As the new Congress begins and a new President is about to be sworn in, PIA is joining with carriers and state insurance legislators to spread the news that state regulation of insurance works well.

Congress is expected to address the issue of regulatory reform in financial services at some point during the year. Its prime focus is to be (and should be) correcting the already demonstrated gross deficiencies in federal supervision of the banking, securities and private capital market sectors – all of which precipitated the financial meltdown that led to the current economic downturn. However, (and disconcertingly), there is an expressed interest by some that regulatory oversight of the U.S. insurance industry be swept into the resulting new federal regulatory structure.

PIA opposes a federal takeover of insurance supervision. This includes our concerns about proposed “limited federal tools,” reforms that impose -- rather than solve -- legal conflicts and uncertainty affecting PIA members’ day-to-day operations as they transact the business of insurance.

PIA continues to support and work for a modernized, coordinated, seamless, states’ oversight and regulation of the business of insurance, and to assure that where and when necessary, federal issues and authorities coordinate, complement and work with our state authorities. Such potential state-federal legal confusions may affect PIA agencies, razing questions as to what frame of statutory or regulatory compliance (state or federal) they would be required to follow with each insurance transaction or agency practice. Such confusion could also create adverse impact on insurance producers relating to E&O law and practice.

In an effort to prevent such federal encroachment, several groups in addition to PIA are taking action. The National Conference of Insurance Legislators (NCOIL) has announced plans to hold a summit of state officials opposed to federal regulation of the insurance industry. The National Association of Mutual Insurance Companies (NAMIC) has launched a nationwide grassroots action campaign to protect the interests of Main Street insurance companies in the upcoming overhaul of financial services regulation. And the Council of State Governments (CSG) reiterated its opposition to federal insurance chartering by adopting a resolution during its recent meeting in Omaha, Nebraska.

“Congress will soon consider sweeping regulatory reforms,” said PIA National Executive Vice President & CEO Len Brevik. “State and federal lawmakers need to realize that in this current financial markets crisis, state insurance regulation has proven to be a resounding success while federal regulation in the banking, securities, and private capital market sectors was an abysmal failure that precipitated the financial crisis. Congress needs to preserve what worked as it fixes what failed.”

“PIA applauds NCOIL, NAMIC and the Council of State Governments for taking urgent action to counteract attempts by the advocates of federal insurance regulation to exploit our nation’s current financial crisis by pushing for additional deregulation under the guise of reform,” Brevik said.

PIA Applauds NCOIL, NAMIC, CSG (12/22/08)

January 8, 2009