Financial Services Reform Could Be “Launching Pad” For Federal Insurance Deregulation, Group Warns

Published on

A consumer advocacy group says it fears Treasury Secretary Timothy Geithner’s financial services reform could become “a launching pad” for the federal deregulation of insurance.

The nonpartisan, nonprofit group Consumer Watchdog sent a letter to Geithner lobbying for the creation of an Office of Insurance Information, a proposal made by Henry Paulson, President Bush’s treasury secretary, in April 2008. The office would provide information to Congress on insurance operations in the U.S. and abroad.

"While the need for a financial regulatory overhaul is clear, it should be not used as a stalking horse for insurance deregulation," Consumer Watchdog wrote.

The organization said statements by U.S. Rep. Melissa Bean (D-Ill.) and Rep. Ed. Royce (R-CA), contained in a Jan. 23 letter to Geithner, are not “seeking greater federal regulation. To the contrary, their purpose is to allow insurers to escape meaningful oversight altogether. Proponents have made no secret of the fact that they consider an insurance office at Treasury to be a vehicle for limiting the role of the states in the insurance marketplace," the group wrote.

Bean and Royce’s letter, signed by several other members of Congress as well, indicates that an Office of Insurance Information would “fill a void on insurance oversight and expertise at the federal level.”

Consumers will pay the price the price if state insurance regulation is preempted, according to Consumer Watchdog.

The group also opposes an optional federal charter, which would allow insurers to choose federal or the current state regulation of their products.

"Insurance regulation should not be made a matter of choice for companies,” the letter from Consumer Watchdog said. “Allowing insurers to select which standards apply to them will result in the negation of hard-won consumer rights laws and destroy the state-based oversight that set insurance products and companies apart from much of the financial sector during this period of extraordinary upheaval."

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases