In an embarrassment to the chairman of the U.S. House Financial Services Committee, the House Insurance Committee of Rep. Mike Oxley’s home state legislature on May 10 passed a resolution asking the Congress not to enact legislation that would impose federal standards on insurance regulation.
The panel voted 14-1 to ask the state legislature to pass the same resolution and send it to the leadership of both parties of Congress. Derrick Seaver, representing Minter in Rep. Oxley’s 4th District, is a sponsor of the resolution.
Rep. Oxley, R-Ohio, chair of the Financial Services panel, did not respond to several requests for comment, according to a committee aide. But a veteran industry lobbyist, Joel Wood of the Council of Insurance Agents and Brokers, Washington, called the resolution “misguided,” and said it was unlikely to have any impact on the committee’s decision whether to act or not act on the legislation, the State Modernization and Regulatory Transparency Act (SMART).
Reps. Oxley and Baker are on target to release a new draft of the bill sometime this summer, according to industry lobbyists.
It is unclear what the full Ohio legislature will do with the draft resolution. The House Financial Services Committee is currently working with industry trade groups and the National Association of Insurance Commissioners, Kansas City, Mo., asking for input title by title, in hopes of creating a consensus on the bill.
The resolution contends that “State legislatures are more responsive to the needs of their constituents and more knowledgeable regarding the market conditions in their own states and the necessary insurance products and regulations to meet those market conditions.”
The resolution noted that premium levies in Ohio totaled $404 million in 2003, and contended that the proposed federal law “would undermine state sovereignty, threaten the power of state legislatures, governors, insurance commissioners and attorneys general to oversee, regulate and investigate the insurance industry….” It also said the SMART bill would “limit the states’ ability to protect the interests of their constituents….”
Defending Reps. Oxley and Baker’s efforts, Mr. Wood said that “state legislators wanting to preserve turf should not come as a surprise to anybody.”
But he said the Ohio panel is “very, very misguided if they think that the proposed SMART Act is destructive to state insurance regulation–precisely the opposite is true.”
Mr. Wood said that “Ohio’s former insurance director, Lee Covington, agrees with Mike Oxley on this point. He understands insurance regulation and the challenges facing it, and he understands that there are simply many areas of state-by-state insurance law that are totally at cross-purposes with the national and international nature of the insurance marketplace.
“The paradox is that there are many players who think that the SMART Act doesn’t go nearly far enough–that Congress should enact federal regulation to supplant state regulation,” Mr. Wood said. “In the absence of common sense, middle-of-the-road reforms like SMART, arguably the closer we get to a full federalization.”
A life insurance industry representative who formerly worked for the American Council of Life Insurers, Washington, and the Independent Insurance Agents and Broker of America, Washington, was highly critical of the Ohio Insurance Committee’s resolution.
“Chairman Oxley and Chairman Baker are leaders and heroes to the insurance industry and its policyholders, as they seek long overdue reform of a backwards and inefficient regulatory structure,” said Philmore Anderson, the founding partner of Washington Navigators, a lobbying and public relations firm that represents several major insurance industry clients.
“This action in Ohio is shocking in its lack of vision and embarrassing in its pandering to a set of state regulators that should be more worried that the job of regulating the industry isn’t taken away from them completely than opposing the SMART, a law which empowers them,” Anderson added. “The insurance industry will achieve reform with or without its current regulators.”
Ohio’s House Insurance Committee adopted the resolution in a 14-1 vote