The Associated Press reported that the National Association of Insurance Commissioners (NAIC) has come out strongly against the proposed Federal Charter for property and casualty insurance companies. As I have now stated in two recent posts, (read them here and here), this federal legislation is not in the interests of policyholders and is an attempt by some insurance carriers to escape accountability and increase their individual profitability.
The article correctly articulates one of my chief arguments against this legislation:
“Consumer advocates argue that such a system would let insurance companies shop around for the weakest rules and lead to the same kinds of abuses and reckless risk-taking that brought other financial services firms to their knees.
Doug Heller of California-based Consumer Watchdog said it would be ”impossible” for the federal government to properly regulate the industry, adding, ”The idea that they would contemplate giving big financial corporations a choice of who regulates them after we saw how that worked for the banks is just legislative insanity.”
Far from strengthening oversight, consumer advocates call it a push for deregulation that would harm consumers and fly in the face of Obama’s promise not to let financial companies ”cherry pick” regulators in a bid to escape tough rules.
”It’ll be a question of who can impress the insurance companies the most with their regulations, and that means, ‘Who will let us do whatever we want without regard to what protects consumers?”’ Heller said. ”You will have the federal government and state regulators in a race to the regulatory bottom.”
The article also shows that this is another example of “bought and paid for” legislation by insurance company lobbyists, who target politicians that will sell their votes against the public interest:
“Together with their trade groups, the companies have dumped tens of millions of dollars into lobbying for the change in recent months.
They’ve also given freely to politicians in positions to help them achieve it. Obama is among the top recipients of insurance industry campaign money, taking in $2.2 million in the run-up to the last election, according to the campaign finance watchdog Center for Responsive Politics. Other top recipients include Rep. Paul Kanjorski, D-Pa., who chairs the House subcommittee that handles insurance, and Rep. Melissa Bean, D-Ill., who’s pushing legislation to accomplish the switch.”
Policyholders should speak out and write their Congressional Representatives urging opposition to this very anti-consumer legislation. The last thing we need is to give the insurance industry an even greater advantage in the insurance coverage and claim game.