Pickens Reflects On The Call By Some For Federal Regulation

It just may be now is the time for American regulators to move from a relatively static financial solvency analysis to a more modern, dynamic risk-based approach, one which will both protect consumers and allow flexibility for insurers. The current federal charter proposals do nothing to help in this regard. Instead, the current proposals would create a huge, new costly regulatory bureaucracy in Washington, D.C., which inevitably will mean the lowering of consumer protections, accountability and responsiveness; the loss of premium tax revenue for state governments and money for our guaranty funds; and dual or multiple layers of more costly regulation for producers and insurers.

The current Corporate-Owned Life Insurance debate in D.C., and the proposed increased taxes on life insurance products during the Clinton administration, etc., are prime evidence some in Congress see the insurance industry as a "cash cow"–a way to increase taxes indirectly for all of us who are insurance consumers–to pay for a vast array of new government spending.

What I have learned about the state vs. federal regulation debate this year has made me more committed than ever to state regulation, to improving consumer protection and creating truly efficient regulation, through regulatory modernization.

I respectfully request the proponents of federal regulation to support our efforts, and continue to help us identify needless costs and burdens that may exist in the current system.

The consumer expectations, culture and history of the insurance business are much different than banking or securities. This is true all over the world. Regulators need to hear what the real concerns are and exactly what we should consider to address them. We can work from there.

The prospect of success for consumers, state governments and the industry lies in improving our proven state-based system, not in the creation of a pie-in-the-sky federal regulator.

Mike Pickens Arkansas Insurance Commissioner 2003 NAIC President

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 31, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.