Personal Lines Regulatory Framework

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Kevin McCarty

Florida Superintendent of Insurance

Chair, NAIC Property and Casualty Insurance (C) Committee

200 East Gaines Street

Tallahassee, Florida 32399-0305

Re: Personal Lines Regulatory Framework

Dear Chairman McCarty and Members of the Property and Casualty Insurance (C) Committee:

I write to you on the behalf of the Competitive Enterprise Institute, a Washington, D.C.-based think tank devoted to classical liberal economic policies. We advocate these policies because we believe in freedom for both individuals and business enterprises. We believe that the economic deregulation we advocate will benefit the economy and the American people as a whole.

We commend the C Committee’s thoughtful, hard work on a difficult issue and we believe that the Committee’s report focuses much needed attention on the entire issue of rate regulation in personal lines. The report represents an important step towards a recognition of the destructive consequences of rate regulation. 

We do, however, wish to raise some concerns about the report. In particular, however, we have grave concerns about several aspects of both the proposed model law and the process used to develop it. Although numerous sections of the law are of interest to us, we wish to use this letter to highlight three particular major concerns:

• We dispute the Committee’s effort to distinguish between “rate regulation” and “price control.”
• The proposed model law envisions a continued system of rate regulation and proposes to protect consumers from “excessive” rates and other supposedly bad practices. We believe that this amounts to continued price control.
• While we applaud the Committee’s willingness to consider the elimination of price controls in certain cases, we strongly question the need for the proposed “electronic insurance exchange.” Such mechanisms are already widespread and having the government run one seems unlikely to benefit consumers or unleash market forces.