WASHINGTON–Rep. Paul Kanjorski says the federal government should have a role in regulating insurance.
“I will act quickly, yet deliberatively, in developing a new game plan to involve the federal government in direct oversight of the insurance industry,” Kanjorski, D-Pa., chairman of the House Financial Services Committee capital markets subcommittee, said today at a subcommittee hearing with the title “How Should the Federal Government Oversee Insurance?”
Kanjorski said Congress should start by establishing a legislative regime for monitoring the systemic risks posed by failures of non-bank financial institutions.
“The events of the last year have demonstrated that insurance is an important part of our financial markets,” Kanjorski said. “AIG taught us that the business of insurance has become complex and no longer fits nicely in the state regulatory box.”
Because so many insurance products are either of national importance or uniform in nature, the federal government “should have a role in regulating the industry,” Kanjorski said. “As such, we now must ask how the federal government should oversee insurance going forward.”
The reaction of other subcommittee members was mixed.
Rep. Jackie Speier, D-Calif., the newest member of the committee and a strong advocate for California’s proposition-mandated insurance consumer protection laws, said she opposes federal regulation of insurance.
She called proposals for federal regulation “seriously misplaced and misguided.” She also argued that AIG’s failure was due to its investments in derivatives, which she said was regulated by the federal Office of Thrift Supervision.
OTS “was largely asleep at the switch,” Speier said.
Rep. Brad Sherman, another California Democrat, voiced support for Rep. Kanjorski.
“I dream of the days when consumers complained of being denied insurance products on a timely basis” because of state regulations, Sherman said. “Today those problems seem quaint.”
Also at the hearing, J. Robert Hunter, a consumer advocate and former insurance commissioner, testified that the federal government should take over regulation of insurance company solvency, and that Congress should repeal the McCarran-Ferguson Act.