Proposed Rules on Insurance Companies Questioned

Analysts at the Competitive Enterprise Institute raised questions about new proposals to impose national regulation on a broad range of insurance companies.
In legislation slated to be introduced later this month, House members Ed Royce (R-CA) and Melissa Bean (D-IL) will propose a national system intended to modernize insurance regulations around the country.
Under the proposed “National Insurance Consumer Protection and Regulatory Modernization Act,” the federal government would gain vast new powers to oversee the solvency and stability of insurers. Small insurers would remain regulated at the state level but larger insurers judged to pose potential “systemic risk” would face a mandate to submit to federal regulation. Nationally regulated insurers would still have to participate in state residual market mechanisms and pay state taxes. In addition, the federal government would open insurance oversight offices in all fifty states. The legislation would also allow insurers to charge actuarially indicated rates throughout the country without burdensome, stability enhancing regulation by state authorities.
“This is not the same thing as the optional federal charter I’ve long supported. It’s not optional, it’s not really federal, and there’s no clear charter,” says CEI Senior Fellow Eli Lehrer. “I wish the proposal went further but, mostly, it still moves things in the right direction.”
CEI is a free-market think tank.



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