NAMIC will testify next Tuesday before the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises at a hearing titled, “Systemic Risk and Insurance.” The subcommittee intends to explore how to improve oversight of the insurance industry in order to protect insurance consumers and prevent insurance companies from posing a systemic risk. We secured a seat on the testifying panel at what is assumed to be the last hearing focused on insurance before the House moves to pass financial services regulatory reform legislation.
One of the main concerns of the subcommittee will be which, if any, types of insurance could threaten the entire financial system and how to address that risk. NAMIC intends to make clear that property/casualty insurance was not responsible for the current crisis, does not pose a systemic risk to the economy, and should not be subject to any new regulator.
The panel testifying before the subcommittee is a diverse collection of key industry players. Representing insurers will be witnesses from the American Council of Life Insurers, the Reinsurance Association of America, the American Insurance Association, two mono-line insurers, and NAMIC. Other witnesses will include a representative from the European Union, a consumer advocate, and the National Association of Insurance Commissioners. NAMIC will be providing the unique perspective of an association with a membership that represents the broadest cross-section of the property/casualty insurance industry. We will be the only voice of insurance companies serving main streets across the United States who might be unintentionally harmed by any new regulatory scheme.
Testifying on behalf of NAMIC will be John T. Hill, president and COO of Magna Carta Companies and Chairman-Elect of NAMIC. Mr. Hill will be returning to the other side of Capitol Hill after testifying in March before the Senate Banking, Housing, and Urban Affairs Committee at the hearing titled, “Perspectives on Modernizing Insurance Regulation,” which was the Senate’s key hearing on insurance regulation this year.
Hill will remind the subcommittee members that while many in the financial services sector have struggled during this economic crisis, the property/casualty insurance industry has remained comparatively strong and has continued to fulfill its promises to its policyholders. Furthermore, because of conservative and liquid investment portfolios, low leverage ratios, strong solvency regulation, and a highly competitive and diverse marketplace, property/casualty insurance companies – both individually and collectively – do not pose a systemic risk to the economy.
This hearing comes at a critical time, one day before the Obama Administration releases its proposals for the reform of the financial services regulatory system and Congress’ crafting of legislation begins in earnest. Chairman of the House Financial Services Committee Barney Frank, D-Mass., has said that he would like to pass a reform package before the August recess. There is no better time to be on the Hill sharing our message with lawmakers.
Both Hill and NAMIC staff will be working hard through the weekend to finalize testimony and prepare an oral statement. The hearing will take place June 16 at 10 a.m. and will broadcast live at the House Financial Services Committee website.
Direct questions to NAMIC Vice President - Federal and Political Affairs Jimi Grande at (202) 628-1558.