Ok, then Holding Companies should not be allowed to own insurance companies. Why? Because if the Holding Company fails the insurance company fails. Wise up, and look at the facts that are screaming at you. Regulation without the red tape is good but it may be too late to prevent what is about to unfold. Our legislators and appointed commissioners have failed and they will keep on failing if they don’t stop living in denial of the fact that they sold out for money. They really don’t understand how the industry works, it’s causes and effects. They depended on industry affiliates to tell them. They listen to the money talking and rationalize their judgement after the fact. This is how the commisioners work. Why? This is all they can do with what is available to them.
No one should expect elected representatives to ascertain the difference between an insurance company and its perent holding company. They do not know anything about the industry and if you try to explain it to them their eyes just glaze over. To them, it’s all the same: property, casualty, financial products, life, health, surplus lines etc. “is all just insurance”. Underwriting is a term they don’t get, they just want claims paid so the feds don’t have to get involved. Federal regulation is a fiasco waiting to happen and given melt downs like AIG they will take advantage and run it through congress because the feds bailed them out. This leaves them thinking they know best and are now entitled to take over from state regulation.
1) it was the banking side of AIG that had problems. most folks don’t realize that there is actually many facets of AIG. the insurance side is supposedly financially stable. but as you can see, most folks link AIG to only the INSURANCE.
2) remember that as an insurance company we are supposed to be solvent to pay on claims. the bank side of AIG is not supposed to worry about the insurance side. again, folks don’t realize the separate entity. it’s like having a parent company with kids.
This is why banks shouldn’t be in the insurance business.I don’t see any insurance companys being bail out? Get them the hell out.Let the states keep control.
The Federal Government as the governing body to oversee the Insurance Industry what are they thinking? That’s right there not thinking at the Federal Level regarding this issue. The States have done a great job in keeping the insurance companies in line and regulaing them. Perhaps that is why some companies want Federal regulation. We do not need to look any farther than the Banking Industry and we can see how effective the Federal Government has been. Do those pushing for Frederal Regulation think we are stupid? Can anyone tell me one Federal Program that is run effectively? Let the States continue to Regulate our Industry. The only item we need on a National Level is a clearing house for those of us licensed in several states. I say if it isn’t broke why try and fix it, especially with a Program Run by the Federal Government.
Sandy Paeger, NAIC President, has it right. How can the Feds regulate the Insurance Industry? Look at what they have done in regulating the Financial Industry. Who in their right mind would trust the Feds with the Insurance Industry? Hats off to our State Regulators and the tremendous job they have done in protecting the public and the Insurance Industry.
Amazing, since the problems were not in the insurance business. The architects of these “mortgage security guarantees” were very careful not to call it insurance in an effort to be unregulated by the State DOI. I understand this loophole was created by congress during a midnight session in 2000. Sounds like unfortunate finger pointing to me.
The AIG situation is a “text book” example of the value of the state regulated system. Under a hypothetical federally regulated system, suppose the insurance companies owned by AIG were not required to keep their surplus intact and the holding company was able to co-mingle surplus assetts with other assetts? AIG might have been history. Where is the first place the holding company turned to two weeks ago? They sought approval from NY to allow the insurance entity to move cash (liquid assetts) to the holding company. Those liquid assetts would not have been there unless the state was there to impose their regulation. Now how is AIG paying back their bail out loan…? Right…they must sell the valuable insurance assetts that were regulated under the state system. Do not trust the people who push for federal regulation of insurance companies.
1) They usually do not understand insurance.
2) It is another opportunity the grand stand.
The only fed regulation that should be considered is getting banks the heck out of this business.
I couldn’t agree more with Sandy Praeger. If it weren’t for the health of the insurance units of AIG, no bailout could ever have been crafted.
Just look at the annual statements of each of AIG’s insurance units. Collectively, all 71 companies made $1 billion in pretax profit in the second quarter of 2008 alone, and that would not be possible without robust state regulation. You won’t find much leverage on any of the insurance company balance sheets, and the quality of the investments an insurance company shows on the asset side of the ledger are carefully monitored. Auction Rate securities and CDO’s would never have found their way on to a carrier’s balance sheet. Furthermore, the way a carrier reports their results to the state regulators is different and far less forgiving than GAAP. Quite frankly, the shanaigans the Fed prsently allow simply are not and would never be tolerated by the state regulators.
Could you imagine what our business would look like if we let Paulson and Bernacke become insurance regulators? Thank god for the existing regulatory structure. This is one time that I do appreciate a “19th Century” regulatory model and not the 21st Century sack of manure that led us to this abyss.
What you see and hear is nothing more than election cycle political posturing. No one on Capitol Hill wants to be blamed for this crisis. Please keep in mind that all of the House and 1/3 of the Senate seats are all up for grabs.
