Europe Wants Your Annuity
November 13, 2019 by The Editorial Board
America’s state-based insurance regime has protected policy holders while fostering competition and product diversity. Europe’s insurance system—like much else on the Continent—is sclerotic due to excessive regulation. Now the pooh-bahs in Brussels are trying to undermine America’s federalist system.
The International Association of Insurance Supervisors (IAIS) on Wednesday plans to vote on a new global solvency regime modelled on the Basel banking standards. Although the goal is supposedly to harmonize regulation, the accounting framework will raise costs for U.S. consumers and companies.
Congress in1945 ceded regulatory authority over insurance to the states in the McCarran-Ferguson Act. States require insurance subsidiaries to be individually capitalized, so an insurer can’t make auto-policy holders pay more to lower homeowner premiums. Insurers also price products differently based on state demographics, regulation and legal climates. This is why customers in states friendly to trial lawyers pay more for property insurance, and health premiums are higher in states where politicians mandate more benefits.