Posted on 28 Jun 2010
Early this morning, the conference committee on financial services regulatory reform finished negotiations on H.R. 4173, which will be known as the "Dodd-Frank Act". David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI) made the following statement on behalf of home, auto and business insurers:
"Significant improvements have been made to the conference report to minimize the potential negative consequences of adding federal oversight to the state-based insurance regulatory system. However, deep concern remains over the long-term impact of this legislation on U.S. competitiveness for the financial services sector.
“PCI is pleased that the conferees recognized that the Federal Insurance Office should not be a duplicative federal insurance regulator. The office is limited primarily to monitoring the industry and advising Congress and federal agencies on insurance issues.
“Essential new provisions were added to help reduce duplicative information gathering requests on insurers. The Federal Insurance Office will be required to seek data from state regulators first before imposing costly and burdensome data demands on insurance companies.
“The conference report also now includes important Federal Insurance Office provisions for appropriate due process to address questions over federal preemption. FIO determinations will be subject to de novo judicial review.
“Congressional leaders have largely identified that the insurance sector already has its own resolution system at the state level and should not pay for bank failures in the new orderly liquidation process in the bill.
“The state regulatory system for property casualty insurers provides the strongest consumer protections of any other sector and it enforces strict solvency requirements for companies.
“Home, auto and business insurers have been strong and stable throughout the financial crisis and are not systemically risky. In addition, the state guaranty fund system protects insurance policyholders and provides assurance that claims will be paid, even in the unlikely event of a company failure.
“Duplicative federal oversight threatens to add costs to the insurance marketplace without corresponding benefits to the consumer. It also creates potential conflicts with existing state regulatory protections.”