NAIC Responds To Call For An OFC

States would retain authority over insurers that opted out of the charter, and because the agency’s regulator would be appointed within the Department of Treasury, there would not be a new layer of bureaucracy, Racicot maintained. Moreover, he argued, start-up costs for an Office of National Insurance would be paid through assessments on insurers.

In her response, Praeger argued that property-casualty insurance is “a local product with local issues that requires a responsive, local regulator to help resolve consumers’ complaints and address their concerns.”

Praeger contended that it would take “quite an imagination to assume the Treasury Department could assume even a partial role in regulating insurance without creating a huge bureaucracy.” She claimed, too, that an OFC would allow insurance companies to opt out of comprehensive consumer protections afforded by state oversight.

“Current proposals would gut consumer protection, while outsourcing most critical regulatory functions to an industry-run self-regulatory organization,” she said.

Allowing insurers to pick their regulator would create a “race to the bottom” for the industry, she added. “The push for an OFC is, in reality, nothing more than a call for little or no regulation,” she stated.

AIA’s letter came on the same day as an announcement by the National Conference of Insurance Legislators, Troy, N.Y., that it would consider a resolution opposing S. 40/H.R. 3200, the National Insurance Act, during its spring meeting in Washington Feb. 28-March 1.