The head of the National Association of Insurance Commissioners says this is the wrong time for members of Congress to try to change states’ insurance oversight authority.
Roger Sevigny, president of the National Association of Insurance Commissioners, Kansas City, Mo., and New Hampshire insurance commissioner, has put out a statement condemning H.R. 1880, the National Insurance Consumer Protection Act.
“If passed, this bill would allow nearly any function of the so-called national insurance regulator to be carried out by self-regulatory industry groups, effectively handing the keys of supervision over to those being supervised,” Sevigny says in the NAIC statement. “Akin to letting the fox guard the henhouse, this bill would essentially dismantle existing state-based consumer protections…. This is not a reform bill, it is a deregulation bill.”
H.R. 1880, introduced by Reps. Melissa Bean, D-Ill., and Edward Royce, R-Calif., includes “optional federal charter” provisions that would give most insurers and producers the ability to choose between being regulated by state insurance regulators or being regulated by a new national insurance commissioner.
In some cases, the government could require that large, “systemically important” insurers by federally regulated.
The bill would require state and national commissioners to share information with a national systemic risk regulator. During emergencies, the systemic risk regulator could handle problems at an insurer without getting help from the insurer’s state regulator.
Bean and Royce also introduced an OFC bill during the previous Congress.
The American Council of Life Insurers, Washington, and the National Association of Insurance and Financial Advisors, Falls Church, Va., are welcoming the bill.
Today, Sevigny says, the American people are calling for stronger oversight, not weaker oversight, and Treasury Secretary Timothy Geithner and congressional leaders have called for an end to “charter shopping,” or arrangements that permit financial services companies to choose their regulators.
State insurance regulation has kept insurers stable, and insurance businesses have not posted a systemic risk to the nation’s economy, Sevigny says.
“There are a number of areas of the financial sector that suffer from little or no regulation,” Sevigny says. “Insurance is not one of them. Energy and resources should be focused on solving the real problems exposed by our financial crisis, and not focus on the call for deregulation that has already costs Americans billions of dollars.”