“The National Association of Mutual Insurance Companies (NAMIC) commends Subcommittee Chairman Paul Kanjorski, D-Pa., and Ranking Member Scott Garrett, R-N.J., in holding today's hearing on the role of the federal government in the future of insurance regulation. It is critical that Congress carefully craft this role to avoid unintended consequences for the functioning insurance markets that serve main streets throughout the nation.
“We agree with Subcommittee Chairman Kanjorski that the federal government can play an important part in improving the regulation of the insurance industry. The difficulty will be in deciding exactly how it will touch the industry so that it addresses real problems while at the same time taking advantage of the strengths of the current state-based regulatory system.
“Several members of the subcommittee expressed serious doubts at the suggestion the federal government could do a better job than the states at regulating the insurance industry. They cited the collapse of the American International Group as evidence of a failure at the federal Office of Thrift Supervision and not a breakdown in the state system.
“Any objective analysis of the AIG situation confirms that the state regulators protected consumers by effectively regulating the solvency of its insurance subsidiaries. Amidst the collapse of banks nationwide, the state-based regulatory system has functioned well to protect consumers and the solvency of the property/casualty insurance industry. However, this system is not without its faults, and Congress can help address those issues through targeted reforms.
“Specifically, NAMIC supports the creation of an Office of Insurance Information as proposed last year by Subcommittee Chairman Kanjorski. Since the office would be housed in the Treasury Department it would be able to provide advice and expertise on domestic and international insurance policy to the administration and Congress. NAMIC recently offered specifics about this proposal and other possible reforms in testimony before the Senate Banking Committee.
“NAMIC will continue to urge Congress to adopt a measured approach to any reform of the regulation of the property/casualty insurance industry as this debate moves forward. NAMIC will also continue to oppose any proposals that would create a dual regulatory environment.”