WASHINGTON, D.C. — The American Enterprise Institution (AEI) held a conference in Washington, D.C., titled “The Future of Insurance Regulation,” which featured national leaders who specialize in insurance regulatory policy. This event was co-sponsored by the Brookings Institution and Georgia State University. The Center for Risk Management and Insurance Research is housed at Georgia State University.

Dr. Martin Grace of Georgia State University and Dr. Hal Scott of Harvard University – advocates for federal insurance regulation – believe that if such a system were implemented within the United States, insurance companies and policyholders would mutually benefit. Specifically, federal standards would be established, inefficiencies at the state level would decrease, benefits would increase and costs would decrease, and there would be a sense of coordination and consistency across states.

Further, Grace and Scott propose an independent agency, though not apolitical, act as regulator, much like those already in many states. They mentioned that there is a looming debate over the question if some insurance companies will have to be regulated, depending on size and power. Internally, they argue that firms should be chartered as opposed to lines within the firms, and propose to create a credible division of consumer protection.

To demonstrate how the insurance industry has moved beyond individual state borders, Grace and Scott reported in a study of insurers from 1945 to 2006 that, “There has been a 25-fold increase in property-casualty insurance premiums and a tenfold increase in life and annuity premiums. In contrast, the U.S. population has just more than doubled over the same time period and automobiles per capita have increased about 2.5 times. The number of property-liability companies has increased about 4.5 times and the number of life insurers has increased about 3.5 times.

Life industry assets have increased about tenfold while the assets held by the property-liability industry have increased more than 130 times. Overall, the sale of life and non-life insurance products and their ‘coverage’ of U.S. households and firms have greatly increased, along with the amount of assets managed by the insurance industry.” Grace and Scott specifically pointed to the national aspect by noting, “For the property-liability industry, approximately 80 percent of its premiums are written by nationally significant companies.”

Bob Redding, the Automotive Service Association’s Washington, D.C., representative, says, “The arguments presented at the conference in support of the federal regulation of property and casualty insurers affirmed ASA’s interest in seeing federal regulation move forward. The long-term solution for the insurer-repairer-consumer relationship is the federal regulation of the insurance industry. This will be a long road, but Congress and the administration are beginning to make steps in this direction. The 111th Congress and the new administration should continue this effort.”

Says Redding: “State regulation has not worked for collision repairers. Incremental successes won’t relieve problems that are occurring in many if not all states. Presenters at this conference demonstrated that our current regulatory system has failed for insurers and consumers, too. Although we have many issues and limited resources, collision repairers need to speak with one voice to ensure we are part of any new, national regulatory system.”

Robert Defletsen of the National Association of Mutual Insurance Companies opposes the federal regulation. He stressed that the federal government is dominant over state legislation in the dual regulation system of the bank industry, and claims this would be inevitable within the insurance field. Additionally, he says, state regulation would be replicated by the federal government, which would increase overall regulation. He proposes state-based reforms and a primary state regulator as alternatives to a federal charter, warning of an egalitarian view.

To view the conference agenda and list of speakers, visit the link found on the home page of www.TakingTheHill.com, ASA’s legislative Web site.