Insurance Firms Fight New Bill FEDERAL REGULATION
David R. Francis, writer of The Christian Science Monitor, The Christian Science Monitor
THE nation's insurance industry feels under siege.
In Washington, the oversight subcommittee of the House Energy and Commerce Committee has held some 15 hearings over the past few years, the latest in May. Chairman John Dingell (D) of Michigan is currently drafting legislation that could add a federal layer of regulation to that now imposed on the industry by the 50 states.
The bill will deal with concerns about the solvency of insurance companies. It could impose new disclosure and auditing requirements on them. It might put limits on the proportion of their assets that could be concentrated in one area, such as junk bonds. It may impose regulation on sectors of the industry that cannot be touched by state regulators - foreign insurers and reinsurers.
A staff aide would not be more specific, saying Mr. Dingell was in the process of negotiating the reforms with the industry and its state regulators "as we speak."
Further, subcommittees of the Senate Committee on Commerce, Science, and Transportation and Senate Judiciary Committee have been holding hearings on the problems of the industry.
For example, on May 7 the consumer subcommittee of commerce looked into the conservatorship of Executive Insurance Company in California and New York. Martin Weiss, president of Weiss Research Inc., an insurance rating agency, told the subcommittee that Congress should require full disclosure rules for insurance companies' investment portfolios. To protect rating agencies from lawsuits from insurers, he suggested placing the agencies in the same category as news media for freedom in disseminating informa tion.
The life insurance industry has increasingly competed with Wall Street in the sale of investment products, versus simple life insurance. But insurers have been generally exempt from the full-disclosure requirements of the Investment Company Act of 1940, Mr. Weiss notes.
The press has been piling on too. The latest edition of Money magazine advises its readers: "Don't Gamble With Your Life Insurance." The Wall Street Journal warned several weeks ago: "Many Policyholders Have Little Protection if Insurers Go Bust. …