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March 05, 2006 at 02:00 PM
Legislation modernizing the insurance regulatory system will be introduced this spring in both the House and Senate, but the likelihood of passage this year is considered slim at best.
That was the word from congressional staffers attending the Third Annual Insurance Summit, held here March 1. However, all those participating in the summit voiced doubt that action on such legislation could occur this year. Indeed, the huge differences in viewpoints voiced by those attending the summit indicate that bridging the gaps and broadening the role the federal government plays in insurance regulation–if any–could be years away.
For example, industry lobbyists, congressional staffers and Rep. Paul Kanjorski, D-Pa., ranking minority member of the House Financial Services Committee’s Capital Markets Subcommittee, all made clear that teeing the issue up for prompt action in the next Congress was all that was likely to be accomplished. That will include hearings on the issue before the Senate Banking Committee, a committee staffer said.
But, based on comments by those attending, the bills to be introduced in each chamber will be materially different, and there is disagreement as to the appropriate approach toward federal regulation between Democrats and Republicans in the House.
Moreover, in comments at the summit, Alessandro Iuppa, Maine superintendent of insurance and president of the National Association of Insurance Commissioners, said reform was needed but that federal involvement would create more problems than it would solve.
The NAIC’s attitude and apparent decision not to cooperate with bill-writing efforts doesn’t sit well with the leadership of the House Financial Services Committee.
Although Glenn Westrick, counsel to the leadership, spoke before Iuppa, he made clear that the committee had become impatient with NAIC’s strong criticism of its draft legislation and the seeming unwillingness to work with the committee to fashion legislation acceptable to both industry and regulators.
“Simply saying ‘no’ to any reform action is simply not an option,” Westrick said. “The regulatory system is in dire need of reform.”
He added that the current system “is inefficient, needs greater transparency and greater coordination.”
The Treasury Department made clear it isn’t ready to take a position.
Emil Henry Jr., assistant secretary for financial institutions at the agency, declined to indicate whether the Bush administration will support any legislation, or what kind of legislation it will support.
Moreover, J. Kevin McKechnie, associate director of government relations for the American Bankers Insurance Association, which is spearheading the effort for legislation creating an optional federal charter, raised another issue. Questioning Iuppa, McKechnie contended that state regulators had increased the rate of market conduct examinations for insurers whose officials had testified on the issue before Congress. Iuppa denied there had been retaliation, although he did not reject the allegation out of hand but did “commit” himself on behalf of the NAIC to a policy of no retaliation against insurers for supporting federal regulation.
Iuppa also “recognized that market conduct is not where it should be,” but said that should change as the number of states, now 26, that have joined an interstate compact on the issue expands.
