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Fear and Loathing of Washington, D.C.
Insurance executives are skeptical of health reform, appeal to lawmakers not to lump them in with banks.
By DAN REYNOLDS, senior editor of Risk & Insurance® Tuesday's annual Property/Casualty Insurance Joint Industry Forum in New York produced a snapshot of an industry patting itself on the back for surviving the financial crisis, remaining wary of inflation and more government insurance regulation ...
"It would be nice if we could get a little credit," said Patrick Thiele, the Pembroke, Bermuda-based president and CEO of PartnerRe Ltd., echoing the sentiment among forum insurance industry panelists. That sentiment being: We are not banks and we are not AIG, so please lay off. Panelists, who included Thomas Motamed, the chairman and CEO of CNA Financial; Jay Gelb, Barclay Capital's senior equity research analyst; and Scott Harrington, a risk management professor at the Wharton School at the University of Pennsylvania, displayed a deep-seated mistrust of the government's ability to regulate any industry, much less commercial insurance. The afternoon's warmest applause went to Brian Sullivan, the editor and publisher of Property Insurance Report. Flushed from traffic tension, he arrived a great deal tardy to take his seat at a 2 p.m. experts' panel. But Harrington, a member of the same panel, was greeted almost as warmly when he lampooned the healthcare reform bills that passed through both chambers of Congress. "The benefits are modest, and the costs are large," said Harrington, also an adjunct scholar at the Washington, D.C.-based American Enterprise Institute for Public Policy, a conservative think tank. NO BANKS HERE Participants throughout the afternoon took great pains to verbalize that the P/C insurance business is doing well, thank you, and that regulation that seeks to heal the systemic risk in the nation's banking system shouldn't sweep insurers into the mix. "Banks and insurers have different types of problems," said panelist member Therese Vaughan, the CEO of the National Association of Insurance Commissioners (NAIC). In the case of banks, they carry asset risk; insurers carry liability risk. Neither can be regulated in the same way. "Insurance keeps risk as opposed to getting rid of it," said Sullivan. The industry, he also said, needs to do a much better job of communicating that role and that distinction. True, it was the financial products division of the massive parent company of an insurer, AIG (now Chartis), that created the credit default swaps that pulled so many big banks into the whirlpool. Yet many P/C insurers had nothing to do with creating the financial crisis and don't need spanking, either through a regulation-minded Office of National Insurance or some other mechanism, Motamed also said. "I don't have a whole lot of confidence that the government is going to pull it off," Motamed said of efforts to create an Office of National Insurance or to better regulate the financial sector. Sandra Parrillo, the CEO of regional insurer The Providence Mutual Fire Insurance Co., was equally skeptical. Parrillo worries that sweeping the antitrust exemption away from healthcare insurers, a component of the House healthcare reform bill, would eventually trickle down to ruin her regional business. "I am very concerned about regulation coming out of Washington, D.C., when they truly don't understand our business," Parrillo said. January 14, 2010 Copyright 2010© LRP Publications |
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