If you love dealing with your group health insurance bills and claims, you will be overjoyed with the new legislation proposed in Congress allowing property insurance companies to apply for a Federal Charter. This proposed legislation is the most unfair and anti-consumer federal legislation filed in recent years.

Need proof that it is bad for consumers other than simply reading it? Allstate Insurance is for the legislation and the legislation is titled: “The National Insurance Protection Act.” I was not born yesterday and neither were you. Allstate is never going to support legislation holding it accountable for the manner in which it adjusts claims. Allstate leads the charge against state legislation that adds penalties for insurance companies that break the rules of “good faith” claims handling.

Why would Allstate support legislation that is truly pro-consumer now? Because the proposed federal law is not a consumer rights bill. This legislation is all about how to get rid of and around state consumer rights.

Every policyholder will lose all the valuable state consumer protections fought for in state legislatures and the courts over the past 150 years. You will lose the right to sue your insurer for bad faith conduct when it wrongfully acts against you. The federal law is clear on this:


(a) No State Restrictions- No State may prevent or restrict a national insurer or national insurance agency from engaging in the acts described in subsection (b) or from engaging the services of a person who engages in such acts for the national insurer or national insurance agency, nor shall any State require that a person be licensed by reason of engaging in such acts for a national insurer or national insurance agency.

(b) Acts Protected From State Restrictions- The acts referred to in subsection (a) are the following:

     (1) Investigating, evaluating, ascertaining, or determining the amount of or negotiating, settling, or adjusting or otherwise participating in the disposal of claims, losses, or damages arising under insurance policies written by a national insurer.

Policyholders should applaud their insurance agents because their property insurance agents seem to get the point and are opposed to the Federal legislation:

“While it has an appealing title, this latest incarnation of Optional Federal Charter (OFC) legislation would damage the stable and healthy insurance marketplace to the detriment of consumers,” says Robert A. Rusbuldt, Big “I” president and CEO. “While the bill reintroduced today has a few changes, it is basically the same concept, optional federal chartering and deregulation of strong state consumer protections, which has rightfully been rejected and ignored by previous Congresses. There is no doubt the current regulatory system needs more uniformity and efficiency, but there are more prudent ways to accomplish this via targeted federal legislation.”

The Big “I” believes that local insurance regulation works best for consumers and the state regulatory system ensures a level of responsiveness that could not be matched at the federal level. The Big “I” believes that there is no regulatory crisis in the property casualty insurance market as a whole that necessitates a risky massive overhaul of its current regulatory structure.

“This legislation deregulates several areas that are currently overseen at the state level and sets up a system to allow regulated entities to choose their regulator, which would leave consumers vulnerable and expose the insurance market to the same types of problems experienced by other sectors of the financial services industry,” says Charles E. Symington, Jr., Big “I” senior vice president for government affairs. “We believe this is an imprudent proposal at a time when there needs to be a review of financial services regulation with all eyes focused squarely on the protection of consumers.”

The concern about a systemic “financial” risk that is addressed in this legislation has to do with some life insurance companies and AIG investing in the credit default swaps. It is amazing that the federal government thinks it can do such a good job regulating property insurance companies when the banking industry it regulates has caused the largest financial meltdown since the Great Depression. The banking crisis and health insurance (regulated by ERISA) claims problems have shown us that  federal regulatons do not protect consumers, they protect big business.

Do we want the federal government to make more of a mess of our property insurance claims too?