WASHINGTON, D.C. – The U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on “Perspectives on Modernizing Insurance Regulation.” Sen. Christopher J. Dodd, D-Conn., chairman of the committee, deemed the insurance industry as a “vital component of the economy.” Further, Dodd recognized that the insurance industry is primarily regulated at a state level, but as it becomes increasingly national and international, the industry needs to be modernized accordingly. Sen. Richard Shelby, R-Ala., ranking member of the committee, raised concerns about the adequacy of state regulation of insurance.
The witnesses were Michael McRaith, director, Illinois Department of Financial and Professional Regulation, on behalf of the National Association of Insurance Commissioners; The Hon. Frank Keating, president and chief executive officer, the American Council of Life Insurers; William R. Berkley, chairman and chief executive officer, W.R. Berkley Corporation, on behalf of the American Insurance Association; Spencer Houldin, president, Ericson Insurance Services, on behalf of the Independent Insurance Agents and Brokers of America; John Hill, president and chief operating officer, Magna Carta Companies, on behalf of the National Association of Mutual Insurance Companies; Frank Nutter, president, the Reinsurance Association of America; and Robert Hunter, director of Insurance, the Consumer Federation of America.
Berkley, chairman of the American Insurance Association, addressed the regulation of property and casualty insurance:
“1. Property-casualty insurance is critical to our economy, but it does not pose the same types of systemic risk challenges as most other financial services sectors.
2. Nonetheless, because property-casualty insurance is so essential to the functioning of the economy and is especially critical in times of crisis and catastrophe, functional federal insurance regulation will enhance the industry’s effectiveness and thus should be included as part of any well-constructed federal program to analyze, manage and minimize systemic risk.
3. Given the national and global nature of risk assumed by property and casualty insurers, establishment of an independent federal insurance regulator is the only effective way of including property-casualty insurance in such a program.”
Robert Hunter, director of insurance for the Consumer Federation of America, emphasized that “Repeal of the antitrust exemption in the McCarran-Ferguson Act must be a part of any efforts by Congress to reform insurance regulation. Collusion in the pricing of property/casualty insurance should not be allowed in the 21st century.”
The Automotive Service Association (ASA) supports the federal regulation of property and casualty insurance. To view the testimony from this hearing, visit ASA’s legislative Web site at www.TakingTheHill.com.
