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
The Insurance industry is very heavily state regulated. According to the Government Accountability Office (GAO) study, the state run regulatory system is Federal verses State Regulation protecting the markets, insurance industry and policy holders and was evidenced during the financial crisis of 2008-09. The insurance business is highly profitable. “Well-run companies can make a lot of money, which breeds competition” from both “inside and outside competitors” (Property, 2013). Insurance companies
on insurance coverage in the United
States. According to Webster’s Dictionary, “insurance is a practice or arrangement by which a
company or government agency provides a guarantee of compensation for specified loss,
damage, illness, or death in return for payment of a premium.” The statutory power to regulate
the business of insurance comes from a 1945 ruling by the U.S. Supreme Court that prompts
Congress to enact the McCarron-Ferguson Law giving individual states the power to regulate the
Background
The federal government’s role is in regulating industries is to protect consumers and the market. There is an ongoing debate on whether the federal government should regulate the insurance industry as a result of the bailouts stemming from the Financial Crisis of 2008. Currently, state governments regulate the insurance industry. Proponents of federal regulation reason that states are inefficient in the duty of insurance regulation. Additionally, the federal government has economies of
has an effect on the whole entire world. This marketplace also needs regulations to protect consumers who end up suffering as a result of poor decision-making by financial institutions. The financial marketplace over time has become more and more regulated but still, there is more that needs to be done, both domestically and internationally. How many crises is it going to take for an increase in regulations? There has been the crisis in Thailand, on July 2, 1997, the series of Latin American
22, 2010
United States v. Lopez
United States v. Lopez was a landmark case, being the first United States Supreme Court case, since the New Deal, to set limits on Congress’s power under the Commerce Clause of the United State Constitution. United States v. Lopez dealt with a previous decision made by the Supreme Court called the “Gun-Free Schools Zone Act of 1990,” and whether this act was constitutional. In other words, is Congress given the power by the Constitution to regulate guns in schools
has burst in both sides of the Atlantic in 2007, the regulatory system has failed not only to effectively manage the risk, but also to require sufficient transparency and emphasized the vital importance of a well-regulated financial system. As a response of the crisis, the United States launched the most powerful financial regulatory reform plan in the U.S. history since the 1930s: The Dodd-Frank Wall Street Reform and Consumer Protection Act (‘the Dodd-Frank Act’ or ‘the Act’). The new regulatory
At the same time, the regulators should be as transparent as possible and fully accountable. The accountability and transparency of the regulator will increase the credibility of the regulator and in-turn benefit the regulated entity. Types of Financial Regulation Financial regulation in a country can be done either by a single body called a single regulator or multiple bodies co-existing and working together or in a hierarchy of entities known as multiple regulators.
economies, and the United States netting almost 1/3 of world’s consumption. East Asia was the most affected part of Asia, specifically Singapore and Japan. Singapore GDP’s dropped from a 14% annual growth rate in 2008 to a 1.1% in 2009 and Japan annual growth rate declined an astonishing 15.2% during the first quarter of 2009. As in the USA, Asia economy have had a strong recovering road but has been positively affected by the USA uprising economy. (Adbi.org)
United States
The USA financial system
problematic institution for the United States over the last several decades. Particularly private companies have been the main cause of high premiums and the denial of coverage for the previously ill. In attempts to remedy these issues congress in conjunction with the President of the United States Barack Obama signed the Patient Protection and Affordable Care Act (PPACA). The PPACA is a federal state that focused on the reformation of the private health insurance market, provide better coverage for
opinion of Justice BINDEROFF: According to Article I, Section 8(3) of the United States Constitution, Congress is granted the power “to regulate commerce with foreign countries, as well as among the several states…;” this enumerated power is what the Commerce Clause describes. This Article has been used to justify many instances in which Congress has exercised its power to regulate commerce, especially among states. In this regard, there has been a myriad of instances in which such exercise of this