“We are encouraged by Secretary Geithner's statements that this proposal will maintain the important role that state regulators play in supervising insurance companies. We agree with his assertion that financial institutions must not be allowed to ‘cherry pick’ among competing regulators in search of the lowest standards and constraints.
“We also agree that there is a need to address how resolutions would operate for financial structures and activities outside of the existing FDIC system for banks and the existing state guaranty fund system for insurers. However, any expansion of federal resolution authority should not displace those proven systems.
“State insurance regulators have a long history of consumer protection, proven solvency oversight and fostering market stability. Any action at the federal level to regulate financial stability should be collaborative, transparent and inclusive.
“We look forward to working with Congress and the Administration on regulatory and legislative reforms that preserve the successful state-based regulatory system that guards the assets of the insurance companies in our states — and protects policyholders and claimants.
“To that end, state insurance regulators have outlined for Congress and the Administration a series of principles for systemic risk regulation, as it relates to insurance, that we believe must be incorporated into any system of comprehensive systemic risk supervision.”
NAIC Principles for Systemic Risk Regulation
State insurance regulators recognize that federal action can manage systemic risk within the nation’s financial marketplace. We believe such proposals should incorporate the following principles:
* Consumer access to state-based regulatory officials.
* Formalized state and federal collaboration to regulate financial conglomerates.
* Limited and extraordinary federal financial-stability regulatory authority, exercised in conjunction with functional regulators.
NAIC Principles for Insurance Regulatory Modernization
For 150 years, state insurance regulators have continually improved and strengthened the state-based insurance regulatory system. Fresh reforms must incorporate these principles:
* Uniform standards where appropriate; local or regional where necessary.
* Continued state responsibility for standard setting and enforcement as well as managing taxes and fees.
* Equal standing for state insurance regulators with other regulators; formalized collaboration with federal financial-services regulators and full participation in information sharing. Collaboration with international insurance and financial-services regulators on matters related to the U.S. insurance marketplace.