Careful What You Wish For

Jimi Grande, vice president of federal and political affairs for NAMIC, says it’s much more a mixed bag where he sits. The OFC is “not what we think is the right solution,” he says, nor does he consider it politically feasible. Members of NAMIC, he explains, range from small farm and county mutuals–”guys that write in one county”–to the bigger companies offering coverage in ten to twelve states within a region, to “megagiants.” The biggest companies are the ones who want the OFC, he says, smaller companies are “scared to death of federal regulation,” and for that matter, NAMIC wonders if the way the OFC is currently envisioned is “at all the way Washington would create it.”

In fact, he sees federal regulation as simply adding a second layer of regulation on top of what the states already require. Grande also points out that life insurers are a “different industry” than property/casualty insurers. Other nationally regulated financial institutions are in a different category: “a mortgage is a mortgage and the same with life insurance, pretty much wherever you live.” However, the perils and risks of consumers in the property/casualty market are very regionalized. If, he adds, the intent is to create more on-hand expertise in Washington in case of disaster that “seems pretty reasonable.” But he cautions that property/casualty “by and large” has never had a taxpayer bailout, whereas, among other federally regulated groups, “everybody has trouble.”

Reinsurance Association of America (RAA)

RAA’s membership is made up of reinsurance companies in the property/casualty arena that run from large to small, and also includes subsidiaries of foreign companies. Tracey Laws, senior vice president and general counsel, says that RAA’s official position is to support the OFC, so that companies can be chartered at a federal level, but “we also support a single national regulator at the state level if that can be achieved more quickly.” Since reinsurance is essentially “insurance for insurance companies” and much of the risk in case of catastrophe is spread throughout the world (in testimony before the Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Laws pointed out that, in the wake of 9/11 and Hurricane Katrina, reinsurers bore the brunt of losses, 60% and 61%, respectively), the ability for reinsurers to function at a global level argues the need for regulation at the federal level. The Blueprint’s proposed Office of Insurance Oversight would accommodate that, she says, with international regulatory bodies talking to one another “without companies having to be licensed in that country.”