The months before a pivotal presidential election is the time when the editors of industry publications actively seek articles that predict how insurance issues will play out if one or the other candidate is elected. This is usually an exercise in futility for two reasons. First, nobody in the industry possesses that kind of a crystal ball. And second, insurance people by nature are reluctant to speculate for fear of offending the winners.


It is far harder to predict how insurance issues will be dealt with in a change of administrations than it is with, for example, foreign policy. That's because insurance issues are seldom the specific focus of campaigns–with two notable exceptions: health insurance and catastrophe insurance.Both Barack Obama and John McCain have detailed, and widely differing, plans for reforming health insurance. That's because the high number of Americans without health insurance (the Census Bureau puts the most recent figure at 45.7 million) makes this is a major campaign issue.So, too, is insurance for natural catastrophes. Many voters in the electoral-vote rich state of Florida and other coastal swing states are having trouble finding or keeping affordable homeowners insurance. Obama has endorsed the "Homeowners Defense Act of 2007″ (H.R. 3355), which has passed the House and awaits action in the Senate; McCain opposes the proposed legislation, suggesting a Gulf states compact or other regional alternative to a natural catastrophe fund. This issue will also touch on the future direction of the federal National Flood Insurance Program.While these may look like insurance issues to us, in the world of federal politics these are really issues about managing the federal budget and deficit. So, apart from these two kitchen table issues that have resonance with voters, what can you determine about how either candidate would deal with other insurance-related issues? The answer is: not much, at least regarding specific proposals.Be careful what you wish for As frustrating as this may be to those of us in the industry, neither candidate has issued a detailed vision for insurance. But before we allow ourselves to become too disappointed for not getting top-level attention at this point in the campaign, we should take a moment to consider that we may want to be careful what we wish for.The best way to divine what either an Obama or a McCain administration would mean for "our issues" is to step back and look more broadly at how each candidate addresses economic issues generally and the attitude of each toward regulation.It is easier to predict how a McCain administration would deal with insurance. McCain seems to embrace a more traditional Republican approach to economic matters. This is in great part because he is not just a Republican, but a Westerner. For example, he speaks constantly of the dangers of the federal deficit and the need to reduce government spending. While McCain's concern about deficits might make him a more traditional Republican, his embrace of many of the supply-side policies of President Bush indicate he may favor Wall Street over Main Street.It is much harder to predict where Barack Obama will come down on matters of the economy and regulation. Despite campaigning on a one-word platform of "change," and despite his embrace of traditional Democratic liberal positions, Obama also goes to great lengths to claim that his priority is to reach across the aisle to seek common ground. This indicates he is open to compromise on whatever his core beliefs turn out to be. He's a pragmatist. Combine this with the "adjustments" he made to some of his previous positions after he won the Democratic nomination, and it all adds up to an unknown.Ask the average voter what they want a candidate to do about insurance, and you will get a few general observations. "Lower my rates" would be near the top of the list, if not the entire list. Would there be more regulation under a President Obama? Would there be less regulation under a President McCain? President Bush entered office with a portion of his agenda to reduce government interference. But there has been more regulation recently under President Bush in response to the subprime meltdown. Perhaps political and economic circumstances of the moment are the real determinants.What would either candidate's positions be on optional federal charters, surplus lines deregulation or any of the myriad insurance proposals various interests are currently pushing? It is hard to predict at this point. These are not issues of concern to the voting public. Remember, too, Congress has a big role in the process and things can change there, too.The regulation debateIn the past two years, advocates of optional federal charters have gone to great lengths trying to convince Congress that creating OFC is a good idea. The National Association of Professional Insurance Agents (PIA), along with the National Association of Insurance Commissioner (NAIC), the National Conference of Insurance Legislators (NCOIL) and many other groups oppose federalizing insurance regulation. PIA believes that there would be nothing optional about an optional federal charter, and that it is one element in the multi-faceted campaign to bring about federal regulation.Another element of the campaign for federal insurance regulation is the Insurance Information Act of 2008 (H.R. 5840). When this bill was first introduced, it was presented as answering a need by Congress to have a source of information about the insurance industry. It was to be an office that would be like a library. The office would also deal with insurance matters that specifically apply to international treaties.But then H.R. 5840 began to morph. By the time the bill emerged from the House Capital Markets Subcommittee on July 8, 2008, it had been changed significantly. What began as a bill to set up an insurance information office and deal with relatively narrow concerns regarding international treaties was now a bill that effectively puts the U.S. Treasury Secretary in charge of most insurance matters in the country.Unless significantly rewritten, the current H.R. 5840 would make the Secretary of the Treasury the principal federal authority for domestic and international insurance issues of national interest with the power to determine which state laws, regulations and industry practices will be preempted. H.R. 5840 effectively guts the McCarran-Ferguson Act of 1945 and the Gramm-Leach-Bliley Act of 1999, which establish and affirm that the states are the regulators of the business of insurance.The Insurance Information Act has become a bill to enable federal regulation of insurance, seeking to lay the groundwork for a federal insurance regulatory structure, complete with a federal insurance regulator. The bill's revised version tracks the "vision" laid out in the Treasury Department's Blueprint for a Modernized Financial Regulatory Structure, released earlier this year, which called for such steps to "prepare" the insurance industry to be made part of "an integrated financial services structure with banking and securities, all regulated by one federal regulator."The bill's supporters say that it does not pose a threat to the authority of the states in insurance regulation. But as more state officials, governors, AGs, legislators, as well as DOIs, fully review it, stronger opposition mounts.The optional federal charter and the Office of Insurance Information are being used as "cover" for what is really going on: an attempt to lay the groundwork for federal insurance regulation. And all this effort is geared toward supporters gaining a significant and unique competitive advantage in the U.S. domestic insurance marketplace.Federal involvement is being marketed as a way of making insurance regulation more efficient, but the subprime mortgage meltdown occurred under federal regulation, at the same time that the insurance industry under state regulation remained on a firm financial footing, achieving record profits and lower prices for consumers. So PIA's question is, why would it be more efficient for the one sector of financial services that has prudently conducted its business to be subsumed into a federal regulatory structure that has failed in the supervision of banking and securities?The state system of insurance supervision has served consumers and our industry well for more than 100 years, and it continues to do so. Just look at the financial performance of our industry, in comparison to the other sectors of financial services.Any reforms needed to improve our nation's insurance regulatory system need to be done at the state level, not federal. We are hopeful that the message, "Don't mess with success" will be one that is embraced by whichever party is in the White House in 2009.

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