National Association of Insurance Commissioners (NAIC) President and New Hampshire Insurance Commissioner Roger Sevigny says the most recent financial services regulatory proposal from the Obama Administration retains a role for state insurance commissioners.

“We are encouraged by Secretary Geithner’s statements that this proposal will maintain the important role that state regulators play in supervising insurance companies,” Sevigny said. “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.”

NAIC Principles for Systemic Risk Regulation

State insurance regulators recognize that federal action can manage systemic risk within the nation’s financial marketplace. We [NAIC] 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.

Geithner Plan Maintains State Insurance Supervision (NAIC 3/26/09)

Obama Plan Retains Their Insurance Role, Say State Regulators (Insurance Journal 3/27/09)

March 31, 2009