New York Superintendent of Insurance Greg Serio has responded to criticism that state regulators botched their investigation of brokers’ fees and alleged bid-rigging.[@@]
State insurance regulators have actively worked on the matter of broker compensation since November 2002, when they sent out 13 requests for information, Serio asserts. A second round of over 100 requests followed, he says.
The New York department has been working with the New York attorney general’s office during that time, he says. However, the department deferred action because of a “pecking order” of criminal, civil and then regulatory priorities, he says. Regulatory action cannot interfere with any investigation that may lead to the filing of criminal indictments, he explains.
Once a civil suit is filed, regulatory action could be taken. Serio argues that such action is being taken, as evidenced by a scheduled Nov. 23 department hearing to address the issue.
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When asked if his agency will conduct market conduct examinations, Serio says that he is “leaving all regulatory options open.”
Serio says that he has not spoken to representatives of Congress on the broker issue yet, but is “clearly mindful” that it will affect the State Modernization and Regulatory Transparency Act.
[The SMART act, currently being considered in Congress, would require states to streamline insurer licensing rules within 3 years to make it easier for an insurer licensed in one state to apply for a license in other states. It would also simplify state market-conduct examinations.]
When asked whether the investigation into broker fees was an argument for federal regulation, Serio says state regulators and the attorney general’s office “were the ones who rooted this out. This whole thing is not a referendum on the effectiveness of state regulation. Federal regulation will not solve the problem.”
What is needed is a better corporate governance structure and greater power for state insurance regulators so that they can examine the interplay between corporate operations and not be limited to looking at licensed insurance entities, he says.
New York will seek an expansion of authority, and the NAIC has started to look at this option, he adds. This added authority would update insurance law to reflect the current market, Serio adds.