The president of the National Association of Professional Insurance Agents (PIA) is voicing his concern over efforts in Washington, D.C., to reform health care and state insurance regulation, likening it to a “nightmare.”

Kenneth R. Auerbach

In a message to association members posted on its website, Kenneth R. Auerbach called ongoing efforts on Capitol Hill to “a bad dream” where Congress worked to establish federal government insurance agencies in each state and prohibited agents from being involved in the lines being sold.

“Far-fetched? Yes. But when I woke up, the nightmare didn’t end because it was true,” Auerbach wrote.

He pointed to legislation proposed by Sen. Edward M. Kennedy (D-Mass) and his Senate Committee on Health, Education, Labor and Pensions that would create a “Navigators” program, awarding grants to public and private entities for conducting public education, distributing “fair and impartial” information on health plans and assisting with enrollment and other information, citing the bill.

“In short, these would be government-funded and operated insurance agencies or brokerages,” Auerbach wrote. “… PIA believes that Congress should build on the private health care delivery system, not seek to dismantle it.”

Auerbach reaffirmed his faith in the private sector, and called any government funded insurance agencies mechanisms that could “displace” professional insurance agents.

Regarding the Obama Administration’s recent push to better regulate insurance, Auerbach says the PIA supports leaving the state insurance regulatory system intact and endorses the focus on addressing systemic risk in the realms of banking, securities and capital markets.

Of concern, Auerbach noted, is the creation of a federal Office of National Insurance, within the U.S. Treasury Department, to  “gather information, develop expertise, negotiate international agreements, and coordinate policy in the insurance sector,” according to the president’s plan.

“While we would like to believe the proposed ONI will not be used to advance federal insurance regulation, we have serious reservations about creating a federal bureaucracy for insurance which could be used to begin to build a structure for full federal regulation of insurance,” Auerbach wrote.

He also cited Rep. Paul Kanjorski (D-Pa.), who has proposed a similar Office of Insurance Information, who recently said: “I believe that only ostriches can now deny the need for establishing a federal insurance resource center and a basic federal insurance regulatory structure.”

Auerbach said the PIA met with White House officials prior to the regulatory reform plan’s unveiling and spoke in support of state regulation of insurance and opposition to federal regulation.

“I am proud that PIA stood its ground in this setting and gratified that our forthright presentation of our views may have contributed to federal insurance regulation being excluded from the Treasury’s recommendations,” he said.