The influence of the Game: Insurers Eye New Rules

 

Thursday, Apr 23,2009, 3:28:38 PM   Click:

WASHINGTON_Not many financial companies have seen an opportunity in the economic collapse. But because large insurers, and now they use to lobby for a change lucrative they searched in vain for years.

Industry estimates suggest a rather obscure change in federal law could be worth billions of dollars each year for insurers. Obama and key lawmakers the administration to say they are open to him and see lobbyists from the music industry to review the financial rules in the wake of the merger as the best chance for a long time to do so.

The change will give insurance companies the opportunity to escape state regulation by creating a new federal agency and let them choose to obey the rules _ a proposal that consumer advocates view with horror.

If companies get their way, the financial repression that President Barack Obama and Congress have promised as a way to prevent another crisis from Wall Street comes with a relaxation on the insurance companies. Known as an "optional federal charter", the system would release large insurers, who may now be over 51 different sets of rules and supervisors in the states where they operate, from a regulatory web they say stifles business and leaves the federal government to blind industrywide problems.


It would function as the system currently used to regulate banks, insurance companies can decide to be approved and supervised by the federal government or by states.

The major insurers, including Allstate, State Farm and Zurich, and the general financial associations argue that the change would create a federal overseer gargantuan need for a sector which currently has no national authority on finding his shoulder .

Debate on the sweeping new financial laws "created an opportunity," said Leigh Ann Pusey, top lobbyist for the American Insurance Association, which represents major property and casualty insurers. "You can not really of those concepts and ideas that are there without trying to have a federal regulator for the insurance industry."

Consumer advocates believe that such a system can do the rounds of the insurance companies for the weak and the rules lead to the same type of abuse and the reckless risk-taking, which other companies financial services to their knees.

Doug Heller of California, consumption monitoring said it would be "impossible" for the federal government to regulate the industry, adding: "The idea that they contemplate major financial companies provide a choice of who governs, after we saw how the banks worked for is legislative madness. "

Far from strengthening surveillance, consumer advocates call a push for deregulation that would harm consumers, and go against Obama's promise not to let financial companies "cherry pick" regulators in an attempt to escape stringent rules.

"This is a question of who can impress the insurance companies with more regulations, which means," Who will we do what we want, without regard to protecting consumers? "Heller says." You will have federal and state regulation in a regulatory race to the bottom. "

The public scrutiny of failed insurance giant American International Group Inc. helped create the momentum to the idea of a national industry. This is despite the fact that the company were mostly caused by the troubles of AIG exotic investments rather than insurance practices.

"This environment provides the best chance yet to address this issue," said Brian Conklin, USAA lobbyist High, which provides military personnel. He said that the state-by-state patchwork creates "another hurdle" for USAA customers, many of whom are forced to move each year, and often can not take their insurance with them.

Together with their trade groups, corporations have dumped tens of millions of dollars in lobbying for change in recent months.

They also gave freely to politicians in positions to help them get there. Obama is one of the main beneficiaries of the campaign for the insurance money, taking $ 2.2 million during the period before the last election, according to campaign finance monitoring Center for Responsive Politics. Other major recipients of Rép. Paul Kanjorski, D-Pa., Who chairs the House subcommittee that deals with insurance, and the Representative Melissa Bean, D-Ill., Who pushed legislation to accomplish the switch.

The idea is not without controversy in the insurance industry, where small players who have long been rivals of their big brothers, fear their business would be hurt and their very existence threatened by a new set of federal rules.


"We could create much of a difference," said Jimi Grande of the National Association of Mutual Insurance Companies.

The National Association of Insurance Commissioners, which now holds a monopoly on insurance regulation, has lobbied intensely against the change.

"What we now have the duplication, overlap, multiple eyes on a problem of checks and balances and when a regulator makes a mistake, there is another waiting in the wings to correct," said Therese M . Vaughan, the chairman of the NAIC. "If you want to add another layer of eyes is good with us. Just do not take our eyes off. "

Insiders acknowledge that change can be a tough political sell at a time when the public is skeptical of financial companies, and legislators may be reluctant to any choice of regulators. Some pressure groups working on the issue say the measure could be delayed or limited to certain products such as life insurance, which operates more as a financial product.

Yet the idea has attracted some high-profile interest. Timothy Geithner Treasury Secretary and Federal Reserve Chairman Ben Bernanke have both said they are open to it.

Bean is a confidant of Dem. Barney Frank, D-Mass., Chairman of the House Financial Services Committee who has a leading role in the development of the financial review.

At a hearing last month, Frank said that the issue is "very much on the agenda" of his group.