“The home, auto, and business insurance industry is healthy and competitive, and the current system of regulating the industry is working relatively well,” said Janice Abraham, president and CEO of United Educators Insurance, in testimony to the House Financial Services Committee. “In the past five years, our insurance companies have weathered hurricanes Katrina, Rita and Ike in addition to handling their regular claims without having to ask for a government bailout. We’re not broke, we didn’t cause the current financial crisis, and we don’t need a duplicative system of federal oversight that may ultimately increase costs for consumers.”
Abraham told the committee that PCI supports responsible regulatory reforms that reflect principles of good insurance regulation, and that while it has not taken a position on proposals to create a Federal Insurance Office (FIO), members do have five critical concerns with these proposals, including:
* There are virtually no limits in the bill on the types or volume of information the FIO may demand, although PCI does appreciate the leadership of Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee Chairman Paul Kanjorski (D-Pa.) in dropping the explicit grant of subpoena authority from the previous Office of National Insurance (ONI) proposal. Dropping this authority is a significant improvement.
* The proposed FIO is not required to look to the state insurance regulators or other public sources to obtain information again leading to the possibility of duplicative reporting.
* The FIO may exclude small insurers from its mandatory reporting requirements, but the exclusion is discretionary and undefined.
* The FIO proposal dropped critical due process protections that are standard administrative procedures.
* The scope of the FIO goes far beyond the previously proposed Office of Insurance Information (OII) bill, with the potential to lead to mission creep and greater duplicative and costly oversight. Specifically, the new proposal would have the Office monitor all aspects of the industry and to have any additional related authorities that the Secretary of the Treasury wants to give it.
Abraham thanked Reps. Kanjorski and Judy Biggert (R-Ill.) for their work on this issue and expressing PCI’s desire to work with Congress on addressing any concerns. “PCI has strong concerns about the current legislative FIO draft, but appreciates the improvements from the ONI proposal and looks forward to working with the Committee on addressing the remaining concerns consistent with past Committee leadership efforts,” Abraham said.