NAMIC Chair Reaffirms State-Based Insurance Regulation; Rejects Federal Expansion Efforts as Duplicative, Costly

Download Mr. Ehlert's written remarks

The chairman of the National Association of Mutual Insurance Companies testified today before the House Financial Services Subcommittee on Housing and Insurance, expressing support for three bipartisan bills to curtail the expansion of the federal role in insurance regulation. Paul Ehlert, president of Germania Insurance and NAMIC chairman, pointed out that federal and international encroachment into insurance regulation almost always leads to costly and duplicative oversight with little benefit to consumers, and he reaffirmed the value of the state-based system of insurance regulation in the United States.

“The national system of state regulation has for more than a century served consumer and insurer needs well,” Ehlert said. “Any federal regulatory authority, whether designed to replace or duplicate this state system, would disrupt well-functioning markets, introduce competitive inequities, and generate confusion among consumers.”

Specifically, Ehlert voiced support for two bills that he said would protect against federal overreach. H.R. 3861, the Federal Insurance Office Reform Act, recently introduced by subcommittee Chairman Sean Duffy, R-Wis., and Rep. Denny Heck, D-Wash., would properly refocus the Federal Insurance Office on its original mission to serve as an informational resource to policymakers and a voice for the U.S. in international insurance matters.

Ehlert said that many insurers would support simply eliminating the FIO, noting that “it performs many redundant functions better left to the states, needlessly utilizes administrative capabilities, and does not provide public benefits to justify its cost.”

He added, however, that “H.R. 3861 would be a major step in returning the office to its intended purpose. The bill is designed to keep the mission focused on coordinating federal efforts and defending the U.S. market, insurers, and policyholders abroad rather than attempting to regulate the insurance industry here at home.”

The second bill, H.R. 3762, the International Insurance Standards Act, would better protect U.S. insurance regulation from efforts to impose uniform regulatory standards globally.

“Since the financial crisis, the G-20’s Financial Stability Board and the International Association of Insurance Supervisors have become increasingly engaged in prescriptive standard-setting for insurers,” Ehlert said. “We have heard no justification for one-size-fits-all standards and are skeptical of global regulatory uniformity for uniformity’s sake.”

H.R. 3762 would bar federal officials from agreeing to any international standard that conflicts with state laws and would provide Congress a process to formally voice its disapproval of any future international insurance agreement. “These reforms will ensure that foreign regulatory standards, inappropriate for our system and markets, would not be unilaterally imported to the U.S. and would provide Congress the ability to exercise its proper role in the process,” Ehlert said.

In addition to supporting these two bills, Ehlert also testified in support of H.R. 3746, the Business of Insurance Regulatory Reform Act, which seeks to clarify and reinforce that the Consumer Financial Protection Bureau should give deference to state insurance regulators when it comes to the business of insurance.

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Article Posted: 10.24.17
Last Updated: 11.08.17


Matt Brady
Senior Director - Media and Federal Advocacy Communications