According to National Association of Insurance Commissioners (NAIC) President and New Hampshire Insurance Commissioner Roger Sevigny, the most recent financial services regulatory proposal from the Obama Administration retains a role for state insurance commissioners.
“We are encouraged by Treasury Secretary [Timothy] 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.”
Sevigny said he and his fellow state insurance regulators also agree with Geithner 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,” said Sevigny.
“State insurance regulators have a long history of consumer protection, proven solvency oversight and fostering market stability. Any action at the federal level to regulate financial stability should be collaborative, transparent and inclusive,” he said in a statement.
State insurance regulators have outlined series of principles for systemic risk regulation as it relates to insurance that they believe should be incorporated into any system of systemic risk supervision.
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.
The NAIC has also put forward principles to improve the current state insurance regulatory system:
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.
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