Even though the bill is very much a work in progress, it has drawn heated criticism from state legislators who do not want to surrender authority over insurance to Washington, as well as from peeved consumer groups.

Indeed, the Consumer Federation of America, in a letter to Reps. Oxley and Baker, charged that “rather than increase insurance consumer protections for individuals and small businesses while spurring states to increase the uniformity of insurance regulation, this sweeping proposal would override important state consumer protection laws, sanction anti-competitive practices by insurance companies and incite state regulators into a race to the bottom to further weaken insurance oversight.”

J. Robert Hunter, former Texas insurance commissioner and chief industry gadfly as CFAs director of insurance, went so far as to decry the bill as “quite simply one of the most grievously flawed and one-sided pieces of legislation that we have ever seena veritable wish list of items requested by insurers with absolutely no protections offered for consumers.”

So passage is no certainty. However, once again, the broker fee and bid-rigging scandal might rear its ugly head, as federal lawmakers wonder whether state insurance regulators are up to the job. Notwithstanding the federal governments own colossal regulatory failures (remember the savings and loan debacle?), the fallout of price-fixing and contingency fee abuse charges against top insurers and brokers might very well put the SMART bill over the top next year.

Reproduced from National Underwriter Edition, December 16, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.