Insurance And The Feds

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RE: ”Regulate Me, Please,” by Tom Wilson, the chairman of Allstate (Op-Ed, April 16).

To the Editor:

Tom Wilson, the chief executive of Allstate, argues for the elimination of state oversight of the insurance industry in favor of a federal regulator. But state regulators have done a lot better than the feds, with policyholder money protected and claims being paid despite the economic crisis.

In fact, federal banking regulators at the Office of Thrift Supervision were supposed to oversee American International Group’s credit default swaps and have acknowledged their failure to Congress.

What the insurance industry really wants is to escape tough state rules, like those that prohibit excessive profit, overhead and executive salaries in California, or mandate an affordable lifeline auto insurance program for low-income drivers. Our consumer group intervened before the California insurance commissioner to force Allstate to lower its homeowner’s and auto insurance rates by $500 million last year because of strong state laws that Mr. Wilson hopes to evade.

Federal insurance regulation is the sheep in wolf’s clothing — a surface promise of tough oversight to hide the coming deregulation.

Carmen Balber
Washington Director
Consumer Watchdog
Washington, April 16, 2009

Consumer Watchdog
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