State Farm Supports Treasury Secretary's Call for Optional Federal Charter for Insurance

State Farm Supports Treasury Secretary's Call for Optional Federal Charter for
Insurance
Current System 'Complicated, Costly and Cumbersome' Says CEO Ed Rust Jr.

BLOOMINGTON, Ill., March 31 /PRNewswire-USNewswire/ -- State Farm
commended Treasury Secretary Henry Paulson's call for an optional federal
charter for insurance regulation as part of its recently released Blueprint
for Financial Regulatory Reform. The Treasury Department calls for the
creation of a world-class insurance regulator through the establishment of the
Office of National Insurance within Treasury. The report states: "Much like
other financial services, over time the business of providing insurance has
moved to a more national focus... [The current] regulatory structure makes
the process of developing national products cumbersome and more costly,
directly impacting the competitiveness of U.S. insurers... To address these
issues in the near term, Treasury recommends establishing an optional federal
charter for insurers..."
The report goes on to state:
"Under the current regulatory structure some lines of property and
casualty insurance, such as automobile and homeowners, are frequently subject
to some form of rate regulation. While numerous arguments have been made to
justify such rate regulation, they are unpersuasive, especially since several
states leave insurers largely free to set their own rates and Illinois does
not have any rate regulation. In those states there is vigorous price
competition and there has been no evidence of excessive profits, and the
insurers competing in those states have remained financially sound. States
that do not impose onerous rate controls generally do not have large residual
markets (markets of last resort) and they have more competing insurers and
overall lower rates. As a substitute for price controls, a federal regulatory
structure should ensure that insurers are financially sound that consumers are
protected from misconduct by competing market participants."
Ed Rust Jr., Chairman and CEO of State Farm, the nation's leading vehicle
and home insurer, said, "The current regulatory structures make serving
insurance customers across the country complicated, costly and cumbersome.
Increasingly, insurance challenges are also national and international in
scope. In the 21st century, we should be able to do better for our customers.
That is why we applaud Secretary Paulson's call for an optional federal
charter."
State Farm(R) insures more cars and homes than any other insurer in the
U.S., is the leading insurer of watercraft and is also a leading insurer in
Canada. State Farm's 17,000 agents and 67,000 employees serve over 77 million
auto, fire, life and health policies in the United States and Canada, and more
than 1.9 million bank accounts. State Farm Mutual Automobile Insurance Company
is the parent of the State Farm family of companies. State Farm is ranked No.
31 on the Fortune 500 list of largest companies. For more information, please
visit statefarm.com(R) or in Canada statefarm.ca(R).
SOURCE State Farm

Phil Supple, Public Affairs of State Farm, +1-309-766-9921