The National Conference of Insurance Legislators’ (NCOIL) financial services committee has unanimously passed a resolution urging Congress to exclude insurers from systemic risk regulation proposals currently being considered. NCOIL took the action during its just-completed 2010 spring meeting in South Carolina. PIA attended the meeting.

The NCOIL resolution noted that subjecting insurance companies to liability for assessments to pay for the resolution of failing, systemically risky non-insurers would inappropriately shift the costs of financial industry segments that pose significant systemic risk to an industry that does not pose systemic risk. It also said insurance companies already pay the resolution costs for failed insurance companies through the state guaranty fund system, and to force them to pay a second time for the failures of systemically risky non-insurers would be “a unilateral subsidy of creditors and investors of highly leveraged and systemically risky firms by insurance consumers.”

“NCOIL urges the Senate Committee on Banking, Housing and Urban Affairs to exclude the insurance industry from systemic risk regulation, federal resolution authority and assessments to fund the resolution of systemically risky financial firms in any financial services regulatory reform legislation that it considers,” the resolution concluded.

NCOIL Resolution  (full text)

NAIC President-elect and Iowa Insurance Commissioner Susan Voss testified before the NCOIL Financial Services & Investment Products Committee on Friday, March 5. She reported on the efforts of the NAIC to educate leaders in Washington and “explain how insurance works. It’s a lot of insurance 101.” Chairman Morelle (NY) asked Commissioner Voss if this message was getting across. She said they are beginning to understand how complicated insurance is and how well the states are regulating it. NAIC representatives recently met with representatives from the FDIC to discuss systemic risk.

March 10, 2010