NAII Senior Vice President for Government Relations Carl Parks has characterized the Insurance Industry Modernization and Consumer Protection Act introduced by Rep. John LaFalce (D-N.Y.), the ranking Democrat on the House Financial Services Committee, as a proposal that does nothing to enhance regulatory modernization and to the contrary contains some disturbing provisions that would actually result in a more burdensome regulatory environment.
Parks said the LaFalce bill would create a Federal Insurance Director with broad discretionary powers similar to those held by state legislatures and insurance regulators, but without the open regulatory process that permits discussion of issues as state regulatory practices do. “The Director’s powers appear to be extremely arbitrary,” Parks said. “The bill itself is without specifics and leaves broad discretion in the federal regulator.
“NAII is committed to seeking needed reforms of the state-based system because we think it provides the best opportunity to create a market-based, competition driven system. We believe that Congress should give the states ample time to improve state regulation. NAII has pledged to carefully study other options with an open mind, but, in our view, the LaFalce bill is premature because the states have not yet had the necessary time to improve their regulatory systems.
Congress has played a significant role since last year when the House Financial Services Committee began a series of hearings on state insurance regulation. Unfortunately, the events of Sept. 11, 2001, interrupted that process.
“We believe that Congress should have time through the hearing process to carefully assess the insurance regulatory system. Such a process can serve to prod states to improve regulation where needed,” Parks said.
Parks stated NAII is encouraging Congress to focus on the terrorism reinsurance issue that currently is urgent to the national economy. The Oversight and Investigations Subcommittee of the House Financial Services Committee has scheduled a hearing Feb. 27 on the impact of terrorism on the insurance marketplace.
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