California’s elected insurance commissioner, Dave Jones, is in the habit of picking fights he can’t win. From his perch atop the nation’s largest insurance regulatory body, he’s sought a federal investigation into a near midair collision, waged a rhetorical war against Congress over health-care reform and barked at the president over matters related to foreign policy.

Yet Jones’ near-daily press musings, while equal parts amusing and irrelevant, rarely present a risk to the consumers he purports to protect. This week marks an exception.

In an interview discussing an anticipated executive order related to the sale of insurance products across state lines, Jones said:

…(the national system of state-based insurance regulation is) fundamentally grounded in the notion of states’ rights and states’ selection of the appropriate level of consumer protection. Depending on how he (Trump) issues the order, it could be directly contrary to federal and state law, in which case I would sue him to block it.

Jones’ threat relates to his understanding of the McCarran-Ferguson Act. Passed by Congress in 1945, the law affirmed that the federal government had voluntarily relinquished its authority to regulate the business of insurance to the states, provided the states moved to adopt effective regulatory and antitrust authorities. It also set forth a presumption that congressional action not expressly directed at insurance does not pre-empt state laws related to insurance.

While it is true that the Trump administration’s executive order may well run afoul of McCarran-Ferguson, Jones’ bluster about states’ “rights” paints a target on the very system of state-based insurance regulation he supports by characterizing it as an obstacle to reform. Lest Jones forget, Congress is controlled by Republicans. Like any grant of authority, power ceded by Congress can be taken back.

In other words, the status quo is far from a “right” and is not somehow guaranteed. In fact, the system of state-based insurance regulation is placed in danger by needlessly defiant statements and threats like those Jones is issuing.

Fortunately, the rhetoric of the industry as a whole, and other insurance commissioners in particular, has been more informative than incendiary. For instance, the National Association of Insurance Commissioners, which is also concerned about the expected executive order, has expressed constructive reasons for retaining a state-by-state approach to insurance sales, licensing and oversight.

What counts as good politics in California courts policy disaster for the national industry. Ironically, despite of all of his best efforts, the best defense for the current state-based system of regulation could be Jones’ own relative obscurity among decisionmakers in Washington.

Image by Zerbor

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