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Regulation and Compliance > State Regulation

Oxley-Baker Road Map Continues State Control

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A congressional panel has released a discussion draft of the insurance regulation modernization “road map.”[@@]

The current version of the road map, which is officially known as the “State Modernization and Regulatory Transparency Act,” would keep insurance regulation in state hands but allow insurance rate setting without prior review from regulators, according to Julie Gackenbach, an assistant vice president in the Washington office of the Property Casualty Insurers Association of America.

The team that developed the draft, which has 16 title sections, “shares the goals of PCI in ensuring competitive markets,” Gackenbach says.

The current SMART Act draft would create a collection of “federal tools” designed to effectuate state-based changes in insurance regulation. The draft was released by Rep. Richard Baker, R-Louisiana, who heads the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprise.

The draft act covers issues such as market conduct, producer and company licensing, and state-national coordination, PCI says.

One portion of the draft would create an advisory council of federal and state regulators that would have no regulatory power over the industry but would mediate disputes and report to Congress on compliance with the SMART Act, Gackenbach says.

Another part of the proposal calls for market conduct examinations of insurers by their home state regulator at least once every 5 years, Gackenbach says.

Gackenbach says PCI would like to see changes in the market conduct exam scheduling section, so that scheduling depends on identification of insurers that seem to have problems rather than a set timetable.

Other draft language calls for streamlining agent and company licensing procedures with a single point for electronic filing, Gackenbach says.

Baker’s committee is part of the House Financial Services Committee, which is chaired by Rep. Mike Oxley, R-Ohio.