WASHINGTON – The Property Casualty Insurers Association of America (PCI) issued the following statement applauding the Senate Committee on Banking, Housing, and Urban Affairs hearing today entitled “State of the Insurance Industry and Insurance Regulation.”
“PCI commends Senators Richard Shelby (R-AL) and Sherrod Brown (D-OH) and the Senate Banking Committee members for holding this important hearing and raising concerns about the unprecedented international intrusion into state insurance regulation,” said Nat Wienecke, PCI’s senior vice president, federal government relations.
“The current U.S. state-based insurance regulatory system is robust and well-positioned to meet the needs of the nations’ insurance marketplace. It has remained strong, stable throughout the financial crisis. Our state-based regulatory system is open and transparent to all interested parties, accountable, and able to respond effectively to evolving challenges,” continued Wienecke.
“But now, our time-tested and effective system faces unprecedented challenges, both from international pressures to adopt global bank-like regulatory standards and from increased federal involvement in insurance,” said Wienecke. “PCI is very concerned that additional layers of Federal Reserve oversight of insurers is proportional to the size of the bank or systemic activity and narrowly tailored to avoid detracting from state insurance regulation. PCI was pleased that the Federal Reserve testified its intent to tailor any standard to a heterogeneous insurance market that is very different from banking. In addition, PCI and the property casualty industry have serious concerns about recent international standard-setting efforts that have morphed far beyond their original mission. The movement toward a one-size fits all standard is accelerating and threatening both international and domestic insurers,” said Wienecke.
Wienecke applauded Senators Heller and Tester for introducing legislation requiring more coordination, collaboration, and transparency from our government insurance leaders. “PCI hopes that the Senate Banking Committee leadership will work together to continue to exercise oversight and move forward with legislation in this area.”
Wienecke commended the seminal report just released this week by coauthors Therese M. Vaughan and Mark A. Calabria, entitled “International Developments in the Insurance Sector: the Road to Financial Instability?” which highlights a “bank-centric, global capital standard is not appropriate for insurers and could raise costs for American consumers and destabilize U.S. insurance markets.”
“It is critical that policymakers insist on an open and transparent policy development process, and the U.S. representatives who engage with international bodies speak with one voice. PCI also strongly recommends that the Congress exercise a robust and effective oversight of the Financial Stability Oversight Council (FSOC) designation process,” continued Wienecke.
“PCI looks forward to working with Congress, federal representatives, and state regulators and lawmakers to ensure the continued support for the time tested state-insurance regulatory model,” concluded Wienecke.
On Thursday, the Senate Banking Subcommittee on Securities, Insurance, and Investment will hear from important industry leaders including Kurt Bock, chief executive officer of COUNTRY Financial from Bloomington, IL.
Vaughan and Calabria’s report can be found here.