NEW YORK — Insurance regulation should focus on deterring future wrong acts, not on punishing the sins of the past, New York’s top regulator said here Friday.
New York Department of Financial Services Superintendent Benjamin Lawsky, speaking before the Insurance Federation of New York (IFNY), told the crowd of insurance professionals, “I do think we’ve entered an era right now of very severe enforcement.”
He explained, “It feels as if the focus more and more is on punishing firms for acts that happened years ago. We’re moving more and more in that direction even as we move further and further away from the financial crisis.”
Lawsky said the punishment being meted out against firms is massive, but done in a way “that I don’t think focuses on deterring the conduct we want to deter going forward in the future.”
He clarified, “Don’t get me wrong, there is a place, in my view, for clear rules, and enforcement when those rules are broken. But it feels like we’re moving into an era where we’re not doing any of that, and it’s just punishment for punishment’s sake, and we’re focused on the past instead of where we are now and the future.”
Lawsky expressed concern about what such enforcement could mean for the financial-services industry in New York, and he called for a “balanced middle approach to enforcement where wrongdoers are held accountable without throwing the baby out with the bathwater and killing the golden goose of New York City.”
He concluded, “And I think it’s time that we have a real dialogue in society at large about how we’re going to go forward on these issues.”
ACE Chairman and CEO Evan Greenberg, who received the Free Enterprise Award at the IFNY luncheon, also took issue with regulations contemplated and enacted in the wake of the financial crisis. Both he and Lawsky indicated that regulations are taking a bank-centric approach that does not make sense for the insurance industry.