The NAIC blasted Congress for suggesting federal regulation of the insurance industry , and mistakenly argued that state regulation actually did an exemplary job in protecting AIG insurance companies and policyholders. NAIC stated “the government didn’t bailout an insurance company” they said the government bailed out AIG and its financial holdings. This is a distinction without a difference. The AIG mess as a prime example of why the state by state regulatory system is not suited for the 21st century. NAIC should not be using AIG as an argument for continuation of state by state regulation. If anything, the AIG situation is a poster child, Exhibit A, for the need to create federal regulation and oversight of the insurance industry. I suggest the NAIC read and comment on the article in Sunday’s New York Times, September 28, 2008 . There was a page 1 article about AIG which, if I read it correctly, stated that one of the major reasons for the downfall of AIG, and the required federal government bailout to the tune of $85 billion, was because there was a failed AIG insurance program. Repeating: A failed insurance program. The program was based overseas in a subsidiary of AIG in London The AIG program insured mortgage loans and other debt instruments. AIG was making huge profits on this insurance. And its executives were making millions while the boom was on While everything was going up, this was easy insurance to sell, and it added a large percentage of net income for AIG. Then when the mortgage crisis and credit crunch hit, and the real estate foreclosures began, AIG realized it was about $75 billion short in the claims that it would have to pay for the risk they insured. That’s when AIG turned to the federal government for the $85 billion. This was no holding company issue, as NAIC is attempting to portray it. NAIC appears to try to characterize AIG as a holding company, which would have avoided state insurance regulation. While top of AIG may be a holding company, the culprit according to the article, was a subsidiary of the AIG holding company in London, which was selling, it turned out, risky insurance . that should’ve been carefully watched. Is there any state regulator that could have watched these international undertakings? Impossible! Isn’t this a clear enough example of where more regulation is required, and on the federal level. ? If these facts about AIG are true, the NAIC and individual state regulators should take a good look at this, and ask themselves if their current regulations could have detected and stopped this problem. The international scope of insurance clearly dictates the need for federal regulation. Congress should clearly be looking at federal regulation and our Congress can be criticized for many things, Congress should not be criticized by the NAIC for applying proper regulation to the insurance industry.. The AIG bailout story, with its international nexus, is a perfect example of why federal regulatory oversight and controls are needed in the insurance industry, and why states could not handle this.. Any comment?
VC, what regulatory authority do you believe the Feds would have had over a foreign entity (London company)? Nothing is perfect, but in this case I feel States do it best. Years ago banks pushed for federal regulation to cross state lines…..to benefit customers, see what we got!
Ok, then Holding Companies should not be allowed to own insurance companies. Why? Because if the Holding Company fails the insurance company fails. Wise up, and look at the facts that are screaming at you. Regulation without the red tape is good but it may be too late to prevent what is about to unfold. Our legislators and appointed commissioners have failed and they will keep on failing if they don’t stop living in denial of the fact that they sold out for money. They really don’t understand how the industry works, it’s causes and effects. They depended on industry affiliates to tell them. They listen to the money talking and rationalize their judgement after the fact. This is how the commisioners work. Why? This is all they can do with what is available to them.
No one should expect elected representatives to ascertain the difference between an insurance company and its perent holding company. They do not know anything about the industry and if you try to explain it to them their eyes just glaze over. To them, it’s all the same: property, casualty, financial products, life, health, surplus lines etc. “is all just insurance”. Underwriting is a term they don’t get, they just want claims paid so the feds don’t have to get involved. Federal regulation is a fiasco waiting to happen and given melt downs like AIG they will take advantage and run it through congress because the feds bailed them out. This leaves them thinking they know best and are now entitled to take over from state regulation.
Tim Johnson is a Senator from South Dakota, not North.
1) it was the banking side of AIG that had problems. most folks don’t realize that there is actually many facets of AIG. the insurance side is supposedly financially stable. but as you can see, most folks link AIG to only the INSURANCE.
2) remember that as an insurance company we are supposed to be solvent to pay on claims. the bank side of AIG is not supposed to worry about the insurance side. again, folks don’t realize the separate entity. it’s like having a parent company with kids.
This is why banks shouldn’t be in the insurance business.I don’t see any insurance companys being bail out? Get them the hell out.Let the states keep control.
The Federal Government as the governing body to oversee the Insurance Industry what are they thinking? That’s right there not thinking at the Federal Level regarding this issue. The States have done a great job in keeping the insurance companies in line and regulaing them. Perhaps that is why some companies want Federal regulation. We do not need to look any farther than the Banking Industry and we can see how effective the Federal Government has been. Do those pushing for Frederal Regulation think we are stupid? Can anyone tell me one Federal Program that is run effectively? Let the States continue to Regulate our Industry. The only item we need on a National Level is a clearing house for those of us licensed in several states. I say if it isn’t broke why try and fix it, especially with a Program Run by the Federal Government.
Sandy Paeger, NAIC President, has it right. How can the Feds regulate the Insurance Industry? Look at what they have done in regulating the Financial Industry. Who in their right mind would trust the Feds with the Insurance Industry? Hats off to our State Regulators and the tremendous job they have done in protecting the public and the Insurance Industry.
Saying it like it is Arizona, Saying it like it is!
