NU Online News Service, July 14, 2003, 5:51 p.m. EDT — Washington
Sen. Ernest Hollings, D-S.C., has introduced S. 1373, a bill that would put the federal government in charge of regulating insurance.
The bill would establish a five-member Federal Insurance Commission housed at the Commerce Department that would establish licensing and financial standards for the insurance industry, regulate rates and policies, oversee solvency, investigate market conduct and establish accounting standards.
The bill, the Insurance Consumer Protection Act, also would repeal the insurance industry’s McCarran-Ferguson antitrust immunity.
The new federal regulatory system would not be optional. All insurance companies that engage in interstate business would come under the authority of the Federal Insurance Commission.
Only insurance companies that did business solely in the state in which they were domiciled would be state regulated.
The Federal Insurance Commission would regulate all lines of insurance, including property-casualty insurance and life insurance.
In addition to creating the insurance commission, the Hollings bill would:
? Create a Federal Guaranty Corp. that would liquidate insolvent companies and pay claims to affected policyholders.
? Set up an independent office within the Federal Insurance Commission that would receive complaints from consumers about improper industry practices and represent consumers before the commission.
? Give consumers the right to challenge rate applications filed by insurance companies.
In a statement on the Senate floor, Hollings linked his legislation to efforts to enact tort reform.
Trial lawyers, he said, are really doing a “wonderful service.”
“The onslaught has got to be stopped here on this so-called tort reform because it is totally political,” Hollings said.
“It is totally campaign funds,” he said. “It is totally the election next year and not the needs of the country.”
He said that 1999 figures show that profits as a percentage of premiums are nearly twice as high for medical malpractice insurance as they are for other types of p-c coverage.
“Recent price increases are merely an attempt by the insurance industry to maintain the extremely high level of profitability for malpractice coverage,” Hollings said.
Robert Rusbuldt, chief executive officer of the Independent Insurance Agents and Brokers of America, Alexandria, Va., says his association is totally opposed to the Hollings bill.
“It is not based on marketplace reality,” Rusbuldt says. “We will fight it every step of the way.”
Rusbuldt adds that he does not think the legislation has much chance of enactment in the near future. Rather, he says, he believes Hollings introduced the legislation because he wants to send a message to the insurance industry.
The insurance industry needs to approach its drive for insurance regulatory reform very carefully, Rusbuldt says.
Links to the text of S. 1373 and other information about the bill are available at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:s.01373: