Will Allstate CEO’s Drive For Federal Car Insurance Regulation Succeed?

By Mike Anderson Posted in Car Insurance News

CEO Of Allstate Corp. Tom Wilson Speaks Before US Chamber Of Commerce

The drive for US insurance companies to be federally regulated has recently taken a leap forward. For years many of the country’s largest insurance companies have been wishing for the move from state regulation to federal. One of the biggest public advocates of this reform is Tom Wilson, the chief executive officer of the Allstate Corporation. He made his stand clear in March of 2009 when he announced before the Chamber of Commerce that “I think our industry should be subject to federal regulation.”

State Regulations Prove Costly To Insurance Companies And Consumers

Proponents of federal regulation argue that individual state regulation is inconsistent and very costly. Nationwide insurance companies have to ensure that their policies and business practices comply with each state’s individual laws. The current system puts a heavy burden on insurance companies without any positives for end consumers, advocates argue.

Opponents Of Reform Argue That Changes Will Just Cause More Problems

The National Association of Insurance Regulators has been one of the biggest opponents of this reform. Agents at the association are concerned that federal regulation would bring about a whole new set of laws and regulations to follow on top of current state ones. They are also worried that insurance companies will be required to have both state and federal licenses in order to legally operate. State regulators and consumer advocates also oppose federal regulation, worrying that departure from state regulation could lead to deregulation.

One option is a proposal that would allow insurance companies to choose whether they want to follow state or federal regulations. Although state regulation would not be completely dissolved, it is believed that state regulations would take a back seat to federal if this plan were to go into effect. Another plan being considered by the US House of Reps. is one in which the federal government draws up the regulations and sets nationwide standards that are to be enforced by state governments.

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