Be careful what you wish for. Those of us hoping the level of debate on the optional federal charter question would finally be raised were granted that wish, in a sense--the wrong sense.
When Len Brevik stepped to the microphone at the July 22 meeting of the National Conference of Insurance Legislator in Boston, he cranked up the decibels, launched what can fairly be described as a tirade against the National Insurance Act of 2006 and took the whole argument against the Sununu-Johnson Senate bill over the top.
Brevik, executive vice president and CEO of the National Association of Professional Insurance Agents, the self-styled voice of the Main Street agent, decried the optional federal charter measure as "legislation of the worst kind." He said it would undermine key insurance consumer protections, constrict the availability of insurance, create market instability, unleash a flood of litigation, and let loose a small band of evildoers to prey upon the public and to plot the evasion of insurance carriers from supervision altogether. The horsemen of the Apocalypse ride again!
"This legislation is an example of a solution that won't work being proposed for a problem that doesn't exist," said Brevik. "This proposal to establish a duplicative federal insurance regulatory regime is being advanced by a handful of big banks, large securities firms and a few insurance carriers solely as a means for them to expand their market share at the expense of the other participants in our industry."
Whew! Time out.
Can you please explain, Mr. Brevik, how consumers will be stripped of protections under a quasifederal system? That doesn't seem to have happened under the banking system on which this model is based and which, by the way, does work as a solution to a problem that existed for the nation's banks as surely as it does for the insurance business.
And just how and why will this Armageddon of dried-up markets, chaos, confusion, instability and deluge of litigation be visited upon us?
Will the federal regulators stand idly by and encourage such rampant misbehavior any more than state regulators would?
Has it escaped PIA's notice that the "handful" and the "few" of those in favor include the rosters of the American Insurance Association and the Council of Insurance Agents & Brokers? Should their legitimate needs and serious complaints be so cavalierly dismissed? Why should they be counted among the miscreants simply because they've thrown up their hands at the prospect of ever improving what is clearly a hopelessly inefficient system.
But that's clearly not the PIA's take on this. Brevik's rant went on to dismiss the "distortions" of some advocates that the current system is broken. "Any assertion that state-based regulation is not working is just not true," he said. "It needs further improvement and modernization. As I speak, modernization of the state system is occurring, and with increasing speed."
And as I write, Mr. Brevik, state-based regulation clearly is not working for many in this industry. Saying it's "just not true" doesn't cut it. We've had a decade of snail's pace "streamlining" and "modernizing" and, despite the best of intentions, we're not much closer to resolving, at the state level, persistent problems with uniformity, efficiency and speed to market.
Maybe there's a compromise solution waiting to be born, but it sure won't be helped along by the kind of downright hysteria and line-in-the-sand pronouncements now emanating from the PIA.
TOM SLATTERY,a frequent contributor to this magazine, has been a writer and editor in the insurance arena for almost 40 years. He is currently managing director of Slattery-Esterkamp Communications, Baldwin, N.Y.
September 15, 2006
Copyright 2006© LRP Publications