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NU Online News Service, July 2, 10:35 a.m. EDT
Property and casualty insurance trade groups are voicing general support for financial services reform legislation as passed by the House, especially because it preserves state regulation of insurance.
Several trade groups also lauded the decision of the conferees earlier this week to reopen the conference and remove a provision that would have imposed a tax on financial services companies, including insurers, to pay the cost of implementing the legislation.
The bill is H.R. 4137, the Dodd-Frank Wall Street Reform and Consumer Protection Act.
At the same time, however, officials of the Property and Casualty Insurers Association noted their overall “deep concern” about the long-term impact of the bill on U.S. competitiveness in the global financial services sector.
And the National Association of Professional Surplus Lines Offices lauded the decision of the House to support a provision of the legislation reforming and streamlining the regulation of the nonadmitted and reinsurance markets.
"NAPSLO is pleased that the surplus lines regulatory reform language was included in the financial services reform legislation approved by the House and NAPSLO believes that the Senate will adopt these reforms, shortly,” NAPSLO Executive Director Richard Bouhan said in a statement.
He added, “We believe we are now close to meaningful surplus lines regulatory reform legislation becoming a reality, and then the work of implementing this legislation in the states will begin.”
Officials of the Independent Insurance Agents & Brokers of America said they were “pleased” that the conference committee that reconciled the House and Senate bills decided to limit the authority of the Federal Insurance Office the bill creates in the final bill.
IIABA officials said the “most significant changes to the FIO language will go a long way to prevent unnecessary and arbitrary preemption of state laws—laws that have protected consumers for years and were particularly critical during the financial crisis.”
These changes include allowing for a de novo court review of FIO preemption decisions, “thereby creating a more level playing field for state regulators to challenge a decision that adversely impacts state laws and insurance consumers.”
Robert Rusbuldt, IIABA president and CEO, said he believes Congress “made the correct decision in the final financial services regulatory reform legislation by leaving day-to-day regulation of the insurance market at the state level.”
He said that “property and casualty insurers were not to blame for the financial crisis and pose no systemic risk to the overall economy,” adding that state regulation of insurance has a “proven track record of ensuring insurer solvency and consumer protection.”
Charles Symington, IIABA senior vice president of government affairs, however, made clear that the IIABA “has not endorsed the legislation.”
He also said the IIABA supported the provisions that streamline and reform regulation of the nonadmitted and reinsurance industries.
“This is a perfect example of the proper way to modernize insurance regulation: targeted federal legislation to improve the state system without creating a federal regulator,” he said.
David Sampson, PCI president and CEO, said the trade group was "pleased that the conference committee ultimately recognized that levying $19 billion in new taxes on the financial services industry would lead to broad unintended consequences for consumers and the marketplace.”
Jimi Grande, senior vice president of federal and political affairs for the group, agreed. “As critics have noted, this so-called fee was not a part of either the House or Senate versions of the bill and was added without any prior consideration,” Mr. Grande said.
He noted that the fee would have unfairly included some p&c insurers “in a prefunding mechanism to fix problems that our industry did not cause, burdening insurers and their customers with the costs of the bill.”
Mr. Grande also said that throughout the legislative process, NAMIC “raised concerns when we thought the legislation was unduly stepping on the toes of the state-based regulatory system, and for the most part we believe those concerns have been addressed.”
Leigh Ann Pusey, president and CEO of the American Insurance Association, said the AIA supports efforts to reform and modernize financial services regulation.
She said that, “to the extent property and casualty insurers have been considered in these reforms, in most instances the legislation appropriately recognizes that our industry does not pose systemic risk.”
Ms. Pusey expressed relief that existing state-based resolution mechanisms are still in place and that policyholders remain protected by the state guaranty fund system.
AIA, she said, is also “encouraged that the legislation establishes a federal office of insurance and believes that this provision offers a substantial contribution toward broadening and deepening our nation’s understanding of the critical role of insurance in our financial system.”