Insurance professionals heard on Tuesday an impassioned plea from the governor to keep regulation at the state level. Hundreds from the industry gathered at the Connecticut Convention Center in Hartford for an annual market forecast.
Congress has several times entertained the idea that insurers should answer to a national regulator, and not state commissioners. It's not a view that Governor Dannel Malloy has any sympathy with. "The federal government needs to stop viewing the state based system as an obstacle to be overcome," he said.
Malloy has made a project of courting the industry, offering incentives to big insurers like Cigna, and going after niche markets like captive insurers. He told the conference that local regulation is a virtue, not a vice. "We must remind our friends in Washington," he said, "that the United States insurance industry is competitive, profitable, fair and a pillar of stability in a financial sector because of the state regulation that has applied to it over the years."
It's not a universally held view. A report into insurance regulation mandated by the Dodd-Frank financial services reforms is currently looking into how local, federal and international systems can work together to cover gaps uncovered by the 2008 financial crisis. Former Senator Ben Nelson, who's now leading the National Association of Insurance Commissioners, has plenty of experience of how things work in Washington. He said the recent debt ceiling standoff further illustrates for him why local control should be preserved.
Nelson told the conference, "In Washington, there's just a small appetite for federal involvement in regulation. But I'll tell you, among the American people, to expand the reach of Washington anywhere -- there is no appetite for that."
The conference heard statistics about the health of the industry in Connecticut, showing that the Hartford area still has the most insurance jobs as a percentage of total employment. But it's not experiencing the same growth as the rest of the nation.
