Minnesota Public Radio – Marketplace
Announcer: From the Frank Stanton Studios in Los Angeles, this is MARKETPLACE.
DAVID BROWN, anchor: Betting high on oil prices, the long arm of the Sarbanes-Oxley law and translating corporate gobbledygook.
JAMIE COURT (Commentator): When any big industry says it’s time to reregulate, that means one thing: Let’s deregulate.
BROWN: All right then. I’m David Brown and this is MARKETPLACE.Ã‚Â Ã‚Â Ã‚Â
DAVID BROWN, anchor: You know those state insurance regulators? They’ve been around for about 150 years watching over the conduct of insurance companies from required standards to maximum fees. What do you say we scrap them? Instead, let’s chart up a system of federal regulation. Well, that’s an idea Ohio Republican Congressman Mike Oxley is floating, and it was the subject of a House committee hearing today. This week, a study came out reinforcing the idea of putting regulation under a federal roof, and that study just so happens to have been sponsored by the American Council of Life Insurers. That alone should send the red flags flying, argues commentator and consumer advocate Jamie Court.
JAMIE COURT: When any big industry says it’s time to reregulate, that means one thing: Let’s deregulate. That’s the game the insurance industry is playing. Congressman Mike Oxley says modern insurance markets are national, so insurers shouldn’t have to deal with the demands of all those 50-state insurance commissioners. Boo-hoo for big insurance. What’s really going on is this: Insurers know even a willing regulator cannot watch hundreds of billions of dollars in premiums charged in 50 states from Washington, DC. And that’s what the insurance industry wants, no one watching. That’s because many states are doing a pretty good job of making insurers ask for permission before raising their premiums. States are also forcing insurers to pay out legitimate claims and to stop selling sham policies.
Oxley wants to end what he calls the ‘travesty’ of price control. That’s not surprising from a congressman who’s taken almost 400 grand in campaign cash from insurers since 1993. Obviously, big insurance’s unrestrained free enterprise works for him. For the rest of us, insurance markets are just too complex to know when we’re being cheated, yet we have to buy insurance to own a home or drive a car. That’s why we need state regulators to keep watching for us. And we shouldn’t have to write the White House when we’re sold a lemon of a policy or given the runaround on a claim.
Congress should look to California. It passed the toughest insurance regulation in the nation 15 years ago. Auto premiums have declined ever since, and profits are still very healthy. That’s because the steady hand of regulation prevents insurers from overcharging on premiums and then overinvesting in the stock market and racking up big losses from the wrong investment. If insurers really believe they can convince us that allowing them to charge us as much as they want will lower our premiums, they must think we were born yesterday. Or maybe tomorrow, April Fools Day. In Los Angeles, this is Jamie Court for MARKETPLACE.
BROWN: Consumer watchdog Jamie Court is author of “Corporateering.”
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