The current draft of the “SMART” federal insurance reform bill is not a “sea change” from existing regulation and is a “fairly well crafted piece of legislation for a first effort.”[@@]
New York Insurance Superintendent Greg Serio gave that assessment Monday here at an insurance conference sponsored by the New York office of KPMG L.L.P.
The SMART bill, officially known as the State Modernization and Regulatory Transparency Act, could be a helpful tool for regulators, Serio said.
Serio welcomed the large number of insurance issues on the congressional calendar as evidence of federal lawmakers’ interest in the industry. “It is a very positive sign,” Serio said.
What is also positive, according to Serio, is the measured approach federal lawmakers are taking to learning about insurance issues and their efforts not to make immediate judgments about insurance issues. The situation is different from the climate that prevailed in the 1990s, when Rep. John Dingell, D-Mich., issued a report about the insurance industry’s “failed promises.”
The industry is not going to be victimized and it is not going to get everything that it wants, Serio said.
Life insurers are not going to get an optional federal charter in this Congress, Serio predicted.
But Serio said the congressional review of life insurance sales to service members reflects the new, more measured approach.
Congress is “considering options but is not castigating the life insurance industry in a perfunctory fashion,” Serio said. “It would be very easy to be hysterical and raise the flag to protect troops who are currently in harm’s way. But this is a more measured approach.”
Here are some of the topics Serio discussed:
- Military life sales: State insurance regulators are pursuing “aggressive enforcement,” because agent licensing and other related issues are part of a state regulator’s responsibility, Serio said.
- Renewing the Terrorism Risk Insurance Act: Serio said that there is still a lot of work to be done but that he is hopeful that renewal can be accomplished. “We need the continued stability of TRIA,” which would provide continued coverage to businesses in the event of man-made terrorist events, Serio said. He argued that the record of backstop measures, such as a pool that will help protect Florida homeowners from the effects of the recent hurricanes, proves the need for continuing the TRIA backstop protection.
- Making insurers to adhere to the requirements of the Sarbanes-Oxley Act of 2002. Serio said SOX Section 404, which requires certification of internal controls by management, is for public companies and not an idea that should be applied to mutual insurance companies or not-for-profits. “It is for a limited population and not for insurance companies as a whole,” he said. Good corporate governance can be used to ensure mutuals and not-for-profits have strong financials, Serio added. He said he has instructed his staff to take such an approach when the issue comes up at meetings of the National Association of Insurance Commissioners, Kansas City, Mo., and in other venues.