NU Online News Service, May 4, 12:10 p.m. EDT–An agents group has called on consumer advocates to offer their own ideas on state regulation reforms rather than criticisms of the State Modernization and Regulatory Transparency, or SMART Act, proposal.
In response to a letter sent to key members of the House Financial Services Committee by a consortium of consumer groups and other organizations, Robert Rusbuldt, CEO of the Independent Insurance Agents & Brokers of America, called on those advocates to work with lawmakers rather than against the proposal.
The letter to Committee Chairman Mike Oxley, R-Ohio, and Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee Chairman Richard Baker, R-La., was signed by, among others, the Foundation for Taxpayer and Consumer Rights, the NAACP, the AFL-CIO, and the Consumer Federation of America.
The groups' letter, Mr. Rusbuldt said, "attacked a pro-consumer plan that will promote national uniformity and efficiency while keeping regulation at the state level, where it is closest to consumers."
Additionally, Mr. Rusbuldt noted that "this is a proposal, not a bill."
He added, "It would be more constructive if Robert Hunter, the CFA director of insurance, sat down with members of Congress and Congressional staff to establish a dialogue and to discuss his concerns."
In their letter the groups outlined what they see as shortcomings of the SMART Act, which is designed to modernize state regulation and create uniformity between jurisdictions.
The investigations by New York State Attorney General Eliot Spitzer, the groups noted, have shown that even sophisticated insurance consumers with risk managers and consultants aiding them have fallen prey to unfair practices by insurers and producers. Under the proposed legislation, which they characterize as a boon to the insurance industry, the problem could grow even more severe.
The groups said in their letter, "Rather than increase insurance consumer protections for individuals and small businesses while spurring states to increase the uniformity of insurance regulation, this sweeping proposal would override important state consumer protection laws, sanction anti-competitive practices by insurance companies, and incite state regulators into a 'race to the bottom' to further weaken insurance oversight."
The letter continued that it is "one of the most grievously flawed and one-sided pieces of legislation that we have ever seen–a veritable 'wish list' of items requested by insurers with absolutely no protections offered for consumers. The consumers who will be harmed by it are our nation's most vulnerable: the oldest, the poorest and the sickest."
As an example, the letter noted that the proposed bill would preempt state rate regulation, which the groups argue would "leave millions of consumers vulnerable to price gouging as well as abusive and discriminatory insurance classification practices." Additionally, the groups noted that while the bill would establish two positions to represent insurers' interests at the federal level, it does not create a position to represent consumers.
"Since consumers foot the bill when regulatory inefficiencies exist, we are certainly not opposed to increasing uniformity in state insurance regulation–as long as high consumer protection standards are applied," the groups said in their letter. "Unfortunately, however, in almost every circumstance in which the draft attempts to ensure uniformity, it overrides strong state laws and chooses the weakest consumer protection approach possible."
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