THING #7: “Our regulators can be toothless“ is next in my series of responses to “10 Things Life Insurance Agents Won’t Say” by Daniel Goldstein “Personal Finance Reporter” for MarketWatch.
In a continuation of his evidence-free article, Mr. Goldstein opines, “Unlike banks and big investment firms, which are largely regulated at the federal level, insurance companies are largely regulated by states . . .State insurance commissioners . . .don’t have as much power to affect the practices of nationwide companies.”
My first reaction is not printable. We’ve seen exactly how well federal regulation has worked, allowing the very bankers who tanked our economy to walk away with record bonuses while stiffing their investors for the fines that were levied against them. This is why many insurance companies want a “unified” regulatory system. So it’s easier to corrupt in their favor.
Reality is the converse of Mr. Goldstein’s assertion. State regulators can put an insurance company or agent out of business, in effect a corporate death penalty. Oregon, though, is quite a bit more progressive than that by not allowing inferior companies and products to do business here in the first place.
Yes, regulation by the states creates a “patchwork” of inconsistent regulations and enforcement. But the states that do it right become great places to live, work and do business in because of the economic stability and level playing field good regulation creates.