Report: The National Insurance Consumer Protection Act’s Potential Impact on the Social Resiliency of Hazard-Prone Regions - National Regulatory Modernization for Insurers FAQs - National Regulatory Modernization for Insurers (formerly Optional Federal Charter) Frequently Asked Questions

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Tuesday, March 09, 2010

Report: The National Insurance Consumer Protection Act’s Potential Impact on the Social Resiliency of Hazard-Prone Regions

by: Ben Klutsey

published: Jun 23, 2009

This paper discusses the benefits and problems with both the state-based and federal-based regulatory systems and suggests that, if policy makers choose to proceed with an Optional Federal Charter system, they should focus attention on: minimizing political risk, allowing competitive rating, minimizing immediate impact, and maintaining the antitrust exemption.

Original Article

Economic Commentary at mercatus.org

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National Regulatory Modernization for Insurers FAQ's

How an OFC Would Work
	Would the proposals create a big new bureaucracy?
	Would these national regulatory proposals increase compliance costs?
	Would the creation of a national regulator help incumbent companies make larger profits?
	Is an Office of Insurance Information a good idea as a precursor to a national insurance market?

State Issues
	What would the proposed national regulators affect state regulation? What about federalism?
	Will states lose tax revenue under an Optional Federal Charter?
	Would insurance companies withdraw from certain parts of the country under an OFC?
	Would there be a ''race to the bottom''?
	Would an OFC subject insurance companies to both federal and state laws, thus increasing the overall burden of regulation?

The Current System
	What is really wrong with the current state system?
	Will an OFC help the development of new insurance products?
	Is the insurance industry unified in its support of OFC?

Consequences of an OFC
	Would local insurance agents go out of business under an OFC?
	Supporters and opponents of an OFC both cite Illinois as an example of what the market would look like under an OFC. What is the Illinois market like?

International Issues
	What would an OFC do for America’s international competitiveness?
	Do other developed countries have something like an OFC?

Consumer Protection and Fair Practices
	Would an OFC protect consumers from insurance fraud?
	Will it confuse consumers?
	Do government-set rates protect consumers?
	J. Robert Hunter of the Consumer Federation of America has presented a range of data showing that publicly held insurance companies are relatively safe investments and have become safer in recent years. Does this prove that the insurance industry is reaping more profits than it deserves and should not be rewarded with an Optional Federal Charter?
	Does a ''revolving door'' between the industry and regulators prove that the insurance industry and the state regulatory systems are corrupt or that the insurance industry ''owns'' state regulators?

Free Market Alternatives to an OFC
	Is an OFC the only way America could liberalize its insurance markets?
	What are some alternatives to an OFC?