Disagreements and debate help pave the path to sound policy. But today’s political environment has become saturated by the loudest and most extreme voices on the fringe of the conversation. What’s truly counterproductive – and even dangerous, at times – is when these voices are injected into conversations about issues that impact everyday Americans and, as a result, allow partisan agendas to win the day rather than informed discourse.
The left, and groups that do their bidding like Americans for Financial Reform (AFR), routinely demonize the private sector and, in turn, attempt to undermine free markets, competition, and the benefits they provide consumers. Private equity has long been a boogeyman for Democrats and the groups they back, and their latest salvo is now against private capital’s role in the life insurance market. It is unfortunate, but not surprising, that some left-leaning organizations are railing against the options that these new investments provide consumers. What’s worse, though, is that the group representing state insurance commissioners responsible for overseeing Americans’ life insurance plans and annuities is in lockstep with these efforts.
The National Association of Insurance Commissioners (NAIC) and groups on the left are making unfounded accusations that new market entrants in insurance have taken on too much risk when it comes to life insurance plans and annuities. The impact of such fearmongering could have very real consequences for consumers, who, if these fears are acted on by government, would be left without the protections and options they need – especially as legacy insurers leave policyholders in “risky” states high and dry.
Across the country, we are seeing major insurers exit markets from places like Florida to California, citing “increased risk” as the reason they are doing so. But then, almost simultaneously, we are hearing those same insurers and other outside voices cry foul that new entrants to the market are making investments that are too risky. They can’t have it both ways. It is understandable from a business perspective that many traditional insurers don’t want what they perceive to be increased risk on their balance sheets; but what’s to be done about the families living in these areas? Are they just out of luck because of where they decided to put down roots? Should they be forced to pay astronomical out-of-pocket costs for the business calculations of legacy insurers? Private equity-backed plans exist precisely to fill these gaps.
The average homeowner’s insurance premium in Florida has risen to $6,000 as insurers exit the state, up a staggering 200% from 2019. The situation has become so dire for homeowners that the state has stepped in and is now the largest and fastest-growing insurer in Florida. This is a cautionary tale of what’s to come if options are limited in the insurance marketplace and consumers have nowhere else to turn.
It appears that is the outcome that AFT and other far-left groups want -- the government to step in to be the insurer for millions of Americans. the government to step in to be the insurer for millions of Americans. That model stands in stark contrast to how the private insurance market has flourished for decades in the United States and would leave us in a crisis just like the one Europe is currently facing. Here at home, the private sector is willing to innovate to protect those who are most at risk. Advocating instead for the government to step in and tell the private sector “No” – thereby reducing or even eliminating competition while leaving consumers without options – is unreasonable. Meanwhile, extreme voices entering the fray will only further polarize important conversations that impact Americans’ financial security.
As Insurance Commissioner for the state of Colorado, I oversaw investments made by insurers, ensured that consumers received the coverage they were promised, and supported fair regulations that still allowed for competition in the marketplace. As a member of NAIC, I led a multi-state investigation of title insurance companies that resulted in reforms for the industry. The importance of guardrails to protect consumers and their investments is certainly not lost on me. But recent claims made by NAIC and others simply paint an inaccurate and distorted picture of the current financial landscape rather than offering meaningful solutions to help homeowners, retirees, and others trying to play by the rules and safeguard their finances. We need to honestly look at the facts on this front, rather than rush to fearmongering and partisan finger-pointing.
