Claimjumpers.

• Position: Federal standard for regulation of insurance industry - Brief Article - Statistical Data Included

What are the problems confronting local governments, and how are they solving them?

A LOT OF PEOPLE DON'T TRUST insurance companies--for good reason. Insurance companies are notorious for taking customers' money and then finding creative ways to avoid paying claims. They price-gouge the black community and drop your car insurance as soon as you ask them to pay for your first fender-bender. And mostly, the insurance companies get away with it.

The reason? They're regulated by a crazy quilt of different agencies for every state and the District of Columbia, with no federal oversight. And those regulatory agencies are too frequently more cozy with the insurance industry than with the consumers they are charged with protecting from it. After all, their budgets often rely entirely on the fees paid by insurance companies they regulate.

Recently, though, there's been talk of tossing the current system and bringing the insurance industry under the federal umbrella. But not because they're sticking up for black consumers or other aggrieved policy holders. No, like most political moves, the regulatory change is being pushed by the industry itself. In the past, the industry has been wary of switching to a federal system, preferring instead the more lax state regulators and disorganized state watchdog groups.

But in 1999, Congress passed the financial modernization law which created powerful new competitors to the insurance industry: banks and securities firms, which can now, for example, offer long-term investment packages that compete with life insurance...