State insurance regulators and legislators have dismissed comments by Treasury Secretary Henry Paulson attacking state insurance regulation in the wake of the American International Group credit crisis. Mr. Paulson made his comments on Meet the Press on September 21.

North Dakota State Rep. George Keiser, R-Bismarck, the secretary of the National Conference of Insurance Legislators, said AIG’s problems were on its investment side and not with the insurance subsidiaries. His response was made during the fall meeting of the National Association of Insurance Commissioners, underway in Washington, D.C.

“The U.S. is the best insurance market worldwide and offers the best protection for consumers worldwide,” he continued. “The “problems surfacing have been at the federal level of regulation,” Keiser added. He noted that within 24 hours of the start of the AIG crisis, locally based state regulators were explaining to consumers what the crisis meant to them and that the insurance subsidiaries are sound. “We didn’t have to wait for a federal bureaucracy.”

Maine Director of Insurance Mila Kaufman said the problems were focused on the AIG holding company and “the whole mess was created under federal watch. Because of effective state-based insurance regulation, the insurance subsidiaries of AIG are financially solvent and not in trouble. The approach from Secretary Paulson to deregulate insurance through an Optional Federal Charter and an Office of Insurance Information is exactly what we do not want and will not protect consumers.”

State Regulators Dismiss Paulson Comments (National Underwriter 9/22/08)

September 24, 2008