As the financial crisis worsened, NAMIC formed the Financial Services Task Force, which represents a cross section of NAMIC’s 1,400 member companies. The goal of the task force was to develop principles to respond to the financial crisis and anticipated public policy proposals. The task force was chaired by John Hill, NAMIC chairman-elect and president/COO of New York-based Magna Carta Companies.
“We created this working group specifically to deepen our understanding of the financial markets crisis and craft and assess regulatory reform proposals as needed,” said Charles M. Chamness, president/CEO of NAMIC. “Over the course of the last few months, our members, staff, and consultants have engaged in a productive dialogue that has incorporated concerns from across the entire industry about the future of insurance regulation for consumers and property/casualty insurers.”
The principles, as adopted, seek to assure that any new federal regulatory proposal:
* Clearly distinguishes property/casualty insurance from others in the financial services industry, such as commercial and investment banks, securities firms, hedge funds, and life insurance.
* Remains targeted to address those industries and products that have contributed to the current crisis.
* Avoids establishing a dual regulatory system that features simultaneous federal and state insurance regulators.
* Includes the adoption of an Office of Insurance Information to serve as a source of domestic and international insurance public policy expertise and as a liaison, conduit, and repository for the vast amount of information made public by the insurance industry.
In considering the origins of the economic turmoil, the task force helped finalize a report released in January titled “Financial Oversight Failure Highlights Effectiveness of Insurance Regulation.” The report, written by former Illinois Director of Insurance Nat Shapo, highlights structural and behavioral differences between the property/casualty insurance industry and other types of financial institutions, and identifies specific factors that led to the crisis.
Because Congress will consider major reforms of financial services regulation in the near future, the recommended set of principles will help lead policy discussions for the association. “The principles help give NAMIC a metric for measuring the effectiveness of any regulatory proposal offered,” Chamness said. “This will facilitate NAMIC’s ability to respond quickly and assist Congress in creating targeted legislative solutions that don’t create dual regulation or dismantle solvency regulation that has proven most effective.”