Subcommittee Seeks to Retain Oversight of International Insurance Regulation Deliberations
WASHINGTON – (RealEstateRama) — The Subcommittee on Housing and Insurance held its second hearing of the 114th Congress to examine the impact of international regulatory standards on the competitiveness of U.S. insurers.
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 enlarged the federal government’s role in the insurance industry. Dodd-Frank also authorized the U.S. to jointly negotiate with foreign governments or foreign regulatory entities regarding insurance or reinsurance standards.
Witnesses at today’s hearing discussed how best to coordinate global and domestic insurance policy; promote a competitive marketplace that allows U.S. insurers to effectively compete with their international counterparts; preserve the authority of the states to regulate insurance; and enhance cooperation between state and federal entities on both international and domestic insurance regulatory regimes.
Additionally, today’s hearing discussed draft legislation which would enhance Congress’s oversight of international deliberations relating to insurance standards. Specifically, this legislation would establish a series of requirements to be met before the Federal Insurance Office or the Federal Reserve may agree to, accept, establish, enter into or consent to the adoption of a final international insurance standard.
“It will provide for greater transparency, allow for a stronger Team USA, and indicate to foreign bodies that the United States will lead and not be led,” said Subcommittee Chairman Blaine Luetkemeyer (R-MO).
Key Takeaways from the Hearing:
- International regulatory efforts threaten the U.S. model of insurance supervision that keeps our insurance market financially strong and competitive.
- 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.
- Congress must have a strong oversight role regarding international regulatory changes.
Topline Quotes from Witnesses:
“It is clear to us that Congress needs to step in and clarify how it wants U.S. interests in international processes protected…. It must acknowledge that the outcomes of these international conversations are not binding on the U.S. and have no legal force unless enacted or promulgated by an insurer’s state of domicile or its functional regulator.” – Mr. Gary Thompson, National Association of Mutual Insurance Companies
“Efforts to create international insurance standards make sense as American firms increasingly enter foreign markets, and foreign firms enter the American one. Common standards level the playing field, and invite the sort of competition that can only benefit insurance consumers. And in a world where an insurance group can be destabilized by a faltering subsidiary in a single country, the value of coordinated supervision is obvious.”-Mr. David Zaring, The Wharton School, University of Pennsylvania
“Congress in the Dodd-Frank Act affirmed the state-based regulation of insurance and the McCarran-Ferguson Act and the states’ historic focus on consumer and policyholder protection. But there have been a number of emerging gray areas as the new regulatory roles have evolved where additional Congressional clarity could be very helpful.” – Mr. Joseph Torti III, Property Casualty Insurers Association of America
“Any standards developed at international organizations must be consistent with the U.S. system for insurance supervision, must not disproportionately harm U.S. products approved and regulated by state insurance supervisors such as variable annuities, and must not interfere with the Board’s rulemaking process, including notice and public comment, for development of insurance capital standards for insurers subject to Board supervision.” – Ms. Carolyn Cobb, American Council of Life Insurers
