WASHINGTON — Financial services regulatory reform should include a dedicated, functional federal insurance regulator, according to eight financial services groups.
The groups wrote Tuesday to the leaders of the Senate Banking Committee and the House Financial Services Committee to ask that the appropriate congressional committees consider the federal insurance regulator proposal as Congress deals with efforts to create a “systemic regulator.”
The groups that signed the letter include Agents for Change, Washington; the American Bankers Association, Washington; the American Bankers Insurance Association, Washington; the American Council of Life Insurers, Washington; the American Insurance Association; the Council of Insurance Agents and Brokers, Washington; the Financial Services Roundtable, Washington; and the Reinsurance Association of America, Washington.
Obama administration officials say the systemic regulator would oversee major non-bank financial institutions as well as banks.
Some groups have asked Congress to start by creating a systemic regulator with the authority to handle troubled financial firms, then come up with more comprehensive reforms later.
The groups that wrote the latest later say strong and uniform federal regulation and supervision of insurance companies, producers and holding companies “would reduce costs and risks to consumers and the economy.”
“As Congress examines the creation of a financial stability regulator for all financial services institutions, it should give insurers and reinsurers the ability to be chartered and exclusively regulated at the federal level,” the groups write. “While state insurance regulation should remain available for those who choose it, the current environment, coupled with the structural limitations of the state system and the fact that insurance has become a global, integrated business, underscores the need for a dedicated federal insurance regulator that can coordinate seamlessly with a market stability oversight authority and interact with other financial service regulators at home and abroad.”
Strong solvency regulation is central to consumer protection, and a federal insurance regulator “must have the authority to examine and address all factors material to the solvency of national insurers and reinsurers, including analyzing relevant financial data of non-insurance affiliates and insurance holding companies that may be germane to that financial regulatory authority,” the groups write.
The groups also call for the creation of a federal guaranty agency, and they sqy a systemic regulator should work through the federal insurance regulator.
“Federal market stability oversight should not undermine or duplicate the authority of that federal regulator,” the groups write. “Only through this coordination will a market stability overseer have the ability to both detect and work with the functional regulator to act upon market activity and business practices that may adversely impact the broader markets and economy in a timely and comprehensive fashion.”
The groups say the federal insurance regulator should preserve the right of states to levy “nondiscriminatory premium taxes.”