Here’s a small but important example of the kind of state consumer protection that the insurance industry and its allies want to escape by taking insurance regulation away from the states.

The Maryland Insurance Administration completed an investigation into auto insurer claims-handling practices this week and found that 67 companies had broken the law and underpaid drivers whose cars were damaged enough to be considered a total loss. The companies were fined nearly a quarter-million dollars, and are required to repay $442,000 to consumers – an average of $100 to each driver affected. 

The companies had failed to comply with a Maryland consumer protection law that requires insurance companies to pay license transfer and vehicle registration fees when they decide to keep, rather than fix, a policyholder’s damaged car.

This law is just one of the thousands of state-level insurance protections that are threatened by a proposal pending in Congress that would strip the states of regulatory authority and give oversight to an appointed, unaccountable, federal regulator. Just as Allstate would use a federal regulator to avoid the California rules that stopped the company from overcharging policyholders by $500,000 million (more on this yesterday), Maryland insurers could get a federal charter and not be subject to its rules requiring fair payment to drivers.

Even if a federal regulator wanted to copy the strictest regulatory rules in the country (and we know that would never be the case), the sheer number of laws alone means it would take decades for a brand-new federal regulator to build up the level of protection that consumers enjoy in every state.