The National Association of Mutual Insurance Companies (NAMIC) recently announced its national agenda of federal legislative issues for 2003.
Topping the list of federal issues are insurance regulation, class action reform, small company tax inflation adjustment and insurance regulator access to criminal records.
“These issues will be the main focus of NAMIC’s Washington office,” Monte Ward, NAMIC vice president-federal affairs, said. “We are confident they will have great momentum in the 108th Congress.”
Ward said that the business of insurance has been regulated by the states since insurance companies first began operating in this country. Legislation to create a federal or dual charter would not reduce insurance regulation, but would add regulatory layers and complexity to the current system.
“While better coordination between state regulators must be achieved, it is by no means certain a new federal regulator would be the ‘single’ regulator for even the largest property/casualty
insurance companies,” Ward continued. “Dual regulation would produce an unfair environment for thousands of smaller companies and would create regulatory competition that often produces poor policy in financial institution regulation. In effect, dual regulation would result in more – and more complex – regulation with fewer advantages.”
“NAMIC believes that the creation of a federal insurance regulator could have unintended consequences that could adversely impact companies and policyholders,” Ward remarked.
Late last week, NAMIC was pleased that class action reform legislation, S. 274, “The Class Action Fairness Act of 2003,” was introduced in the Senate. This legislation allows for the removal of certain interstate class action lawsuits to federal court from state courts if requested by either plaintiffs or defendants.
“S. 274 would serve to restore balance to the class action system, reduce litigation expenses, curb frivolous class action suits, and provide additional protection to consumers,” Ward said.
“Due to the dramatic increase in the filing of class action lawsuits in the United States in the last decade – many of which are frivolous – our member companies, as well as other businesses in other industries, have been forced to use more of their valuable resources on litigation rather than on conducting their business. We are very hopeful that this legislation will be signed into law during this Congress,” Ward noted.
Ward added that NAMIC supports legislation that would adjust for inflation the tax-exempt and income election levels for small property and casualty insurance companies. These have not been adjusted for inflation since 1986. This legislation would increase the tax-exempt level for insurance companies from $350,000 to $575,000 and the income election level from $1.2 million to $1.971 million while also indexing the levels to a cost-of-living adjustment.
“This legislation will go a long way in helping many of the small property and casualty insurance companies throughout the country to remain solvent and pay claims. More than 650 of NAMIC’s 1,300 member companies would be impacted by this legislation,” said Ward said.
Lastly, Ward stated that NAMIC supports legislation giving insurance regulators access to the FBI criminal database.
“The ability of insurance regulators to access FBI criminal records will be an important tool in the fight against insurance fraud. With the enactment of the Insurance Fraud Prevention Act and the uniform producer licensing initiative, it is more important than ever for insurers to possess a mechanism for checking the backgrounds of potential and current employees. In fact, insurance departments are the only government regulators who do not have the proper tools, technologies or access to FBI criminal background histories for potential or current employees,” Ward added.
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