Some Thoughts On Recent Happenings On The Hill

Some quick thoughts:

Congress and Federal Regulation of Insurance: During a recent hearing on efforts by the states to streamline agent licensing, I couldnt help but be impressed by what seems to be a growing skepticism among members of Congress about state insurance regulation.

That hearing in Congress tells part of the story. Specifically, at that hearing, at least two prominent members of the House Financial Services Committee (Republicans, incidentally) expressed serious doubts about whether the states, despite the best of intentions, would succeed in creating an efficient, uniform agent licensing system nationwide.

But also apparent was the lack of expression of strong support for continued state regulation by any members of the Committee.

Since the early 1990s, when Rep. John D. Dingell, D-Mich., began questioning state insurance regulation, hearings such as those on agent licensing usually include at least one member offering a lively defense of state regulation.

Normally, this defense says that despite the weaknesses of state insurance regulation, it is better than one-size-fits-all federal regulation.

But during the agent licensing hearing, I dont recall any member of the Committee offering a strong defense of state regulation. While there were a couple of comments that no one is calling for federal regulation, at least not yet, the comments were tepid at best.

It may well be that this lack of enthusiastic support for state regulation was an anomaly. Perhaps the sincere supporters of state regulation, for whatever reason, chose not to attend the hearing.

But I have to wonder whether all the recent movement on optional federal chartering and the relentless criticism of state regulation, even among industry groups that say they support the current system, is beginning to have an impact.

I still do not believe that the 107th Congress will seriously consider optional federal chartering, but I wouldnt make any bets about the 108th Congress. I think all the trends are working against exclusive state insurance regulation.

The Leadership Change in the Senate: Forgive my cynicism, but whenever I read about “seismic” change in Congress, I start to yawn.

“Seismic” changes just dont happen in Congress. I personally believe the differences between the two main political parties are much narrower and more nuanced than one would believe by listening to the rhetoric.

The rhetoric is so intense because the differences are so small. I think that is particularly true for issues affecting the insurance industry.

Certainly, the tone of the debate will change on some issues. For example, on privacy, the new chairman of the Senate Banking Committee, Sen. Paul Sarbanes, D-Md., is a strong supporter of privacy legislation.

The outgoing chairman, Sen. Phil Gramm, R-Texas, opposed it. The new leadership means that a privacy bill is more likely to get a hearing. But it may have gotten a hearing anyway.

Like a lot of issues affecting insurance, privacy does not break clearly along party lines. Perhaps the strongest supporter of privacy legislation in the Senate is a Republican, Sen. Dick Shelby, R-Ala.

Its not clear to me that other issues, such as civil justice reform, had much of a chance in any case.

Some type of patients bill of rights is likely to be considered in the Senate, and perhaps the resulting bill will be incrementally more negative for employers and health plans than would otherwise be the case. But I cant imagine it will be anything more than that.

The leadership change gives the Democrats the ability to control the floor of the Senate, schedule votes and decide to some extent what bills move through the Committees.

But at the end of the day, you will have the same people casting the same votes they would have cast in any case.

The change in leadership will probably make life a little more difficult for members of the business community, including the insurance industry.

But I certainly do not believe that the direction of the nation has been permanently altered.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 11, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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