In its testimony for the House Committee on Financial Services’ hearing on consumer financial products regulation, PCI noted that property casualty insurance has a proven track record of protecting consumers through its state-based system, and that creating an inefficient system of dual regulation will result in confusion, as well as higher and unnecessary costs for consumers.
“New federal standards will not improve upon the present state-based system,” said David A. Sampson, PCI’s president and chief executive officer. “Through the strong system of consumer protections property casualty insurers provide peace of mind to consumers in their decision making process and use of insurance products. New federal protections administered by any new agency would create a duplicative, inefficient system that would add even more costs for consumers, with little or no benefit.”
PCI’s testimony highlighted the extensive, comprehensive protections already in place to protect insurance consumers, including:
·Requirements that must be met before insurers are permitted to sell products, such as being financially sound, having a qualified management team, and employing staff with suitable credentials;
·Product regulations, such as restrictions on the kinds of insurance that can be sold, readability standards, cancellation and non-renewal restrictions, consistency of products, and availability of buyers guides; and
·Post-sale safeguards for protecting consumers’ premium dollars, such as rules regarding grounds for cancellation and consumer notification, financial regulations to ensure the insurer’s ability to meet policyholder obligations, and restrictions on unfair claims practices.
“Unlike mortgages or related financial services products, there is no gap or regulatory arbitrage in consumer protections for property casualty insurance,” said Sampson. “Federal regulation of insurance in this area would inevitably conflict with state policy making and would likely result in more costs and red tape burdens that consumers would ultimately pay through higher premiums.”
In addition to today’s testimony, to increase awareness of how consumers are successfully protected by the current state guaranty fund system PCI has released a video featuring James P. Thomas, President and CEO of Society Insurance - A Mutual Company. The video, which can be found on YouTube at www.YouTube.com/propertycasualty, also highlights the benefits for consumers of a healthy marketplace.