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Life Health > Health Insurance > Your Practice

Insurance Professor: Regulators Should Open the Curtains

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Consumers often have no good way to compare the contract terms, company performance levels or even premiums for many types of insurance products, Daniel Schwarcz testified today on Capitol Hill.

Schwarz, a faculty member at the University of Minnesota law school, appeared at a hearing on insurance regulation organized by the Senate Banking, Housing and Urban Affairs Committee’s securities subcommittee.

Schwarz blasted the current state of insurance information disclosure.

State insurance regulators have made some effort to set annuity disclosure standards, but, in most cases, “consumers neither receive nor can access reliable measures of how often or how quickly carriers pay claims,” Schwarz said, according to a written version of his remarks. “Consumers have virtually no means of comparing prices or costs for the cash value life insurance products that different companies offer.”

Insurers rarely post policies or detailed descriptions of contract terms online, Schwarz added.

Schwarz cited the mortgage disclosure forms recently developed by the new Consumer Financial Protection Bureau and the health insurance product summaries recently proposed by the U.S. Department of Health and Human Services as examples of good models for disclosure forms for other types of insurance products.

Schwarz also asked why insurance regulators have not done more to change state laws that classify insurance company market conduct information as being confidential.

Mary Weiss, an insurance professor at Temple University, noted that some critics of the state of insurance regulation have recommended letting insurers be regulated by a federal agency.

“Although there are arguments in favor of federal chartering, I believe there are better reasons not to follow such a route,” Weiss said. “In my opinion, large insurers would likely opt for federal chartering, and these insurers could present a powerful lobbying force to the federal regulator. In fact, the regulator might be prone to regulatory capture, a phenomenon in which the regulator ends up serving the interests of the regulated entities rather than pursuing traditional goals of regulation.”

Other federal insurance regulation coverage from National Underwriter Life & Health:


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