A Message from PIA's President

June/July 2008

Sometimes it is hard to figure out exactly what is going on in Washington, D.C. when it comes to insurance regulatory reform. It seems like a jigsaw puzzle, with pieces slowly being added. Recently, more pieces have been added to the puzzle, and we do not like the picture it is creating.

Rep. Paul Kanjorski is proposing to create a federal Office of Insurance Information. Sounds okay? It’s not. The title and the rhetoric suggest that Congress just wants to create this harmless little office as kind of a library, staffed by soft-spoken librarians with their hair tied in buns.

Since PIA first announced opposition to this bill, Kanjorski changed it, supposedly to answer criticisms, from the NAIC, PIA and others. But now, it allows this “harmless” little office to contract with the NAIC for market conduct data. And it gives the NAIC a seat on an advisory group the bill creates. And it still allows the Treasury Secretary to preempt state insurance laws.

When Illinois Insurance Commissioner Mike McRaith registered objections to the preemption provisions, one of the committee’s prime sponsors of an Optional Federal Charter, Rep. Melissa Bean (D-Ill.), told McRaith that he would make “an ideal candidate” for federal insurance regulator. When NCOIL President Brian Kennedy said giving the NAIC and not NCOIL a lead role in this office “allows the tail to wag the dog,” Rep. Kanjorski quickly offered to give NCOIL a seat on the OII Advisory Group and asked if that would assuage their objections to the bill.

It is unusual to see such bare-knuckles tactics, customarily employed in private, break out into a public congressional hearing. Amid all of this, Cathy Weatherford, staff EVP of the NAIC, has picked this moment to announce that she is considering moving to Washington, D.C.

Have I told you enough to figure it out?

Rep. Donald Manzullo (R-Ill.), a member of Kanjorski’s subcommittee, knows exactly what is happening. He says the OII is a “soft punch,” to be followed by much stronger action to move the industry closer to a federalized regulatory system. “This is an attempt to federalize the insurance industry,” Rep. Manzullo said. “That’s all it is.”

This piece of legislation — along with others — is part of a coordinated, frenetic push by advocates of federal insurance regulation to sweep away opposition and advance their agenda. These bills are the “Trojan Horses” being rolled up to the doors of Main Street insurance agencies, as well as small to mid-sized regional and national insurance carriers.

If allowed to succeed, we will ultimately see the Treasury Department’s “New World Order” for insurance regulation, which it detailed in its own report in March. It will be a world where there are no state Departments of Insurance and only a handful of big national and international insurance carriers, who can then attempt to finally get rid of both their competitors and Main Street insurance agents.

The good news is that PIA members and PIA affiliates can supply the final piece of this puzzle. And by working together to defend our interests, we can change the picture.

Robert P. Page
President