Middle-level federal regulators are taking a harder look at various aspects of the insurance industry.
These regulators are quick to note that their agencies' efforts are at an early over the next year or so the industry is going to come under increasing scrutiny, first on the agency level than on the legislative level.
At the Securities and Exchange Commission, for example, the tiny staff concerned with bringing cases against insurance companies for violations of the securities laws has several major investigations underway.
At the Federal Trade Commission, several aspects of the insurance industry being probed. Furtherest along is an investigation of the disclosure in life insurance policies. The FTC staff also is in the early stages of looking at the methods that states use to set insurance rates and is gethering, as well, data on how states license insurance agents - to determine if the process is anti-competitive.
Last January, a Justice Department Task Group on Antitrust Immunity concluded generally that the isurance industry should lose its immunity to anti-trust regulation that it has enjoyed for more than three decades.
It was the McCarran-Ferguson Act of 1945 that gave states power to regulate insurance, barring federal legislation to the contrary. It also had provided insurance companies with an antitrust exemption for rate setting and made such rates subject only to state regulation. Now this could be changing.
On the Hill, a move in that direction came last month when Sen. Edward Brooke (R-Mass.) introduced a bill that would, among other things, set up a federally-administered insolvency fund for insurance companies and create a three-person Federal Insurance Commission to replace the limited Federal Insurance Administration, currently under the jurisdiction of the Department of Housing and Urban Development.
"The beauty part," said an SEC attorney of the growing scrutiny, "is that several agencies have come on this individually. If these investigations were coordinated, it would look like a political attack. But this approach increases the validity of the investigations. What it points out to me is that you won't be able to stop this movement because it is so broad-based."
The industry, meanwhile, showed its disdain for federal intrusion earlier this month when the National Flood Insurers Association, made up of 132 companies, threatened to quit writing the insurance if HUD insists asserting final control over the program.
HUD Secretary Patricia Harris is being urged by staff members of the Federal Insurance Administration, among others, not to buckle under to the industry. The argument is that government should have the last word because flood insurance is made possible only because of heavy federal subsidies.
Today a few state insurance commissioners who favor a larger federal role in insurance regulation, along with a representative from a Ralph Nader group, will meet with Secretary Harris to encourage her to hold firm against the industry.
They also will press her to appoint a strong federal insurance administrator to replace acting administrator J. Robert Hunter Jr., whose outspoken criticisms have angered the insurance industry.