VA Oversight Defended

Hughes argued that life insurance product regulation requires a thorough understanding of the basic workings of the life insurance business. “That understanding does not presently exist at the federal level and would not exist within the CFPA should it be established,” he insisted.

Cliff Wilson, president of NAIFA, said that “it is dangerous to separate insurance product regulation from solvency regulation, because the pricing and cost of products is so interrelated to the financial health of the insurer offering the product.”

Moreover, he said, “to the extent the federal government assumes insurance product regulatory authority, it should be part of a comprehensive insurance regulatory reform effort that brings the required insurance expertise to Washington, addresses regulatory overlap with the states and has the authority to address the full panoply of regulatory issues that arise in connection with the oversight of this critical sector of the economy.”

Cathy Weatherford, president and CEO of NAVA, testified that “no compelling need has been identified in the insurance and annuity market for an additional regulator focused on consumer protection.”

Moreover, she said, “An additional layer of regulation would only risk confusion, which would exacerbate the already concerning issues with the current regulatory structure.”

Consumers would ultimately be saddled with increased costs and would lack fast access to needed products, “given the natural and inevitable scenario of two different regulators of the same product having differing views about product standards,” Weatherford said.

Representing the National Association of Insurance Commissioners, Ralph Tyler, insurance commissioner of Maryland, said, “The states believe insurance has unique challenges best handled by a single regulatory department. We believe a new agency to regulate consumer protections in insurance is not necessary and would cause the kind of overlaps that lead to preemption of state laws and rules designed specifically to address the complexities of insurance.

In his written testimony, Brian Atchison, president and CEO of IMSA, argued that including insurance-related products under the proposed agency “may be premature and redundant to the extent that a revised insurance regulatory scheme incorporating a meaningful self-regulatory organization will focus on marketing and sales practices to ensure that consumers are purchasing products of their choice that meet their individual goals and objectives.”