In this week’s edition of the FIRE Podcast, I offer updates on major insurance issues brewing on Capitol Hill, including delays in getting a Senate floor vote on legislation to reform the National Flood Insurance Program (the program has now been extended temporarily through Dec. 16); the potential that the Super Committee proposal could be hijacked with a ‘secret farm bill’ that would cut off debate on further cuts to the Federal Crop Insurance Corp.; and a trio of draft bills that would roll back virtually all powers granted to federal agencies under the Dodd-Frank Act to oversee insurance.
On that last issue, of particular concern are provisions of one of the bills that would gut the newly created Federal Insurance Office of virtually all of its information-gathering powers, leaving it completely beholden to the states and the NAIC for any data it might need. Even worse, the measure would tie the FIO’s hands should it want to share that data with other agencies or the general public.
I’ve written here before about why I think the FIO should make insurers’ statutory financial data available to the public on-line with a free open source database, much like the Securities and Exchange Commission’s EDGAR service. Some have taken me to task for that proposal – including of the always excellent Aleph Blog — on grounds that the NAIC needs the revenues from its sales of insurance data to fund services to underfunded state insurance departments. I tried to dispel this myth in this week’s podcast and in a recent media advisory sent out about the draft bill:
Taken together, the 50 states, Puerto Rico, and the District of Columbia collected $2.48 billion in regulatory fees and assessments from the insurance industry in 2010, but spent only half that total, $1.24 billion, on regulatory activities. Insurance departments also collected $63.5 million in fines and penalties and another $1.22 billion in miscellaneous revenues, while states separately collected a whopping $14.82 billion in insurance premium taxes. Put together, states spent only a measly 6.7 percent of the $18.58 billion they collected from the insurance industry last year on regulating the industry.
The problem has never been that state insurance departments lack resources. It is that states have grown accustomed to viewing the regulation of insurance as a profit center, a slush fund from which lawmakers can perpetually draw to patch other holes in state budgets. States can certainly work out a system to share resources and services that doesn’t require keeping financial data collected by public employees with public resources a secret from the public.”