State Regulated or Federal Regulate Insurance

769 WordsFeb 21, 20183 Pages
One of the most important economic issues in the insurance industry is the push for increased federal regulation of insurance. According to the Washington Surveying & Rating Bureau, Congress in 1945 stated that the regulation of the business of insurance would be best left to individual states. Since the release of this statement, a common argument that state regulation is inefficient, costly, and burdensome has been made. It is also argued that the 50 or so individual laws and jurisdictions embody many rules and standards that are very difficult and timely as regulatory systems. These systems have been described as very costly, and that they also deny customers the creativity of the free market to quickly develop and market innovative insurance products. The common way to respond to these issues in such a robust industry is typically by federal regulation. It is believed that having just one regulator for the entire country will lead to more new products being introduced in the market place and thus, increased competition which will be better financially for all consumers, carriers, and agents. This logic is likely supported by the idea that it is easier to introduce a product if it is going to only be approved by one insurance department rather than several dozens more. However, many other factors come to play. It is important to realize that the purpose of insurance regulation is to provide consumer protection. In RMI 3500, I have learned that there are insurance

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