President Orders Regulatory Strategy To Support Growth
President Obama's executive order today to streamline federal agency regulations could have the effect of promoting greater regulatory efficiency for the insurance industry, an executive with an insurance association said.
By Mark E. Ruquet|January 18, 2011 at 09:57 AM
Thank you for sharing!
Your article was successfully shared with the contacts you provided.
NU Online News Service, Jan. 18, 2:53 p.m. EST
President Barack Obama’s executive order today to streamline federal agency regulations could have the effect of promoting greater regulatory efficiency for the insurance industry, an executive with an insurance association said.
The president ordered federal agencies to review and develop regulations to protect consumers while promoting economic growth with special focus on less burdensome regulation on small business.
The White House released the executive order that aims “to support continued economic growth and job creation while protecting the safety, health and rights of all Americans.”
The president ordered agencies to be more transparent and accountable in regulatory compliance. He also issued a memorandum to emphasize “the need to reduce burdens on small business whenever possible.”
The White House said the president is requiring agencies to “design cost-effective, evidence-based regulations that are compatible with economic growth, job creation and competitiveness.”
Among the guiding principles outlined:
• Cost-effective and cost-justified: Agencies must choose the least burdensome path, considering cost and benefits, and remain consistent with the law.
• The regulatory process must be transparent and include public participation.
• Agencies “must attempt to coordinate, simplify and harmonize regulations,” aiming to reduce costs and promote certainty for business and the public.
• Agencies must consider approaches that maintain freedom of choice and flexibility, including disclosure of information.
• Regulations must be guided by objective scientific evidence.
• Existing regulations must be reviewed to determine their necessity and crafted effectively to solve current problems. Outdated regulations must be changed or repealed.
In an op-ed column that appeared in today’s edition of The Wall Street Journal, the president said that some rules “have gotten out of balance, placing unreasonable burdens on business,” stifling innovation and having a “chilling effect on growth and jobs.”
The intention of his executive order is to find “more affordable, less intrusive means to achieve the same end” and promote rules made with input of experts, business and the American public.
It is the president’s intent to get rid of “absurd and unnecessary paperwork” that is a waste of time and money and to reduce the burden on small business.
Reacting to the president’s order, David Snyder, vice president and associate general counsel, public policy for the American Insurance Association (AIA), said the president “has lent his significant prestige to the notion that balanced regulation can help create and maintain jobs.”
This is important for the insurance industry, he said, because the AIA has asked the National Association of Insurance Commissioners (NAIC) to review its regulations and regulatory structure in an effort to eliminate waste and unnecessary paperwork, beginning with commercial lines.
“This is powerful support for the notion that regulations need to be reviewed to eliminate wasteful and duplicative regulation and to engage in a thorough cost benefit analysis for all regulation,” said Mr. Snyder, something the NAIC has yet to indicate it will do.
“We hope now, with the president clearly supporting and underscoring the critical relationship between balanced regulation and jobs, that the NAIC and state regulators will carry the same message into their workflow,” he said.
Unnecessary regulation, he said, adds to cost, limits capacity, and especially in commercial lines, prevents insurers from being globally competitive.
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies said that this was a refreshing change in tenor from the president’s “finger wagging and speeches we were getting a few months ago” that called business a big piece of the problem and that more regulation was needed.
He agreed with the spirit of the president’s proposal, noting that there has been a lot of political pressure to change the rule making system. He added that he hopes this will ultimately lead to a serious review as the president proposed.
“I’m encouraged by the tenor of the dialogue and where it is going,” said Mr. Grande. “There seems to be an increasing recognition in Washington, maybe the last election had something to do with it, that the old ways of doing business are probably going to have to change.”
Benjamin McKay, senior vice president, federal government relations for the Property Casualty Insurers Association of America, said the president’s actions could help control duplicative information demands from a number of regulators, provided the administration is willing to stand behind it.
“If they are willing to step up to the plate and help us eliminate it, and they are on the record as saying that, that’s great,” he said.