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September 19, 2008 at 11:33 AM
The National Association of Insurance Commissioners has responded quickly to suggestions that the turmoil at American International Group Inc. might be evidence of the need for a federal insurance regulatory agency.
The American Council of Life Insurers, Washington, and the American Insurance Association, Washington, argued Thursday that the problems at AIG, New York, show why lawmakers should give insurers the option of choosing between the traditional state-based regulatory system and a new, national insurance regulatory system.
Sandy Praeger, the Kansas insurance commissioner and president of the National Association of Insurance Commissioners, Kansas City, Mo., has put out a statement of her own rejecting the trade groups’ argument that the AIG problems demonstrates the need for an optional federal charter.
The ACLI and the AIA “have gotten it wrong and are letting their desire to have an optional federal charter get in the way of making a common sense recommendation to address the problem,” Praeger says in the statement, which was distributed by several state insurance departments as well as by the NAIC.
People think of AIG as being an insurance company, but it is really a conglomerate that controls 71 U.S. insurance entities and 176 other financial services companies, Praeger says.
The AIG finance unit that got into trouble was regulated by the federal Office of Thrift Supervision, not by any state insurance department, Praeger says.
