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Regulation and Compliance > Federal Regulation

High-Level Roundtable Discusses Likelihood Of Federal Regulation

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A high level, Washington roundtable attended by the majority whip of the Senate, the chair of the House Financial Services Committee, a Congressman, 28 state insurance regulators, other regulatory agencies and industry trade groups discussed the growing possibility of federal insurance regulation.

During the gathering, the head of a property-casualty insurance trade group told state regulators at a meeting here on May 21 that it is increasingly likely that Congress will impose some level of federal insurance regulation soon unless the states act promptly to impose meaningful reform,

The comments by David Sampson, president and CEO of the Property Casualty Insurers Association of America, Des Plaines, Ill., took place during the meeting which was also attended by 14 representatives of other state regulatory agencies in addition to other stakeholders.

Mr. Sampson was among 5 heads of insurance trade groups invited to speak at a “roundtable.” The meeting was chaired by Sandy Praeger, Kansas insurance commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo.

An NAIC official confirmed that the meeting was held, but declined further comment.

Those participating included the heads of PCI; the National Association of Mutual Insurance Companies, Indianapolis; the Independent Insurance Agents and Brokers of America, Alexandria, Va.; and the Council of Insurance Agents and Brokers, Washington.

But, no invitation to participate was made to the American Insurance Association and the American Council of Life Insurers, both in Washington, according to officials of those trade groups. They are leading the effort to pass federal legislation creating an optional federal charter for insurers.

Interestingly, also among those who participated were Sen. Richard Durbin, D-Ill., majority whip of the Senate; Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee; and Rep. Earl Pomeroy, D-N.D., a former state insurance commissioner.

The National Underwriter was unable to contact these officials by press time. Their presence was confirmed by representatives of the trade groups that did participate.

PCI, NAMIC and the IIABA are steadfast supporters of continued state regulation of insurance.

The CIAB was asked to participate because it supports uniform state licensing and is also seeking backing from state regulators of legislation passed by the House last year that would simplify regulation of surplus lines and reinsurance.

That bill could be the subject of a hearing in the Senate Banking Committee as early as next month.

Joel Wood, senior vice president for government affairs at the CIAB, noted that the Council has been a “longtime” supporter of an OFC, and declined to go into detail about what he said at the meeting, “claiming it was a private opportunity to have an open dialogue with regulators.”

But, Mr. Wood said, “I can say that it was a frank, constructive and gratifying dialogue.” He said “There was more focus on what we agree on, such as surplus lines reform and uniform agent/broker licensure, than what we disagree on.”

An IIABA official confirmed that Robert Rusbuldt, president and CEO, spoke at the roundtable. “We were invited to speak to the state regulators,” the spokesman said. “The Roundtable dealt with the big picture concerning insurance regulatory reform and our general perspective on that topic,” the spokesman said.

Charles Chamness, president and CEO of NAMIC, also confirmed that he appeared at the roundtable, and urged the states to adopt the Illinois model, that is based on ‘no prior rate regulation.’ His other major point, Mr. Chamness said, was a call for less of what he and Mr. Sampson called “friction,” namely different standards and reporting requirements among states. “If they do those 2 things, we will go a long way to addressing the types of issues the pro-OFC forces are raising on Capitol Hill,” Mr. Chamness said.

But the most pointed comment was made by PCI’s Mr. Sampson. PCI strongly supports state regulation.

He said he told those attending the roundtable that, “It is increasingly likely that Congress will intervene in insurance regulation unless it is persuaded that rapid, visible, meaningful regulatory modernization at the state level is occurring.” (See related story on the bottom of page 6.)

And, Mr. Sampson said, “I also shared with them that it is PCI’s view states are not making sufficient progress to reform the current regulatory system. I indicated that PCI wanted to work closely with them to help achieve that regulatory reform and modernization.

The heart of that message is that PCI and its members support responsible reform to the existing insurance regulatory system based on sound principles of regulation that preserves the prerogatives of the states.”

He said that, “I shared with them that PCI recognizes the depth of experience of the states in regulating the industry is not something that we underestimate, and that that experience would not quickly be replicated at the federal level.”

Mr. Chamness also said that in his comments, he brought up Florida, which has been critical of insurance companies for not lowering homeowners’ rates enough to satisfy state officials, including state regulators. Florida also suspended the ability of Allstate to write new personal lines business until it turned over hundreds of thousands of pages of document related to its rate structure, and signed an affidavit promising to turn over all documents as they are requested in the future.

“I told them Florida insurance regulation has effectively destroyed the private market, and complimented neighboring coastal states for their restraint, which will ultimately give a benefit to consumers in those states by keeping the private market vibrant and healthy.”

Mr. Chamness noted “some positive signs” in modernizing state regulation, citing recent rate reform in Kansas. “But states have to do more to commit themselves to change,” he said. “We also encouraged the regulators to communicate our concerns to the governors and legislators who ultimately make the decision regarding insurance regulation.


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