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	Name:	MartiniMan -
	Subject:	Let me educate you
	Date:	9/16/2009 8:33:51 AM

why there is an important distinction so you will understand because by your snide "That is what most people would say" comment I assume you are inferring that this is a red herring when it is not.

As you rightly point out, each state has its own rules and regulations for insurers and currently in order to sell insurance in that state you have to abide by those rules. Presumably any insurer can apply but for many states with burdensome rules why would they? What is being proposed is that you can domicile your insurance company in a state with rules and regulations that suit your business needs but sell insurance in other states. Just like my business is regulated by the state of Nevada where my businesses are incorporated but I work in all 50 states, Canada and internationally.

What state attorneys general are concerned about with this is insurers domiciling in states with more reasonable regulatory environments selling very inexpensive insurance to those least likely to use it (i.e., the young) and picking off this demographic thereby leaving their state-registered insurers with the raw end of the deal (adverse selection). Of course this could be a problem but those insurers registered in their state could do likewise so I think this is the true red herring.

The fact is they don't like the idea of insurance companies being able to domicile where they like and ply their products where and as they like and let the markets ferret out the wheat from the chaff. I am of the opinion that in almost every case competition tends to drive down prices, increase innovation and improve productivity. It works with auto, homeowner and life insurance except in those states where they make it impossible for that competition to occur. Guess where the rates are highest (i.e. California)?