Collision repairers are being asked to contact their elected federal officials to encourage passage of House Resolution 5840, which would establish an Office of Insurance Information within the Treasury Department to address differences in insurance regulatory standards among the various states.
The Insurance Information Act of 2008 aims to eliminate competitive disadvantages prevalent among U.S. insurance companies and to modernize domestic insurance regulation. Specifically, the measure would consolidate the more than 50 state regulators into a united and consistent group to appeal to foreign firms and create global competition among insurance carriers.
The Automotive Service Association (ASA) supports federal regulation of the insurance industry, and HR 5840 is a key step toward achieving that goal, according to Bob Redding, ASA’s Washington, D.C. representative.
“This bill is a long way from the federal regulation of the insurance industry. It does continue the process to get to federal regulation,” Redding says, which presents the possibility that eventually steering and other concerns would be addressed at the national level.
“It is very difficult for the collision repair industry to address insurer-repairer issues in 50 states,” Redding says. “The lack of unity, commonality of message and the lack of resources prevent consistent resolution of issues of importance to repairers. Federal regulation will provide a greater opportunity for repairers to address insurer-repairer concerns.”
It is most likely any action on major insurance reform will not occur until the 111th Congress, which begins in 2009. “This is a first step toward a much larger debate on insurance reform we will see in the next Congress. In general, consumers and collision repairers will be better protected in a federal regulatory system versus a state system with regard to auto insurance,” Redding says.
In the meantime, what can repairers do to prepare for the federal insurance regulation debate? First, become familiar with your Congressional and Senate officeholders so you can contact them with your views.
“Second, step up and join our efforts to address the most important issue to come before the collision industry in many years,” says Redding. “If the U.S. Congress fails to address the insurance regulatory issue, continued state regulation could prevent any degree of national insurer-consumer-repairer property and casualty reform.”
U.S. Rep. Paul E. Kanjorski, D-Pa., chairman of the subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, is HR 5840’s sponsor. He seeks to have the proposed Office of Insurance Information establish a federal policy on international insurance matters so that state laws will be uniform with international trade agreements.
“Congress continues to vote regularly on insurance matters. In order to create the most effective and sensible legislation, we, as lawmakers, must educate ourselves on insurance policy and build a knowledge base in the federal government on these issues.” Kanjorski says.
Though there is some disagreement on the bill among insurers, the majority of the insurance sector backs the legislation, according to Redding. Opponents maintain that the federal government will serve as a preemptive authority over state regulators, much like in the banking industry.
The American Insurance Association (AIA), which represents most of the powerful insurance companies, endorses passage.
“This office will help the U.S. Treasury analyze the important societal role that insurance plays in the domestic economy and will provide urgently needed leadership by the U.S. in international insurance regulatory policy making and agreements,” says the AIA’s president, former Montana Gov. Marc Racicot.
While some insurers believe that the office would be a step toward an optional federal charter system, many who oppose a federal charter nonetheless advocate Kanjorski’s bill.
One such group, the National Association of Mutual Insurance Companies, says: “An Office of Insurance Information, if properly constructed and contained, could help modernize the insurance regulatory marketplace and reduce inconsistencies and redundancies, while recognizing and respecting the rightful and necessary role of state-based regulation.”
The National Association of Insurance and Financial Advisors supports creation of such an office but has reservations about certain provisions of the resolution. It is currently working with Kanjorski’s staff to address those concerns.
“Previous hearings and this legislation indicate many insurers believe a federal regulatory system is preferable to a state system,” Redding says.
The ASA recently participated in an insurance regulatory conference hosted by the American Enterprise Institute. “The message from academics across the country was that federal regulation is needed for the insurance industry’s benefit as well as consumers,” he explains. “It was also noted that property and casualty should be included in any federal regulation process unlike some Capitol Hill messages that federal regulation should be limited to life insurance only.
Redding encourages repairers to become involved in the efforts to promote passage. “The establishment of an Office of Insurance Information at the U.S. Department of the Treasury is a small first step towards the federal regulation of the insurance industry. Even HR 5840 has a long way to go before becoming law.”
