Modernizing U.S. Insurance Regulation: What Can Be Learned From The European Union?

At present, the state-based insurance regulatory system in the United States is encountering considerable pressure for change not only from certain industry groups concerned principally with the system's lack of uniformity and its imposition of government price and product controls, but also fr...

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Bibliographic Details
Published in:Journal of insurance regulation 2004-07, Vol.22 (4), p.3
Main Authors: Cooper, Robert W, Dorfman, Mark S
Format: Article
Language:English
Subjects:
Associations
Charters
Consumers
Efficiency
Financial services
Financial Services Modernization Act 1999-US
Insurance industry
Legislators
Modernization
Product development
Regulation
Regulatory reform
State regulation
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Summary:At present, the state-based insurance regulatory system in the United States is encountering considerable pressure for change not only from certain industry groups concerned principally with the system's lack of uniformity and its imposition of government price and product controls, but also from state regulators themselves who are committed to the need for modernizing the current system. In recent years, two key approaches have been considered to cope with the situation. The NAIC has indicated that state insurance regulators are committed to updating the existing state-based system to respond to various changes occurring in the insurance marketplace, while continuing to recognize their principal responsibility to protect the needs of insurance consumers. As an alternative, some industry groups have recommended the establishment of an optional dual federal-state regulatory system that would give insurers and producers a choice of continuing to be regulated by the state-based system or obtaining a federal charter. After analyzing these two alternatives, this article proposes a new approach for modernizing the U.S. insurance regulatory system that draws heavily from the key concepts underlying the regulation of insurance in the European Union and overcomes nearly all criticisms of the two approaches currently under consideration. [PUBLICATION ABSTRACT]
ISSN:0736-248X