Now that Mr. Spitzer is no longer distracting the insurance industry (as he is distracted by his own problems — like running for governor and not losing any more cases), we are seeing attention returning to the problem of insurance regulation.
The National Association of Insurance Commissioners (NAIC) is saying we need state regulation and the states are, in fact, doing a pretty good job. Insurance Agents and others want the SMART Act passed (which would essentially take away most state powers to regulate prices and market conduct) while life insurers would like to have a dual charter system like the banking system. According to the NY Times, this Optional Federal Charter has been pushed most recently by a large group of insurers (including AIG) and would allow insurers to choose whether they wanted to be regulated by the states or by a federal regulator.*
Evidently consumer groups also oppose federal regulation (see above linked NY Times article). Having a dual regulatory structure reduces the influence consumer advocates can have as long there is a Republican controlled Congress. Presumably, Congress will look at the SMART Act this summer and that a Optional Federal Charter bill will be introduced soon too. (I recall seeing an American Bankers Association draft of one some time ago.)
I don’t think the consumer advocate bandwagon has been able to get its steam up yet, but it will be interesting to see the comments and themes develop about how bad federal regulation will be.
*Just a snarky note, the NY Times article linked here refers to the NAIC as the National Association of Insurance Regulators.