NU Online News Service, June 18, 1:52 p.m.– Washington
The American Council of Life Insurers, Washington, says the consumer survey results it released Monday show why Congress should give insurers the option of operating under federal regulation.
The survey, which was commissioned by ACLI and conducted by Matthew Greenwald & Associates, Washington, revealed that only one-third of U.S. consumers know that life insurance is state-regulated, and that only 11% would try to resolve a complaint against a life insurer by turning to state insurance regulators.
Fifty-seven percent of the consumers surveyed said they would handle a complaint against an insurer by hiring a lawyer.
Opponents of ACLI’s “optional federal chartering” proposals argue that consumers would be more confused and have less opportunity to redress concerns under a federal system.
Phil Anderson, ACLI’s senior vice president of government affairs, agrees that consumer protection is a legitimate issue.
But opponents of optional federal chartering are wrong to say that consumers would be worse off under federal regulation than they are today, because the Greenwald survey shows that consumers could not be more confused about insurance regulation than they already are, Anderson argues.
Moreover, Anderson says, an August 2000 study by the Consumer Federation of America, Washington, found that more than half of the state insurance regulatory agencies had less than 60% of the minimum funding they needed to fully protect consumers.
The CFA survey found that funding for all state insurance regulatory agencies combined was almost 25% below the minimum necessary level.
ACLI Chairman Joseph Gasper recently testified on Capitol Hill that the current state-based regulatory system hurts insurers’ efforts to compete with banks and securities firms and may also weaken protection for consumers.
If the federal government decides to regulate life insurance, “consumers will experience uniform and consistent protections nationwide and will enjoy the same availability of products and services in all 50 states,” Gasper testified, according to a written version of his remarks. “Consumers will also benefit from uniform rules regarding sales and marketing practices of companies and agents.”