At a summit meeting in Washington, D.C. this week, the three largest commercial insurance trade associations in the United States called upon the government to refrain from erecting regulatory barriers to insurance e-commerce and recommended 12 principles to be followed in its regulation of the industry.
Despite having accepted the fact that regulation of e-commerce is inevitable, American Insurance Association (AIA) president Robert E. Vagley maintains that the real goal of the group is to have the Internet “declared a free-trade zone, where government involvement and taxation are minimized to facilitate market growth and strength.”
Council of Insurance Agents and Brokers (CIAB) president Ken A. Crerar commented, “As the industry leaders, our three associations took the initiative to fill the void and develop these vital principles to ensure the growth, strength and flexibility of the e-commerce marketplace. It is critical that lawmakers and policymakers not erect barriers to insurance e-commerce.”
The AIA, CIAB and the Reinsurance Association of America (RAA) met this week in Washington, D.C. to formulate their proposals at the Commercial Insurance Legislative Summit.
By late Tuesday, the groups had reached consensus on 12 principles that they believe should guide lawmakers in their regulation of electronic commerce.
Proposed Principles Would Foster E-Commerce
Some of the principles, despite being designed to grow the online insurance industry, call for the government to set mandates about online ethics and procedures.
For example, one principle calls for issues of regulatory jurisdiction to be resolved in a manner that best serves the customer. However, to accomplish that end, the group wants the government to insist upon uniformity and minimum duplication in regulatory requirements among various jurisdictions.
However, critics maintain that if the government becomes overly involved in establishing uniformity as it pertains to insurance dealings online, the snowball effect may result in increased regulations that could negatively affect other industries.
Treat Electronic Fraud Like Offline Fraud
Some of the proposed principles, however, would likely benefit most or all online industries. For example, the group advocates basic legislation to prosecute online fraud in the same manner as non-electronic fraud. It also calls for consumers and businesses to be allowed to use the strongest forms of encryption available, and for electronic storage to be recognized as an acceptable alternative to the storage of written documents.
Significantly, the group believes that the development and maintenance of e-commerce communication and data transmission standards should be led by the private sector.
No Unique Internet Tax
As for taxes, while the group said there should be no “unique Internet tax,” it stopped short of supporting a no-tax policy on goods sold on the Internet.
“In determining whether to implement a sales tax on Internet transactions, the difficulty and costs involved in adopting such a system should be weighted against the likely benefits,” the proposal stated.
Timing is Crucial
The group’s proposed principles come at a time when government seems to be increasing its efforts to involve itself in electronic commerce. Earlier this month, U.S. Commerce Secretary William M. Daley solicited public suggestions regarding policies, laws and regulations that would create barriers to the growth of online business.
The Commerce Department is also seeking suggestions from the public as to how government regulatory schemes may create such barriers.