Insurance Reform Bill Could Have Big Impact On Consumers

Contact: Christine Hall, 202.331.2258

Washington, D.C., April 10, 2007— America has a deeply troubled auto and homeowners’ insurance system, but a forthcoming bill in Congress may spur needed debate on reform.

“The current system of state-by-state, patchwork regulation increases average insurance rates and reduces economic efficacy,” explained Eli Lehrer, a senior fellow at the Competitive Enterprise Institute. “Eventually, insurance will work best if the United States sweeps away nearly all rate regulation and lets the market set the insurance rates for people’s homes and cars.

Two U.S. senators, New Hampshire Republican John Sununu and North Dakota Democrat Tim Johnson, are poised to introduce a bill that would let insurance companies choose federal rather than state regulation.

“The Sununu-Johnson plan could improve competition, increase risk pooling, and make things better for consumers,” said Lehrer. “But if it’s a poorly structured plan, it could subject insurance companies to both federal and state regulation. That would make things worse.”

Read Eli Lehrer’s recent article.