Fast Focus
	This looks to be the year for some federal regulation of insurance.
	Holding companies and systemic risk are the most likely targets.
	Opportunities abound for important measures to pass, but look out for landmines
	Will insurance industry factions finally unite to ensure the best results?

Barack to the Future

Will Obama succeed on insurance issues where others have always failed?

By  Cheryl Arvidson

In the backrooms of Capitol Hill, where the deals are cut and legislative language is hammered out, there’s a saying that consensus in the insurance industry is like a unicorn. Everyone can describe it, but no one has ever seen one.

That may have been true for past insurance battles, but there is a new urgency for consensus in the industry as 2009 dawns, a new Congress convenes and a new president takes office against a backdrop of the most severe financial crisis this nation has faced since the Great Depression. The federal government has done the unimaginable—partially nationalizing banks and insurers—and major stakeholders expect tough regulatory reform to come next.

Will this force the insurance industry to do the heretofore impossible and engage the unicorn? Nobody is making any wild predictions yet, but key industry players certainly are making noises about cooperation. In the past, reform efforts—especially those that would have usurped state regulation in favor of federal oversight—were stopped by industry groups that “just said no.”

This time, however, there is a sense that obstructionism may come at considerable peril because the regulatory reform train is stoked up and ready to move down the track. If you don’t get on board, you may just be left behind.

“We’ve had conversations, direct conversations, with all of the major leaders in the House and the Senate and also had some conversations with the current and incoming Treasury team, and they have all indicated there is going to be sweeping financial restructuring,” says Robert Gordon, who spent 16 years as a top staff member of the House Financial Services Committee before joining the Property Casualty Insurers Association of America as senior vice president for policy development and research.

“Many of those individuals told us very definitely that insurance will be included. It won’t be optional anything.”

“I think this is going to be the year,” agrees Peter Lefkin, senior vice president of government and external affairs for Allianz of North America. “I believe some form of federal oversight and regulation of the insurance industry is going to occur in 2009.”

Joel Wood, senior vice president for The Council of Insurance Agents & Brokers, expects that at a minimum there will be “an overlay of systemic risk regulation at the federal level for holding companies.”

“I think we may be past this federal-versus-state issue. Once it becomes clear that there is going to be a degree of federal insurance regulation, most in the industry will have to decide what we can live with and what we cannot,” Wood says. “I am less concerned about this being a battle royal within the industry itself, but it is combustible. This is a very anxious environment, and anybody who says they know what is going to happen is blowing smoke.”

Federal regulatory oversight for holding companies would affect many of the major insurance companies.