Insurance is best regulated at the local level. That’s the opinion of California Insurance Commissioner Steve Poizner, who shared his views during his welcome address to the National Association of Insurance Commissioners Summer Meeting in San Francisco.
Poizner said he was opposed to an optional federal charter system to regulate insurance because history has proven that local governments can better respond to consumers than the federal government. “Standards need to be at the local level,” he emphasized.
However, Poizner criticized the insurance regulator community for failing to keep pace with the global economy. The insurance industry is largest industry in the global economy, he said, but that enforcement standards were not always up to date. He cited the need to modernize reinsurance collateral requirement rules as an example.
That issue was discussed by the NAIC’s Reinsurance Task Force. As part of amending the reinsurance regulatory framework, regulators proposed developing a system that would allow for a single state with appropriate regulatory capacity to be the sole U.S. regulator to supervise a national reinsurer or a port of entry (POE) reinsurer for all of its U.S. reinsurance business. As part of the single regulatory system for POE reinsurers, states would be required to grant appropriate credit for reinsurance ceded by their domestic insurers to a POE reinsurer. And the task force discussed reducing the collateral required for alien reinsurers.
Poizner pledged his staff to take a role in improving such regulations. “The insurance industry affects every part of the economy — every business, every consumer, every family,” he said. “We need to streamline.”
Speaking to his fellow insurance regulators, Poizner said, “together we can modernize insurance regulation.”
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