WASHINGTON, D.C. – June 8, 2010 — With the Senate and House financial reform legislations moving to a conference committee, officers of the National Association of Insurance Commissioners (NAIC) provided state regulators’ perspective on the issue.
In a letter to congressional leaders, state regulators expressed support for several provisions that preserve critical consumer safeguards and maintain efficiency in the national system of state-based insurance regulation. The NAIC supports the House Federal Insurance Office (FIO) language, which provides the office with narrow authority to implement mutual recognition or equivalence agreements.
“The FIO approach ensures the federal government has information and expertise on the insurance sector, provides that international agreements are subject to appropriate review and input, and protects against unnecessary preemption of state law,” said Jane L. Cline, NAIC President and West Virginia Insurance Commissioner.
The NAIC supports the House proposal allowing for non-voting membership for state banking, insurance and securities regulators on the Financial Stability Oversight Council (FSOC).
“The FSOC is a regulatory body, and demands the commitment, expertise, and regulatory data that only an active state insurance commissioner can bring,” said Cline. “The inclusion of a state insurance regulator will aid considerably as an early warning system in identifying practices and risk-related trends that contribute to systemic risk.”
Regulators also urged congressional leaders to retain provisions excluding insurance companies from systemic resolution authority and expressed support for insurers to continue to utilize derivatives for hedging purposes consistent with state rules and laws.
“We want to ensure the legislation ultimately enacted addresses issues, gaps or weaknesses exposed by actual events, and avoids unnecessary or counterproductive changes to healthy and functioning elements of the financial system,” said Cline.
Click HERE to view full text of letter.
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.