ShawneeDispatch.com

To the editor:

The financial crisis gripping our nation has many Americans on edge, and it may take some time before relative stability is restored.

Unbelievable as it may seem, the country's largest insurance companies are using the AIG liquidity crisis and subsequent federal bailout as a reason to deregulate insurance and move its regulation from the states to the federal level. It was federal regulation of the financial services side of AIG that failed. The AIG insurance subsidiaries were solvent, profitable and paying claims, thanks to careful state regulation of insurer solvency. And it was state regulators and laws that prevented AIG's management from raiding their solvent subsidiaries to prop up the risky investments.

It would be a monumental mistake to transfer regulatory authority of the insurance business to the federal government. For one, look at the track record of federal agencies when it comes to oversight of financial services. The commercial banks, investment firms and international holding companies (like AIG) at the center of the nation's financial crisis are all regulated by the federal government. The savings and loan mess of the 1980s, which cost billions to clean up, also occurred on the watch of a similar federal bureaucracy.

In contrast, most elements of the insurance industry are regulated today at the local level by state officials, and they do an excellent job. At a time when crisis and turmoil are the norm in the banking and securities sectors, state regulators continue to quietly ensure that insurance companies are solvent, claims are paid and consumers are protected. State officials have experience, outnumber their banking and securities counterparts, handle countless inquiries and questions from consumers, and understand the concerns and particular issues facing the citizens of their area. State oversight of insurance may not be perfect, but its record is far superior to that of regulators at the federal level.

The only people calling for federal oversight of the insurance industry are the big insurance players who desire the same level of weak oversight, accountability, and consumer protection that has produced this current crisis. To them, I say "get real."

Larry Magill

Executive vice president

Kansas Association of Insurance Agents

Comments