Today and Tomorrow Insurance Regulation

The United States currently has a fragmented regulatory system that governs the insurance industry. Each state is responsible for its management. Many industry professionals and representatives of regulatory agencies are convinced that the state-governed system in America is overly complex and plagued with bureaucracy.

There have been two different ideas to improve regulation that were put forward in the federal legislative. One proposal is a charting system that will model some aspects of national banking regulation. The second proposal is a complete overhaul, and up-to-date, of the state-based regulatory systemChurch Insurance Company.

The 1999 Gramm-Leach-Bliley Financial Services Modernization Act provides details on how each state regulates most insurance business. This act was created to consolidate licensing and reciprocity among insurance marketers. The end result is the protection for at least 12 statutes under the state-based system.

The SMART Act, a new piece legislation, was released by Mike Oxley, of the House Financial Services Committee, and Richard Baker, of the Subcommittee on Capital Markets, Insurance and Government sponsored Enterprises. The SMART Act a/k/a State Modernization and Regulatory Transparency was created to improve regulation for issues in the insurance sector such as broker credentials, property insurance, and life and health insurance.

This Act would enable states to develop new products more efficiently and offer additional opportunities for them to mediate any disputes and comply with a set standard. The Act’s most significant impact is likely to be on the life-insurance industry.

Overall, the insurance business seems to have accepted the SMART Act in its entirety and feels it could lead to better regulation. Independent insurance agency associations such as American Insurance Association and Property and Casualty Insurers Association of America supported the legislation.

The modern insurance regulation’s purpose is to help consumers realize the benefits of the changes. This includes greater transparency, lower premiums, better life and health insurance products and more transparent pricing.