Congress and the Obama administration should take care in making changes to the insurance regulatory system, the National Association of Mutual Insurance Companies said today in response to the release of the Federal Insurance Office report on insurance regulatory reform and modernization.
“The report issued today represents another point in the conversation about our insurance regulatory system,” said Charles M. Chamness, president and CEO of NAMIC. “As we debate what can and should be done by the federal government, it is important to remember that the state-based regulatory system, though far from perfect, has performed remarkably well for decades. That performance should not be taken lightly, especially in favor of new, untested alternatives.”
The report describes numerous steps that could be taken by states to ensure a more streamlined and unified marketplace throughout the United States, but also lists several areas in which the FIO believes a federal role could be explored.
“While the report makes much of the international regulatory climate and the demands to modify our system by non-US regulators, it is worth noting that the U.S. system of state-based regulation consistently has proven itself to be the gold standard of the world – most recently during the economic crisis of 2008,” Chamness said. “We should therefore be wary of significant changes to our existing system, and the unintended consequences that could result. Any move to give the federal government a role in insurance regulation must be taken with extreme care. Even if done with the best intentions, providing federal authority in even a limited sense today could become an avenue to expand that authority tomorrow.”
“We respectfully disagree that federal involvement is necessarily the default answer to existing regulatory concerns,” Chamness continued. “There is much room for improvement at the level of state insurance regulation, but recent experience has not proven that a one-size fits all, nationally designed and operated program will remedy deficiencies and add real value. And the financial crisis experience of other sectors of financial services shows that federal regulation is no panacea.”
Mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act and due in January of 2012, the report outlines recommendations from the Obama administration to modernize the insurance regulatory system.
“NAMIC believes that a free and competitive marketplace is the best means of ensuring consumers receive the best possible protection and service,” Chamness said. “These are the principles that have guided the association for the past 118 years, and they will continue to do so as we work with the administration and members of Congress to advance those ideas that we agree with and make the case opposing those with which we disagree.”
NAMIC is the largest property/casualty insurance trade association in the country, serving regional and local mutual insurance companies on main streets across America as well as many of the country’s largest national insurers. Its 1,400 member companies serve more than 135 million auto, home and business policyholders, and write more than $196 billion in annual premiums.
Director, Federal Public Affairs
Posted: Thursday, December 12, 2013 4:06:34 PM. Modified: Tuesday, January 28, 2014 3:08:08 PM.
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