While most financial services companies cringe at the thought of more regulation, Allstate (ALL) CEO Tom Wilson on Wednesday is launching a very public campaign calling for national regulation of insurance companies.
That would be a huge change from the current system of state-by-state regulation, which creates many loopholes. Some of those gaps in regulation were exploited by American International Group (AIG).
Starting Wednesday, Allstate is running print ads stating the case for national insurance regulation. One headline reads: "A man-made disaster just cost America trillions -- Here's How To Keep It From Happening Again." The text calls for reform of all financial institutions and the regulatory agencies that supervise them.
In a letter to the New York Times, Wilson notes that Allstate has little presence in the market for unregulated products that triggered the global financial collapse. Still, he writes: "We have a duty to help stabilize the financial system."Charging that state regulators "lack the expertise to properly oversee rapid innovation or systemic risks," Wilson proposes that Congress establish one federal regulator for all national insurance companies. The demand for one set of regulations is a bold one, especially for the insurance industry. The complexity of the current situation requires insurers to file individual policies on a state-by-state basis. Did you ever search for an individual health insurance policy, for example, and learn that some of the best deals weren't "approved" in your state? Meeting all of those diverse requirements adds a huge layer of cost to the insurance buyer. In many states, insurance commissioners are elected officials, bagging huge campaign contributions from the industry. Elsewhere, they're career bureaucrats, hoping to protect their turf. That's why a call from one of the largest national insurance companies, serving 17 million American households, is bound to create ripples in the industry. We'll see who climbs on board next.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV