May 12, 2009
On May 14, the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises will hold a hearing titled “How Should the Federal Government Oversee Insurance?”.
The following witnesses have been invited to testify:
The hearing comes quickly on the heels of a Government Accountability Office report on state producer licensing, product approval, and market conduct regulation that was issued late last week.
At the request of House Financial Services Committee ranking member Spencer Bachus, R-Ala., Subcommittee Chairman Paul Kanjorski, D-Pa., and Subcommittee ranking member Scott Garrett, R-N.J., the GAO was asked to review the three areas in terms of progress by the National Association of Insurance Commissioners and state regulators to increase reciprocity and uniformity, the factors affecting this progress, and the potential impacts if greater progress is not made.
The report concluded that reciprocity of producer licensing among states has improved, but consumer protection and other issues present challenges to uniformity and full reciprocity. The report suggested that as Congress considers proposals to make changes to the oversight of the insurance industry, it should ensure that all states and jurisdictions include national criminal background checks as part of their producer licensing and consumer protection functions.
The report also recommended that the NAIC and state insurance regulators work with the insurance industry to identify product-approval differences among the various states and improve the consistency of state regulators’ reviews and product filing approvals, once the filings are received through the NAIC’s System for Electronic Rate and Form Filing, or SERFF.
In one small paragraph, the report mentions, “Congress could consider the advantages and disadvantages of providing a federal charter option for insurance and creating a federal insurance regulatory entity.” However, the report further states that although a federal charter may alleviate some challenges, “such an approach could also have unintended consequences for state regulatory bodies and for insurance firms as well.”
NAMIC believes that the creation of federal authority for the regulation of insurance would in fact have severe consequences for the property/casualty insurance industry. Recently, NAMIC’s Chairman-elect John T. Hill, president/COO of the New York-based Magna Carta Companies, offered NAMIC’s comprehensive position on insurance regulatory reform in testimony before the Senate Banking Committee hearing titled "Perspectives on Modernizing Insurance Regulation." This was the committee’s first hearing on insurance regulation since the nation’s financial crisis began.
Rather than an industry panel, Thursday’s hearing will be comprised of mainly academics and economists. NAMIC will be closely monitoring this hearing and will continue to keep you informed.
If you would like to watch the hearing live, please visit http://financialservices.house.gov/index.shtml to be connected.
Posted: Tuesday, May 12, 2009 12:00:00 AM. Modified: Tuesday, May 12, 2009 3:39:41 PM.
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