Speaking at the National Association of Insurance Commissioners’ International Insurance Forum, Connecticut Gov. Dannel P. Malloy told a crowd of U.S. and international regulators and insurance representatives that when it comes to insurance regulation, states are “here are stay” and that the states — not the federal government — will have the last word on whether international standards will become a reality in the U.S.
Gov. Malloy offered his remarks at the NAIC’s seventh annual International Insurance Forum in Washington, D.C., Tuesday. The event drew more than 250 U.S. and international insurance regulators, consumer advocates, academics and industry leaders.
“Of course, what differentiates the U.S. insurance sector from other jurisdictions represented in this room today is the decentralized, state-based regulatory structure,” Malloy told the forum attendees.
“We’re not very far from our National Archives where the U.S. Constitution resides, so I will spare you the lecture in American federalism. But suffice it to say that our regulatory structure is not an accident or an afterthought, but a well-reasoned construct of federal and state law working together,” Malloy said.
Malloy noted that almost 70 years ago, the McCarran Ferguson Act laid out the initial roadmap whereby regulation of insurance was deferred to the states, and this was reaffirmed and reexamined by subsequent Acts of Congress including the recent Dodd Frank Act.
“Some of you may be disappointed to hear this, but when it comes to insurance regulation, we, the states, are here to stay,” he said. “This means that, unless Congress ignores our 140-plus year track record and overcomes the resolute opposition of our nation’s governors, state legislatures, and state regulators, the states — and not the federal government — will have the last word on whether international standards will become a reality in this country.”
But, he added, the unique nature of insurance regulation in the U.S. has not been — and will not be — an impediment to delivering the best outcomes for consumers and the insurance industry.
“We have a system that clearly managed the financial system well, ensuring enough capital and liquidity to weather what by all accounts was one of the most significant stresses to our financial system in history,” Malloy remarked. “We also have a system that fosters competition and is not a barrier to foreign market participants.”
In fact, he said, the amount of insurance being written by foreign firms in the U.S. — including from large markets like Europe and Asia — often dwarfs the amount being written by U.S. firms in those same jurisdictions.
“A question we should be asking here in Washington,” Malloy said, “is not whether the states are enabling foreign investment, but rather whether enough is being done here in D.C. to open up the doors of economic opportunity for U.S. firms abroad.”
Malloy also assured that he and other governors around the country are also committed to working together with federal and international colleagues to make the industry more fair and more resilient.
“Before I leave you with the impression that I and my fellow governors are simply interested in defending the status quo, know that I take my home state’s reputation as the insurance capital seriously,” Malloy said, “and I fully appreciate the global and interconnected financial system that we are all working to make more fair and more resilient.”
“Our system has to continuously evolve to keep pace with this reality, and we must constantly live up to the trust and responsibility placed in us to regulate this complex industry,” Malloy said. “We’re committed to working with our federal and international colleagues in good faith to look for solutions that make sense.”
“Everyone in this room knows we can’t put the round peg of banking rules into the square hole of the insurance business, and we know that we have to work together to jointly supervise global groups, to share information and data, and to coordinate across sectors so that risk has no safe place to hide,” Malloy said at the NAIC international forum. “If you share that goal, and if you care more about what we do than where within the government we do it, you have a partner in the State of Connecticut.”
Source: National Association of Insurance Commissioners