WASHINGTON (December 16, 2011) – Efforts to reform and modernize the insurance market should focus on improving the state-based regulatory system without jeopardizing its effectiveness, the National Association of Mutual Insurance Companies (NAMIC) said today.
In response to a request by the FIO, NAMIC provided its views on the issues facing the property/casualty insurance industry today.
“Any discussion of insurance regulatory modernization must begin with the recognition that even in the tumultuous financial crisis, the current state-based system proved resilient and was effective for both solvency and consumer protections,” NAMIC said in its filing. “Many financial and regulatory experts have concluded that it outperformed the other financial services regulatory frameworks in place at the federal level.”
Despite its performance during the economic crisis, NAMIC recognizes that there are still significant areas in need of improvement.
“While the state-based regulatory system has allowed for a well-functioning and competitive insurance market, we are concerned with the lack of efficiency and uniformity in the states and believe that much can be done to modernize and streamline insurance regulation,” the association said. “Going forward, it is important that our insurance regulatory system directs its primary focus to ensuring that insurers have the capital strength necessary to continue to meet the promises they have made to their customers. This can be best accomplished by regulators who encourage vigorous competition among insurers as opposed to pursuing policies such as price controls and the prevention of sound underwriting practices that will ultimately harm consumers by driving insurance capital out of the marketplace. It is our goal to help the FIO recommend actions that will promote as much efficiency in the state system as possible without jeopardizing its effectiveness.”
The request for comment is a part of the FIO’s study of the insurance regulatory system, which was mandated under the Dodd-Frank Act. The office is required to report its findings in January.
“Property/casualty insurance proved to be among the best regulated financial services sectors throughout the financial crisis,” said Jimi Grande, senior vice president of federal affairs for NAMIC. “Our policyholders were well served and well protected. We will continue to support efforts that lead to more uniformity and streamlined processes; however we will fight any new federal efforts that will lead to more duplicative or costly regulations.”
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