NAIFA GovWatch

U.S. House Subcommittee Holds Hearing on Insurance Regulation; Examine OFC, Systemic Risk Regulator and other Options

Issue: Insurance Regulatory Reform

Date: May 15, 2009

Action Taken: The House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises (Chairman Paul Kanjorski, D-PA) held a hearing yesterday entitled “How Should the Federal Government Oversee Insurance?” The hearing examined what options the federal government had with regard to insurance regulation, with a heavy focus on a systemic risk regulator, and an optional federal charter for insurance. The following witnesses testified:

Mr. Baird Webel, Specialist in Financial Economics, Congressional Research Service;
Ms. Patricia Guinn, Managing Director, Global Risk and Financial Services Business, Towers Perrin;
Mr. J. Robert Hunter, Director of Insurance, Consumer Federation of America;
Mr. Martin F. Grace, James S. Kemper Professor, Department of Risk Management and Insurance, Georgia State University; and
Mr. Scott Harrington, Alan B. Miller Professor, Wharton School, University of Pennsylvania.

Of significant note was the statement from Chairman Kanjorski that, given the recent economic crisis and the role AIG played in the crisis, the federal government must be involved—in some capacity—in the regulation of insurance. Kanjorski stated that until now, Congress had only been reactive to crises involving the insurance industry, and the time had come for the federal government to respond proactively.

Chairman Kanjorski was not specific about the extent to which he believed the federal government should regulate insurance. He acknowledged that state insurance regulators had done well, but with insurance becoming an increasingly more global industry, it was necessary for the U.S. to have a world-class insurance regulator to represent the industry on a global scale.

For a complete report of yesterday’s hearing, please visit www.naifa.org/advocacy/documents/ReportonHouseSubcommitteeHearing.pdf.

Next Steps: Chairman Kanjorski signaled that he would like to act swiftly to develop a plan to involve the federal government in oversight on insurance, but gave no real timeline for such a plan. NAIFA will continue to engage with Chairman Kanjorski and other members of the House Financial Services Committee and advocate for our conditional support for an optional federal charter. We will also continue to advocate for agent licensing reform legislation known as NARAB II as well as our support for the creation of a federal Office of Insurance Information (OII). NAIFA has learned that Chairman Kanjorski is considering reintroducing legislation to create an OII. Further, Reps. David Scott (D-GA) and Randy Neugebauer (R-TX) are planning to reintroduce NARAB II as early as next week. NAIFA will continue to keep you informed of important developments as information becomes available.

For more information on NAIFA’s federal and state insurance regulatory reform efforts, go to www.naifa.org/irr.

NAIFA Staff Contact: Jill Edwards, Assistant Vice President – Federal Government Relations.

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