Congressional Bond Hearing Underscores Need for Optional Federal Charter for Insurers

A hearing on February 14 in the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises focused on bond insurance but also underscored the importance of all types of insurance to the broader U.S. economy, according to the American Insurance Association (AIA).   
  
“While the specific problems confronting the bond insurers may have been unique to that sector, their current situation underscores the need for strong solvency regulation that anticipates, rather than responds to, rapid societal developments that can result in major losses,” said Gov. Marc Racicot, president of AIA.   
  
Legislation that creates an Optional Federal Charter (OFC) would provide systemic reforms and would achieve a more active federal role in the regulation of insurance. It would also recognize how the interdependence of our national and global economies affect the risks insurers assume, and thus the products they provide.   
  
AIA and its member companies strongly support the measures pending before Congress that would establish an OFC for insurers. The National Insurance Act, has been introduced by Reps. Bean and Royce in the U.S. House of Representatives (H.R. 3200), and by Sens. Sununu and Johnson in the U.S. Senate (S. 40).   
  
“Just as investors look to bond insurers in the event of a default on a municipal bond, injured workers, drivers, homeowners, and business owners look to their property/casualty insurers for financial protection,” continued Racicot. “We look forward to working with the Congress in the months ahead to make sure that the insurance regulatory debate is comprehensive and leads to meaningful reform.”

Source: Source: AIA Pess Release | Published on February 15, 2008