Democratic Senator Jon Tester of Montana is standing up to the insurance industry, opposing the industry’s push for federal charter of the property and casualty industry. In an article in the National Underwriter, Tester noted that state regulation has worked regarding the insurance industry:
"Insurance…is one industry that does not need a federal overhaul because the state regulators have played a “critical role” in ensuring that the fate of other financial institutions did not befall insurers.
He said his time as a state legislator taught him how effectively state regulators can oversee the insurance industry."
This has been one of my strongest arguments against federal charter. Most of the financial institutions that have failed recently are regulated by the federal government. Property and casualty companies, which are regulated by states and not the federal government, are solvent and even thriving. Even the property and casualty part of AIG, which is regulated by the states, is profitable and solvent.
State regulation works, has worked for over a century, and current federal regulation has proven to be a mess.
As I have noted in previous posts, (here, here, and here), Allstate and a handful of other insurers are pushing for the federal charter option. They want to escape the consumer friendly state regulations to federal rules which would maximize their profits and minimize meaningful oversight and their duties to act in good faith towards their customers.
Why fix something that is not broken?