recent increased regulatory scrutinyin a number of jurisdictions; and the lack of internationalcoordination of insurance regulation, which, the Council says, hasmade it increasingly difficult for insurers and brokers to offerand place master multinational policies.

The letter concludes that it “will take leadership from thefederal government to hold the states’ feet to the fire—pressuringthem to make the needed changes to modernize and improve thecurrent system.

“And it may take more than pressure—there may be an ongoing rolefor the federal government in the form of comprehensive insuranceregulation, state mandates or standard setting,” it adds.

The letter adds that FIO’s role as theinsurance-regulatory expert in the federal government “and [its]obligation to monitor the industry and its regulation put FIO in aperfect position to work for improvements to the system.”