U.S. PIRG Consumer Blog: Consumer groups to state insurance commissioners-- don't sell out consumers!

Bob Hunter of the Consumer Federation of America and Birny Birnbaum of the Center for Economic Justice -- the nation's leading insurance consumer advocates -- have sent a sharply worded letter to members of the National Association of Insurance Commissioners (NAIC) urging them to reject a proposal they will consider later this week to deregulate auto and homeowners insurance and slash protections for consumers. Hunter, an actuary, is a former Texas and federal insurance commissioner; Birnbaum, an economist, was his associate commissioner in Texas. From the letter from Hunter and Birnbaum:

The NAIC jumped on the deregulation bandwagon in 2000 with its plan for modernizing insurance regulation that featured Speed to Market -- ways for insurers to get their products to markets sooner in part from less regulatory oversight. There was never any consumer demand for insurers bringing products to markets sooner or for insurers bringing ever more complicated and confusing products to market. It is time for the NAIC to acknowledge that Speed to Market should follow -- not replace -- careful regulatory oversight.

The insurance commissioners have always played a kind of passive-aggressive game with Congress and the industry. Some are impressive consumer protectors; others not so much; some do just enough to prevent a federal takeover of insurance regulation; others seem to want a federal takeover, so long as their jobs are preserved, they don't care if their actual authority is eliminated. Voting yes on this proposal would be an example of commissioners aggressive embracing insurance industry demands, and doing the absolute wrong thing for ratepayers. We need more state insurance commissioners to step up and become consumer champions, not more becoming industry followers. Here's more from the release accompanying the letter (sorry this material is not on their websites yet):

“It is astonishing that the states would consider a proposal to deregulate auto and home insurance at a time when even Alan Greenspan has recognized the failure of weak government oversight of the financial services industry” said J. Robert Hunter, Director of Insurance for CFA and former Texas Insurance Commissioner and Federal Insurance Administrator.
“Americans, struggling to make ends meet, need increased, not reduced insurance price protection by the states, especially if they are required by law or by lenders to purchase auto or home insurance,” he said. “State insurance commissioners defend state-based insurance regulation by claiming they are tuned in to local markets and consumer issues. But, the paper and recommendations represent a startling lack of understanding by regulators of the problems insurance consumers face today when buying auto or homeowners insurance,” said Birny Birnbaum, executive director of CEJ.