How Insurance Is Regulated
Capitol Hill Briefing
April 12, 2002
From regulatory basics to the aftereffects of 9/11
It was billed as a general informational session on how insurance is regulated. But the Academy's April 12 Capitol Hill briefing also addressed an especially timely question: How urgent is the need for federal terrorism insurance legislation?
Robert Anker and Patricia Teufel at the briefing
"The industry absorbed 9/11, and did it very well. But it can't take a second hit like that," Academy President-Elect Bob Anker told congressional staffers at the briefing. "Is something like 9/11 going to happen again? I don't know. My view is there needs to be a backup capacity."
The issue had just regained prominence on Capitol Hill: Only a few days earlier, President Bush, in a speech to business leaders, had urged the Senate to act quickly on terrorism insurance legislation.
"The insurance industry, I could argue in good conscience, doesn't need the protection—consumers need it," said Anker, adding that another catastrophic event on the scale of the Sept. 11 terrorist attacks could force some insurers into bankruptcy. "If the insurance industry goes on its knees or out of business, then we will have destroyed homeowner's insurance, auto insurance, and other protections in this country."
Speaking afterwards, Anker expanded on the need for a backup to terrorism insurance: "After all, it's better to avoid a crisis than have to deal with it after the fact — that's why consumers buy insurance in the first place."
More than 40 legislative staffers and policy-makers attended the briefing, which was organized by the Academy's Financial Reporting Council and came as a follow-up to a 2001 Academy briefing on insurance risk.
Pat Teufel, the Academy's vice president for financial reporting, moderated. The featured speakers were Anker and Julia Philips, an insurance regulator in Minnesota.
During the session, Anker, retired chairman and CEO of American States Financial Corp. in Indianapolis, also gave an overview of the role insurance regulation plays in the insurance industry.
Philips talked about state regulation of insurance and specific regulatory issues, including some of the implications of the Financial Services Modernization Act and the Health Insurance Portability and Accountability Act.
And before discussing various efforts to respond to health insurance problems, she got to the basics. Said Philips: "The three biggest problems in health insurance in this country are cost, cost, and cost."
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