Subcommittee Discusses Impact International Regulatory Standards Could Have on U.S.Insurance Competitiveness
Washington,
April 29, 2015 -
The Financial Services Subcommittee on Housing and Insurance, chaired by Rep. Blaine Luetkemeyer (R-MO), held a hearing on Wednesday to examine the impact international regulatory standards could have on the competitiveness of U.S. insurers.
“Our nation enjoys the most robust, policyholder-centric insurance system in the world. The industry performed well during the financial crisis, and policy holders enjoyed the safety and soundness that comes with our nation’s unique regulatory structure,” said Chairman Luetkemeyer. “It is vital that we uphold the system that has served Americans well for so many generations. Any discussion or compromise that jeopardizes the U.S. insurance industry or, more importantly, the policyholder, should be rejected.”
Key Takeaways From the Hearing:
- For nearly 150 years, U.S. insurance companies of every kind – including property-casualty, life, reinsurance, health, and auto – have been regulated primarily by the states. The Dodd-Frank Act passed in 2010 enlarged the federal government’s role in the insurance industry.
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- International regulatory efforts threaten the U.S. model of insurance supervision that keeps our insurance market financially strong and competitive. There is a shared goal to better coordinate international insurance supervision, however, but not if it means deferring to international authorities that seem intent on moving toward a consolidated, bank-like model.
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- U.S insurance supervisors do not have a unified strategy to defend and promote the strengths of our regulatory system internationally and ensure that U.S. insurers can effectively compete overseas.
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- Recent steps by International Association of Insurance Supervisors (IAIS) to deny U.S. insurance companies a voice in the IAIS decision-making process have prompted concerns that U.S. insurers will be prevented from expanding their products into foreign markets.
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Topline Quotes from Witness:
“In our view, taking a more homogenous regulatory approach that treats insurers more like banks may actually encourage new risk-taking in the insurance industry. Also, if the new standards are excessive or too inflexible, then they could increase costs on U.S. insurers and consumers and undermine the U.S. state-based insurance regulatory system, which is based on protecting policyholders and has a strong track record of effective solvency supervision and stable, competitive insurance markets.” – Kevin McCarty, Commissioner, Florida Office of Insurance Regulation
“We remain equally concerned with the lack of transparency at the Financial Stability Board. While we appreciate the role of the Federal Reserve, Treasury, and the Securities and Exchange Commission as members of the FSB, state insurance regulators supervise 100% of the private insurance market in the United States and to date have had only limited access into FSB discussions directly relevant to our sector….we find the lack of support for our inclusion at the FSB by our federal colleagues troubling and not reflective of the best interests of U.S. insurers and policyholders.” – Kevin McCarty, Commissioner, Florida Office of Insurance Regulation
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