Insurers deserve freer rein over their operations and protection against terrorism, but, under normal conditions, they need to take responsibility for their own solvency.[@@]

Rep. Richard Baker, R-La., chairman of the U.S. House Financial Services Subcommittee on Capital Markets, delivered that message here Thursday at a luncheon.

Baker promoted the State Modernization and Regulatory Transparency Act, a bill that Baker has drafted along with House Financial Services Committee Chairman Michael Oxley, R-Ohio.

The SMART Act will “enhance market function while stopping short of a true federal charter,” Baker said.

Property-casualty insurers want lawmakers to attack state price controls.

Baker says he wants to see Congress “taking down all the fences” in the “economic pasture” and “letting the industry eat as much grass it likes.”

But, if insurers eat too much grass and get sick, “that’s their own problem,” Baker says.

When Baker spoke about an extension of the Terrorism Risk Insurance Act program, which expires Dec. 31, he said federal backstop protection is warranted.

“There is no public interest in allowing companies to become insolvent in the face of terrorism,” Baker said.

But Baker said insurers ought be responsible for repaying some of the support they get, as long as the payments do not hurt the insurers’ solvency.