Insurance Reform Takes Next StepPosted 7/15/2005
By Robert L. Redding, Jr.
After reviewing the option of federal insurance regulation in the last two Congresses, the U.S. House of Representatives' Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing on the draft of the State Modernization and Regulatory Transparency Act (SMART). The draft legislation can be reviewed on the Automotive Service Association's legislative Web site, www.TakingTheHill.com.
A subcommittee of the House Financial Services Committee has been aggressive in its efforts to review the nation's current insurance regulatory processes. The U.S. Senate has also held hearings relative to insurance reform.
The SMART draft is the first committee document on insurance reform available for comment in this Congress. The June hearing's focus was on "the need for comprehensive reform in the state-regulated insurance marketplace and the evolution of the road map and legislative draft of the SMART Act."
In summary, the draft establishes a system for coordinated licensing, uniform market-conduct oversight, speed to market initiatives and a mechanism to coordinate state and national insurance policy. The draft is a product of 17 hearings by the House Financial Services Committee.
House Financial Services Committee Chairman Michael G. "Mike" Oxley, R-Ohio, commented, "The collective action barrier to getting legislatures and regulators to act in complete unison is, and will always be, insurmountable - absent Congressional legislation."
The bill was not received with as much support from democratic subcommittee ranking member Congressman Paul E. Kanjorski, D-Pa. Kanjorski commented, "This evolving proposal has, at best, received lukewarm support from the many parties to which I have spoken about the draft reform plan."
ASA has been a proponent for many years of national insurance regulation. Having worked in multi-industry coalitions and with consumer organizations for repeal or reform of the McCarran-Ferguson Act, this is the first serious look Congress has attempted at insurance reform since the early 1990s.
The SMART draft is in its earliest stages of debate. Committee leaders do hope to move legislation in this Congress. Testifying at this particular hearing were present and former insurance regulators. Listed below are specific testimonies that can be found on the ASA legislative Web site, www.TakingTheHill.com:
Although the National Association of Insurance Commissioners (NAIC) did not come out in opposition to the draft, the NAIC did raise serious concerns during the hearing. Pennsylvania Commissioner Diane Koken said:
"As the SMART Act has not yet been formally introduced as a bill, it is premature for the NAIC to take a position to support or oppose it. However, we have expressed the NAIC's fundamental concerns regarding the structure and impact of the SMART Act during meetings and correspondence with members and staff of the Financial Services Committee. For these reasons, the NAIC has long expressed concerns about how an optional federal charter for insurance companies would erode state authority and undermine consumer protections."
State insurance commissioners argue that insurance regulation has worked well for 125 years. They advocate that any congressionally proposed reforms should be implemented through the state legislative system.
ASA has expressed concerns to congressional leaders about areas the reforms do not address in the early SMART draft. It is important that the collision repair industry reviews the SMART proposal and makes it a top priority for industry debate. The SMART draft is the first opportunity in more than a decade that the small business community has seen to obtain substantive insurance reform. Although the legislation clearly does not address many of the issues relative to the collision industry, it does open the door for a process of issue review that has not been available to the industry under the present regulatory structure.
In the coming months, ASA will promote a national industry discussion of the SMART legislation. ASA encourages collision repair leaders to review the draft and testimony as it evolves in the legislative process. This review and comments to ASA can be made through www.TakingTheHill.com.
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