The head of the American Bar Association insurance modernization task force says Congress will insist on “more uniform, more national regulation” in 2009 in the wake of the failure of American International Group Inc.
“I see some form of federal regulation, maybe not in all lines, and in all areas of regulation, but I predict more strict financial regulation of insurers,” says Fran Semaya.
Semaya is a partner in the Philadelphia office of Cozen O’Connor; chair of the Task Force on Federal Involvement in Insurance Regulation Modernization at the ABA, Chicago; and president of the International Association of Insurance Receivers, New York.
Semaya says optional federal charter proposals – proposals to let insurers choose between traditional state regulation and regulation by a new federal entity – tend to be associated with deregulation efforts.
Recent events likely will lead to more regulation, not less, Semaya says.
“I don’t see more deregulation, as in an optional federal charter, but [we] will see more regulation, more than we bargained for,” Semaya says.
Semaya made her comments after attending a hearing of the House Oversight and Government Reform Committee on the recent problems at AIG.
The level of federal involvement in insurance regulation will depend on who is president, with Sen. Barack Obama, D-Ill., supporting more regulation than Sen. John McCain, R-Ariz., would support, Semaya says.
“I think federal regulation will be on top of, rather than an alternative to, state regulation,” she says.