Delaware Business Insurance Update From CNC Insurance Associates Inc. "Federal Insurance Office is Active" 4-21-14

A few years ago Congress approved the formation of the Federal Insurance Office (FIO). This was in response to the 2008 meltdown of AIG and numerous other banks and money institutions.  For the first couple of years the office has not been in the insurance headlines very much. Lately however, it seems that the FIO is in every insurance publication I read. The office is becoming very active. Currently they are probing the need for Federal Government intervention into the 150 year old State regulation of insurance. Also I saw headline of the FIO  looking into the affordability of auto insurance. These actions are a precursor, in my opinion, of a full Federal regulatory takeover of the insurance sector. It may take awhile to achieve this, but State's will have no ability to stop it. The State regulatory system has been exemplary over the years as insurance has proven to be stable and well capitalized and did not suffer the collapse that banking and S&L's experienced. However as consumers demand more guarantees and less risk from insurance products, the FIO will continue its creep into the regulation as a response to consumer demand. We see this currently with the Affordable Care Act, which was passed on the backs of  the few but true stories of health insurance companies dropping coverage or not covering policy holders. Insurance was developed to cover the catastrophes in life and in business. It was never meant to cover the day to day financial risks we experience. Consumers however are demanding more and actuaries are mathematically trying to make that happen so insurance companies can provide the coverage and still make a profit. There is however a point where consumer demand will out pace what can be achieved and still make money in the insurance business. When we get to that point , and we are approaching it quickly, the whole insurance industry will be under the regulatory thumb of the Federal Government and the products will not resemble the insurance products we grew up with. Until next time be careful out there and know your risks.
G. Kevin Nemith Pres. CNC Insurance Associates & The Small Business Insurance Center
Serving DE, MD, PA, NJ, & VA
www.cncinsurance.com
www.bizinsurancetv.org

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