Amazing, since the problems were not in the insurance business. The architects of these “mortgage security guarantees” were very careful not to call it insurance in an effort to be unregulated by the State DOI. I understand this loophole was created by congress during a midnight session in 2000. Sounds like unfortunate finger pointing to me.
The AIG situation is a “text book” example of the value of the state regulated system. Under a hypothetical federally regulated system, suppose the insurance companies owned by AIG were not required to keep their surplus intact and the holding company was able to co-mingle surplus assetts with other assetts? AIG might have been history. Where is the first place the holding company turned to two weeks ago? They sought approval from NY to allow the insurance entity to move cash (liquid assetts) to the holding company. Those liquid assetts would not have been there unless the state was there to impose their regulation. Now how is AIG paying back their bail out loan…? Right…they must sell the valuable insurance assetts that were regulated under the state system. Do not trust the people who push for federal regulation of insurance companies.
1) They usually do not understand insurance.
2) It is another opportunity the grand stand.
The only fed regulation that should be considered is getting banks the heck out of this business.
I couldn’t agree more with Sandy Praeger. If it weren’t for the health of the insurance units of AIG, no bailout could ever have been crafted.
Just look at the annual statements of each of AIG’s insurance units. Collectively, all 71 companies made $1 billion in pretax profit in the second quarter of 2008 alone, and that would not be possible without robust state regulation. You won’t find much leverage on any of the insurance company balance sheets, and the quality of the investments an insurance company shows on the asset side of the ledger are carefully monitored. Auction Rate securities and CDO’s would never have found their way on to a carrier’s balance sheet. Furthermore, the way a carrier reports their results to the state regulators is different and far less forgiving than GAAP. Quite frankly, the shanaigans the Fed prsently allow simply are not and would never be tolerated by the state regulators.
Could you imagine what our business would look like if we let Paulson and Bernacke become insurance regulators? Thank god for the existing regulatory structure. This is one time that I do appreciate a “19th Century” regulatory model and not the 21st Century sack of manure that led us to this abyss.
What you see and hear is nothing more than election cycle political posturing. No one on Capitol Hill wants to be blamed for this crisis. Please keep in mind that all of the House and 1/3 of the Senate seats are all up for grabs.
Go to youtube and watch this video about how the sub-prime problem came about and then ask yourself if the politicians should be regulating anything!
http://www.youtube.com/watch?v=H5tZc8oH–o
the video is no longer there
This video is no longer available due to a copyright claim by Warner Music Group
The NAIC blasted Congress for suggesting federal regulation of the insurance industry , and mistakenly argued that state regulation actually did an exemplary job in protecting AIG insurance companies and policyholders. NAIC stated “the government didn’t bailout an insurance company” they said the government bailed out AIG and its financial holdings. This is a distinction without a difference. The AIG mess as a prime example of why the state by state regulatory system is not suited for the 21st century. NAIC should not be using AIG as an argument for continuation of state by state regulation. If anything, the AIG situation is a poster child, Exhibit A, for the need to create federal regulation and oversight of the insurance industry. I suggest the NAIC read and comment on the article in Sunday’s New York Times, September 28, 2008 . There was a page 1 article about AIG which, if I read it correctly, stated that one of the major reasons for the downfall of AIG, and the required federal government bailout to the tune of $85 billion, was because there was a failed AIG insurance program. Repeating: A failed insurance program. The program was based overseas in a subsidiary of AIG in London The AIG program insured mortgage loans and other debt instruments. AIG was making huge profits on this insurance. And its executives were making millions while the boom was on While everything was going up, this was easy insurance to sell, and it added a large percentage of net income for AIG. Then when the mortgage crisis and credit crunch hit, and the real estate foreclosures began, AIG realized it was about $75 billion short in the claims that it would have to pay for the risk they insured. That’s when AIG turned to the federal government for the $85 billion. This was no holding company issue, as NAIC is attempting to portray it. NAIC appears to try to characterize AIG as a holding company, which would have avoided state insurance regulation. While top of AIG may be a holding company, the culprit according to the article, was a subsidiary of the AIG holding company in London, which was selling, it turned out, risky insurance . that should’ve been carefully watched. Is there any state regulator that could have watched these international undertakings? Impossible! Isn’t this a clear enough example of where more regulation is required, and on the federal level. ? If these facts about AIG are true, the NAIC and individual state regulators should take a good look at this, and ask themselves if their current regulations could have detected and stopped this problem. The international scope of insurance clearly dictates the need for federal regulation. Congress should clearly be looking at federal regulation and our Congress can be criticized for many things, Congress should not be criticized by the NAIC for applying proper regulation to the insurance industry.. The AIG bailout story, with its international nexus, is a perfect example of why federal regulatory oversight and controls are needed in the insurance industry, and why states could not handle this.. Any comment?
VC, what regulatory authority do you believe the Feds would have had over a foreign entity (London company)? Nothing is perfect, but in this case I feel States do it best. Years ago banks pushed for federal regulation to cross state lines…..to benefit customers, see what we got!