NAMIC testified before the Senate Committee on Banking, Housing, and Urban Affairs Tuesday morning during a hearing entitled, “Perspectives on Modernizing Insurance Regulation.” Designed to be an examination of the future regulation of the insurance industry, NAMIC was invited to offer the perspective of those property/casualty insurance companies serving the main streets of America. Our message was delivered by John Hill, president and COO of Magna Carta Companies and NAMIC board chairman-elect, who made clear the fundamental differences between our members and those financial services institutions that have required unprecedented government intervention.
At the outset of the hearing, Chairman Christopher Dodd, D-Conn., paused to remind the members of the committee that the insurance industry was not simply made up of several large institutions. Rather, he pointed out that it was made up of thousands of companies, the vast majority of which are operating successfully. Clearly, our message is having an impact with key decision-makers on Capitol Hill.
Mr. Hill used the opportunity as a witness to solidify NAMIC’s position by reminding Congress that the property/casualty insurance industry is diverse, competitive, and well capitalized. Instead of focusing on property/casualty insurance – an industry that did not cause this financial crisis and continues to successfully weather it – Mr. Hill recommended that Congress take a measured approach of targeted reforms to address the many issues that have emerged since this crisis began. For instance, if properly crafted, the combination of a systemic risk regulator overseeing financial products that pose a risk to the financial system (rather than particular institutions) and an Office of Insurance Information could accomplish many key reforms without the need for an overhaul of the entire insurance regulatory system.
Mr. Hill testified alongside other key players in the industry: Mr. Michael McRaith on behalf of the National Association of Insurance Commissioners; the Honorable Frank Keating, president and CEO of the American Council of Life Insurers; Mr. William Berkley on behalf of the American Insurance Association; Mr. Spencer Houldin on behalf of the Independent Insurance Agents and Brokers of America; Mr. Frank Nutter, president of the Reinsurance Association of America; and Mr. Robert Hunter on behalf of the Consumer Federation of America. This critical hearing will likely be the only one solely focused on insurance regulation before financial services legislation is drafted.
The invitation to testify is a direct result of NAMIC's policy work and lobbying efforts. Our representatives have met with all members of both relevant committees in Congress, published a paper differentiating AIG's problems from the property/casualty insurance industry and its regulation, and staked out sound policy principles for systemic risk and financial reform. The Senate Banking Committee clearly recognized this policy leadership in inviting NAMIC to have a voice at the hearing table.
Immediately following the hearing, NAMIC hosted a press teleconference with Mr. Hill and NAMIC President and CEO Chuck Chamness. They expressed confidence that committee members are focused on the key issues and show a great deal of awareness of the distinctions between AIG, other segments of the financial services industry, and NAMIC member companies.