Eyes Consultant Regulation

 

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Copyright 2009 Crain CommunicationsAll rights reserved Business Insurance

30 March 2009

447 words


Consultant eyes Regulation

Jeff Casale



Congress to debate with the idea of creating a systemic risk regulator, a report by McKinsey & Co. said in May that not be the best option for the U.S. economy or the property or industrial accidents.

In its report, the New York board said that if a systemic risk regulator to improve the security and stability by providing additional oversight of state regulators, it could lead to confusion, lack of accountability and `` costly duplication, inefficiency''for customers who pay.

The report, `` the improvement of property and casualty insurance settlement in the United States,''said the U.S. property / insurance industry is still relatively high compared to other financial institutions affiliated companies. But the report also indicates regulators struggle to follow participants in the industry and its innovative state-based regulatory model is increasingly `` structurally disadvantaged compared to the national regulations to ensure the solvency of major insurers.''

The report proposes five ways to better regulate the property / casualty industry to make it more flexible and competitive, while providing a strong consumer protection. This can be achieved, based in New York, McKinsey said, by a national regulator and streamline regulatory processes.

`` Our analysis and research indicates that this path (of a greater complexity of the rules) has some advantages to government involvement in the national regulation of property / casualty industry, but it suffers from inefficiency and the cumbersome and lengthy time required to implement any changes among the 50 state regulatory agencies,''the report said.


In addition to establishing a systemic risk regulator, McKinsey proposes a regulator of global stability, which would be a national regulatory body for issues of solvency, pricing and products, while state regulation should be limited to maintain a customers fairly.

Another option suggested by McKinsey is a national regulator for large insurers and complex, while the state regulators would be `` responsible for insurers that are small and have business models relatively simple.''McKinsey argues this option, say 96% of property / casualty insurers writing business in multiple states. In addition, 40% of the largest property / casualty insurers are now offering banking products and offer 35% of mutual funds first-McKinsey found that the greater regulation is needed.

`` States are not well suited to oversee insurers' national and international operations, a responsibility best suited to a national regulator,''said the report.

The full report can be obtained by sending an e-mail to insurance@mckinsey.com

2 April 2009

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