As if the industry didn’t already have enough on its plate with SEC 151A looming, word leaked recently that a bill is making its way through the House that would give the biggest insurance companies an option to choose who would regulate them -- state governments or the Fed.
I posted a blog earlier this week concerning that bill and received some interesting comments from our readers.
Following are some highlights from that feedback.
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I have a concern about the Federal Government taking over anything that directly affects consumers. On the other hand having every state enact their own laws adds to the cost for carriers and makes it difficult as a producer.
One hundred and fifty years ago, when insurance companies started and states began to regulate them, families were all born, raised and died in the same area. People did not move away and most companies were local without offices and divisions in different counties, much less in different states.
Now families are mobile, often move, change jobs and homes. So the insurance policy they bought in one state, under one state law now provides protection in another state with different state laws. And while there are provisions to ensure the policy meets the new state law, therein lays the concern.
It is costly to manage these policies and the moves policyholders make during the life of their policy. So in principle having one government body regulate the industry seems to have some merit along with severe hurdles. Perhaps the question is what would the hurdles and concerns be that would have to be addressed to make it work for the Federal government to regulate the insurance industry and what would happen to the state agencies?
Maybe that's the discussion that needs to take place?
--Lloyd Lofton
I agree, in part, with Lofton. It does get tricky if you do business in multiple states. However, I would rather deal with that problem than have the Federal Government foul it up worse. I am not sure why Americans want more government control when most government programs do not work properly already. The SEC and IRS have already proven they cannot handle their regulatory obligations now, let alone if we add more to their plates. We are slowly sliding into a Socialist state. Americans have got to wake up and then stand up and fight for the principles and morals our founding fathers built this country on.
--Scott Neher
In my opinion, 151A is being driven by the SEC at the behest of the B/Ds, who are missing taking a haircut on additional insurance products. It is also a "perfect storm" scenario that fits in with the nationalization of private companies by the government. Just look how good a job the SEC did with Bernie Madoff, as well as several other reps. The states do an excellent job with regulation. The bill should definitely go the way of the dodo.
--Davis Garrison
We would like to hear your thoughts on the regulatory direction the industry is heading and what it means to you as an advisor.