Who Regulates? Don't Ask Consumers

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By Steven Brostoff, Washington Editor

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NU Online News Service, June 18, 3:02 p.m. EST,Washington?A survey, that could have relevance forproperty-casualty insurers, has found mostAmericans are unaware the industry is state regulated and theywould turn to a lawyer, rather than an insurance commissioner, toresolve problems.

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The study, which was commissioned by the Washington-basedAmerican Council of Life Insurance, found that only about one-thirdof consumers know that insurance is state-regulated.

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Moreover, the survey found, only 11 percent of consumers saidthey would try to resolve a complaint against a life insurer with astate insurance commissioner.

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Rather, 57 percent of consumers said they would turn to alawyer.

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Phil Anderson, senior vice president of government affairs forACLI, said the survey represents another reason why Congress shouldcreate a federal regulatory option.

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He noted that opponents of optional federal chartering oftencite consumer protection as a reason for their opposition. Consumerprotection, Anderson says, is a legitimate issue.

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But it is illegitimate and inaccurate to say that consumerswould be worse off under federal regulation than they aretoday.

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Opponents of optional federal chartering say consumers would bemore confused and have less opportunity to redress concerns under afederal system, according to Mr. Anderson.

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However, he said, the survey reveals that consumers could not bemore confused about regulation than they are now.

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Moreover, Mr. Anderson said, a study in August of 2000 by theWashington-based Consumer Federation of America found that morethan half the states were more than 40 percent below the minimumfunding level needed to fully protect consumers.

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In addition, he noted, the CFA survey found that the statesystem overall was almost 25 percent below the minimum fundingnecessary.

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Mr. Anderson observed that in recent testimony on optionalfederal chartering, ACLI said that under a federal system,consumers will have more uniform and consistent protectionsnationwide.

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