David-GoliathOne of the moreoutspoken consumer advocates–Birny Birnbaum, executive director ofthe Center for Economic Justice–is packing it in as anNAIC-funded representative, complaining the deck isstacked against he and his colleagues because of theoverwhelming advantage insurers enjoy in both people anddollars.

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The fact that the National Association of InsuranceCommissioners even pays to have consumer advocates attend istestimony to their good-faith effort to keep the public involved intheir decision-making process.

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Still, I can appreciate how overwhelmed Mr. Birnbaum and hiscolleagues must feel, as their little band of Davids is hard put tomatch the lobbying firepower of the Goliaths in the insuranceindustry.

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“Insurers spend tens of millions of policyholder-supplied fundsto lobby for insurer interests. In contrast, consumer interestshave few such resources,” said Mr. Birnbaum, according to a reportfiled by NU's Phil Gusman from the NAIC's national meeting thisweek in San Francisco.

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“The imbalance is on display at the NAIC, where over a thousandindustry representatives—many of whom are former insuranceregulators—are paid to present and press the industry viewpointduring and between NAIC meetings,” he added.

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Meanwhile, Mr. Birnbaum pointed out, there are only ahandful of consumer representatives, most of whom are volunteers.“The current consumer participation budget at the NAIC is$120,000—less than the salary of one industry lobbyist,” Mr.Birnbaum said.

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Still, I was disappointed to hear about Mr. Birnbaum leaving thefield of battle, and not just because he “gives good quote,” asjournalists say. I believe it's better to be a player than adistant spectator as broad regulatory policy is made. Out of sight,out of mind, if you will.

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Be that as it may, Mr. Birnbaum suggested a number of intriguingsuggestions on how to level the playing field when it comes tomaking sure the views of consumers are adequately heard.

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As reported by Mr. Gusman, Mr. Birnbaum would:

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• Create a Public Insurance Council, with 50 cents from eachinsurance policy sold collected by states to fund such a public orquasi-public agency.

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States could pass laws establishing consumer organizationsthat would be authorized to enclose a one-page pamphlet withinsurance policies that would “describe the organization andinvite consumers to join for an annual membership.”

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• Give consumers a veto over whether their premiums couldbe used for insurer lobbying.

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“Consumers should be presented with a choice: 'Do you want anypart of your premium to go to insurers for government relations, toa publicly chartered consumer organization for consumer advocacy,or neither?'” he suggested.

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The question is, what would such an entity do? Would it have anyregulatory authority, or simply represent the consumer'sviewpoint?

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And who would that “consumer” be? The Risk and InsuranceManagement Society already ably represents the interests ofcorporate insurance buyers. Would this new entity only representindividual consumers?

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Would it be limited to personal lines, or would small-businessowners–who often depend on their insurance agents toserve as their risk managers–have a voice via this new council aswell?

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How would policy be set by such a group? Indeed, that's thebiggest complaint I hear about today's consumer advocates. Whoelected them to represent consumers? Who sets their agenda? Who arethey accountable to?

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And how would such a national entity be created? By the NAIC,unilaterally? That could prove to be dicey. By Congress, perhaps aspart of its overhaul of financial services deregulation–asubdivision of the widely discussed Insurance InformationOffice?

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What do you folks think?

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