Members of the Subcommittee of Housing and Insurance of the House Financial Services Committee peppered leading insurance governmental representatives, NAIC CEO Ben Nelson, the Federal Insurance Office Director Michael McRaith, and the insurance expert on the U.S Financial Stability Oversight Council (FSOC) Roy Woodall, on the deep concerns the direction of international regulatory standards are taking during a hearing Thursday.
The subcommittee expressed concern about how the three agencies are working together and if any lack of collaboration is an obstacle in representing U.S. interests abroad.
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“This will be the first of many hearings examining the international competitiveness of the U.S. insurance industry,” stated Subcommittee Chairman Randy Neugebauer, R-Texas.
The concerns reflected the U.S. insurance industry’s own concern that the International Association of Insurance Supervisors (IAIS) is moving toward global capital standards that reflect Eurocentric and bank-centric standards.
These are "ineluctable realities" McRaith said of industry's global movement, adding that the U.S. industry needs to go to emerging markets if it wants growth. McRaith has called for capital standards for these developing economies in testimony.
FIO/the Treasury wants to support an international platform that allows for competitiveness overseas, McRaith said.
McRaith also assured lawmakers that he is committed to working with the NAIC and working in the best interests of U.S. consumers, industry and for jobs in the U.S. economy.
In his response to cooperation among agencies, Nelson said the NAIC can’t get the answers it wants from the FIO, doesn’t exactly even know FIO’s position, and sometimes doesn’t know when it will get information consistently or in a timely manner.
FSOC’s Woodall expressed his frustration to the subcommittee, saying he cannot get in the room when members of the International Monetary Fund and employees from Treasury are discussing international matters, which FSOC is supposed to monitor.
“It seems ridiculous that you can’t participate in the process,” said Ranking Member Rep. Michael Capuano, D-Mass.
McRaith did not respond directly to any overtures on Woodall and FSOC with regard to membership on the IAIS, an issue which is expected to resurrect itself this fall during the full IAIS annual meeting.
McRaith said he hopes the highly-anticipated Insurance Modernization report due in January 2012 will be sent to Congress this summer, and told Rep. Dennis Ross, R-Fla., that he recognizes the importance of the reinsurance issues for Florida and the rest of the country will issue the overdue reinsurance report and another one on natural catastrophes, along with the modernization report “in the near term.”
Neugebauer concluded the hearing by telling the witnesses, “The three of you can figure out how to work better together, and get Mr. Woodall involved. Collaboration is an important part of the process.”