Question

European Union is pursuing development of a single, integrated market for insurance services provision across borders of the member states. In the U.S. markets context, this is equivalent to federalization of the insurance sector regulations and diminution of the State-level regulations regime to 'gold-plating' Federal regulatory regime. Gold-plating involves state bodies being able to impose additional regulatory requirements on insurers operating within each state, over and above those imposed by the federal regulations.

In your opinion, who would gain and who would lose from creation of a single insurance markets in life and health insurance in the U.S.? Why?

Answer 1

It is important to understand what federalism here really means in context of US.

US is union of 50 states. They all together form fedral units of United states.

When the point comes about creation of single insurance markets, We need to know that what the Single Insurance Markets would really mean.

Single insurance markets can be considered as one holistic market with one set of regulatory guidelines. Such Single Insurance markets are to be spread across states in union. This would mean Union Level or Central level regulation of Insurance sector.

Who will gain who will lose ?

This question can be answered in the way of finding out advantages and limitations of such single insurance market.

Gain ( Advantages):-

1) Single Insurance Markets main purpose will be to integrate diverse insurance sector player into one channel. So, it will be benificial for all federal units of union.

2) This will help in synergising the capacities of vast insurance market. Proving benificial to all stakeholders.

3) it will be also benificial for people of all the states in federation as they can use intra-state or inter-state insurance facilities without any difficulty because of single regulation system.

4) It will also help in better mobilisation of resources and provide boost to insurance sector at centre and state level.

Loss

1) Single Insurance Market may lead to decrease in competitiveness among insurance companies.

This may be a loss for people seeking insurance as they can't get much benifits through competitive attitude of different insurers.

2) 'Gold plating ' provision for State level regulation may bring the things to square one.

As excessive state level regulation can make the gains of single insurance markets nullified.

So, it is loss of whole federal policy on single Insurance markets.

3) There may arise a dependent tendency in all states. They may keep on following on federal regulations without thinking about dynamic character of environment. This can be a loss of main objective of single insurance markets.

4) Single Insurance Market provision may not be applicable directly as laid because of State-wise differences and market scenario. This can lead to loss for states.