Oxley-Baker Roadmap Continues State Control
By Daniel Hays
NU Online News Service, Aug. 20, 5:20 p.m. EDT?The congressional panel at work on an insurance regulatory reform bill today released a discussion draft of a measure that would keep insurance regulation in state hands and allow insurance rate setting without prior review from regulators, according to an insurers’ trade group.[@@]
Julie Gackenbach, assistant vice president for government relations at the Property Casualty Insurers Association of America’s Washington office ,said the comprehensive draft, which has 16 title sections, “shares the goals of PCI in ensuring competitive markets.”
The draft for the “State Modernization and Regulatory Transparency Act” (SMART Act), which provides a series of federal tools to effectuate state-based changes in insurance regulation, was released by Rep. Richard Baker, R-Louisiana, who heads the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprise.
Des Plaines, Ill.-based PCI said the comprehensive legislation covers a number of insurance regulatory issues, including market conduct, producer and company licensing, commercial and personal lines rate and form modernization, surplus lines and state-national coordination.
Ms. Gackenbach said the draft calls for a phased move to an open competition model that would allow companies to raise and lower rates without prior regulatory approval. This would be accomplished by moving to an Illinois-style open competition model via a two step flex band rating plan.
Another portion of the draft would create an advisory council of federal and state regulators that would have no regulatory power over the industry but would serve to mediate disputes and report to Congress on compliance with the SMART Act, Ms. Gackenbach said.
One part of the proposal, she said, calls for market conduct examinations of insurers by their home state regulator at least once every five years.
Ms. Gackenbach said PCI would like to see changes in this section so that such exams, rather than going by a set schedule, are done on a targeted basis using market analysis to examine firms that exhibit problems.
Other draft language calls for streamlining agent and company licensing procedures with a single point for electronic filing, she said.
There are also portions dealing with personal and commercial rate and form modernization, said Ms. Gackenbach.
Rep. Baker’s committee is part of the House Financial Services Committee, which is chaired by Rep. Mike Oxley, R-Ohio.
PCI in a statement it issued said it “has opposed the creation of a federal regulatory framework and is pleased that the legislation does not contemplate the creation of a federal entity with regulatory authority.
“On behalf of our more than 1,000 member companies, PCI appreciates the commitment of Chairman Baker and Full Committee Chairman Mike Oxley and looks forward to working with the committee as the process unfolds.”
The group said also that it “continues to support the goals of Chairman Baker in modernizing insurance regulation and creating more competitive insurance markets.”