INDIANAPOLIS (June 22, 2005)—Stating that the insurance industry successfully influences public policy “when we are assertive, thoughtful and focused in our arguments,” a senior official from the nation’s largest property/casualty trade association has strongly encouraged insurers to embrace a pro-active agenda to “fundamentally re-shape the regulatory environment.”
Roger H. Schmelzer, senior vice president of state and regulatory affairs with the National Association of Mutual Insurance Companies (NAMIC) told attendees at the annual meeting of the Michigan Insurance Federation on Monday that insurers must “learn from past advocacy successes and put those lessons into practice in the face of an aggressive regulatory climate.” He called specifically for a spirited defense of underwriting prerogatives and a demand for greater regulator accountability.
“Regulation that curtails an insurer’s ability to set prices–either through prior approval of insurance rates or restrictions on a company’s ability to underwrite risk–stifles competition and deprives consumers of the benefits that naturally flow from competition,” Schmelzer said. “Competitive risk-based pricing is fair. It produces prudent company conduct and widespread availability of coverage and risk-sharing among insurers. These are powerful social benefits for which any regulator should want to take credit.”
Industry should also insist on a “value-added” state regulatory regime that routinely measures the regulatory burdens being imposed and is committed to reducing burdens that are no longer necessary, according to Schmelzer. He cited ongoing efforts to convince regulators that elements of Sarbanes-Oxley are not applicable to non-public insurance companies as an excellent example of a proposal made without regard to cost or the practical burden to a company and its insureds.
“State regulators can do a better job for consumers if they take into account the cost and likely results of what they are proposing. They are accountable for the effectiveness of what they enact. They should also bear the burden of explaining why they need the regulations they propose, how they relate to the laws they already have and how companies and consumers will be impacted by their proposals,” Schmelzer said.
Schmelzer also called for more states to follow the lead of Kansas which enacted a self-evaluative privilege law this year. The new law encourages companies to proactively identify and eliminate improper practices under regulatory oversight. “This legal privilege helps everyone. It is a mutually useful compliance tool that protects consumers by fixing problems early and eliminates the risk to companies of expensive litigation.”