Academic

Davod notes Dodd-Frank's "wee bit of federalization" in creating a Federal Insurance Office. Although I'm thankful Congress didn't go further and that some jurisdictional competition was preserved, I agree with Dave that the FIO is a move toward greater coordination.  The problem is that without a structure designed to achieve a balance between federalization and constructive competition, I think that state regulation as a whole is likely to "fade away" -- and not just its "idiosyncracies" as Dave suggests. 

Henry Butler and I have proposed a system aimed at improving and preserving state competition while addressing its worst flaws. The system allows insurers to choose a single state regulator, but gives states some power to protect local insureds through legislation. A Federal Insurance Office conceivably could be part of this system by providing monitoring and a threat of federal takeover if the states misbehave. 

There is still time to go down this road.  I hope our proposal gets a full hearing before we jettison the states and end up with another unwieldy federal bureaucracy.