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Lloyd's Says FIO Will Be Federal Regulator, NAIC Disagrees

Although the U.S. Treasury's recently established Federal Insurance Office lacks regulatory authority, outgoing Lloyd's of London Chairman Peter Levene thinks it ultimately will serve as...
October 18, 2011

Although the U.S. Treasury's recently established Federal Insurance Office lacks regulatory authority, outgoing Lloyd's of London Chairman Peter Levene thinks it ultimately will serve as a national insurance regulator, assuming some regulatory duties currently held by states.

"It's the first attempt to have any kind of federal involvement in the insurance industry," he said. "I think and hope that one day it will become a federal regulator."

However, Therese M. (Terri) Vaughan, Ph.D., CEO of the National Association of Insurance Commissioners, emphasizes that the Dodd-Frank bill "made clear that the Federal Insurance Office was not a regulator." She says, "They reaffirmed state regulation, which was an important acknowledgment after the financial crisis that state regulators did a pretty darn good job."

Dr. Vaughan warned against a system that would allow insurers to pick their own regulator.
"That was one of the lessons of the financial crisis," she said. "Allowing companies to pick their regulators is the wrong way to go."