WASHINGTON–Advocates of continuing state regulation for the insurance industry have an ally in one of Maine's senators, who told an agent's group that she is against the idea of an optional federal insurance charter.
Speaking to agents and brokers here today during the annual Independent Insurance Agents & Brokers of America Legislative Conference and Convention, Sen. Susan Collins, R-Maine, pronounced her opposition to OFC in no uncertain terms.
"I believe the present system of state regulation largely works. The answer is not to disrupt that system by concentrating more power in Washington, D.C.," Sen. Collins said.
Ms. Collins, who for five years headed the state's Department of Professional and Financial Regulation, which oversees Maine's Bureau of Insurance, said she, unlike the majority of members in Congress, understands the industry and believes most states perform the task of regulation "quite well." Creation of a federal system would at some point "overwhelm" the current system of state regulation, making it ineffective and nonexistent, she remarked.
The newfound impetus for OFC came earlier this week when Treasury Secretary Henry M. Paulson Jr. announced the Bush administration's financial regulatory reform package that would include the creation of an optional charter for both life and property-casualty insurers.
Ms. Collins said the news that insurance would be part of the reform package came as a surprise to her and she did not believe it should be part of the proposed reforms.
"Certainly the ongoing struggle in the insurance sector needs to be addressed, but I fail to see how the crisis in the housing and financial markets justifies the reach of federal regulators into the insurance industry," she said.
She called on agents and brokers to use their knowledge and influence to speak to their federal legislators and inform them of the benefits in keeping the current system.
"Your continued advocacy on this point, now that Secretary Paulson has embraced this proposal, is going to be absolutely critical," she said.
On the issues of natural disaster and catastrophe, Sen. Collins said the government should not subsidize those who choose to live in catastrophe prone areas.
She called for an effort to find an answer to the problems facing the federal Flood Insurance Program and the challenges from other natural disasters. The private insurance industry, said Sen. Collins, is ahead of the federal program in adequately assessing risk.
Earlier in the day Rep. James Clyburn, D-S.C., and majority whip in the House, told the same group of agents that Congress may need to revisit the economic stimulus package passed earlier this year and concentrate on the creation of jobs aimed at fixing and improving the nation's infrastructure. He also advanced the idea of creating a summer jobs program to employ one million college students.
"If you give a teenager a $500 check in the afternoon, it will be in the economy by that evening," he said.
Both Sen. Collins and Rep. Clyburn called for fixing the alternative minimum tax but offered no concrete proposals to do so.
Rep. Clyburn noted that the biggest hurdle to doing away with the alternative minimum tax is solving the dilemma of replacing the lost funding.
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