Consumer representatives to the NAIC say in a letter to the Federal Insurance Office (FIO) that effective insurance regulation requires greater transparency and substantive regulation.
The letter also said that insurance regulation through market competition “would be inadequate,” and said regulatory modernization “should not become deregulation by another name.”
The letter stated that neither state nor federal regulation is inherently superior. The issue “is what works best.”
The letter voiced concern that a dual or “optional” [federal] charter would likely repeat the failure of our dual banking system, “where regulators competed through deregulation.”
The consumer reps also acknowledged that international regulatory cooperation is increasingly important.
But, the letter said, “it cannot be used as an excuse to dilute state and federal consumer protection standards.”
The letter was written in response to requests for comment from the Treasury Department and FIO on how the industry should be modernized and regulated going forward.
The comments were requested as the Treasury and FIO work to complete a report on those issues mandated by the Dodd-Frank financial services reform law.