NEW YORK–State regulation of the insurance business provides a more diverse, nimbler, less inept and less remote system of control than any federal system that could be developed, five former New York regulators, said at an industry conference last week.

They gave their viewpoints on a panel at the Downstate Insurance Associations Council's 76th Annual Conference after moderator Albert J. Beer, professor of Insurance and Actuarial Science at The School of Risk Management, asked them to discuss the benefits of state regulation.

Former Superintendent Gregory V. Serio said state level regulation allows for experimentation and the development of insurance products while minimizing the prospect of a mistake ballooning into a national problem.

“Using the states as labs for experimentation in insurance product development, and also in helping us to compartmentalize problems before they become national scope … are a couple of the benefits of state regulation,” Mr. Serio said.

Former Superintendent Salvatore R. Curiale expanded on Mr. Serio's comments by noting the dangers of centralizing insurance regulation with one entity.

Mr. Curiale, who noted that state versus federal regulation issues have been discussed at least since he first joined the department in 1983, said, “And so you say to yourself, if you put all your eggs into one basket, what's going to happen? Insurance is so important, isn't it nice to have really strong regulators like the New York Department, like the California Department, like the Florida Department; like the Illinois Department also looking at all of these separate issues” as opposed to just one federal regulator?

Former Superintendent Howard Mills said, “I would submit that the single thing that state-based regulation does better than any federal regulator would ever do is consumer protection. I do not believe that any massive federal agency of insurance regulation could do anywhere near as effective a job on behalf of consumers as state-based can.”

However, he did note that there is room for improvement within the current regulatory structure.

James P. Corcoran, who preceded Mr. Curiale as superintendent, questioned the federal government's ability to take real action on the issues that matter in insurance. “Competence in the federal government is a far leap,” he said, and he added that the federal government runs on “political issues.”

Mr. Corcoran said, “They're not serious people. [Do] congressmen and senators really want to run for office on real issues like med mal rates, or homeowners rates, or automobile rates?

“You don't honestly believe that Congress wants to embrace that, do you? You don't honestly think that your congressman or senator wants to be accountable for anything real. I don't worry about [federal regulation]. It's never going to happen. Until these people become serious people, there's no threat to state regulation.”

Al Lewis, who began his term as superintendent in 1978, said that organizations like the Downstate Insurance Associations Council would be harmed by a move to federal regulation because they would lose the relatively easy access that they currently have to state legislators and regulators.

As for local organizations trying to gain legislative clout in Washington, Mr. Lewis said, “Lots of luck. You're not going to make it.”

Special Reports /

NY Ex-Regulators Blast Federal Regulation Concept

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