WASHINGTON — The Property Casualty Insurers Association of America (PCI) today hosted a policy briefing entitled “Defending U.S. Insurance Consumers and Markets: A Policy Discussion on Insurance, Regulation, and the American Economy” on Capitol Hill where industry experts discussed the urgent need for Congress to pass legislation and defend the state-based insurance regulatory system from global-one-size-fits all standards that could limit choices and increase costs for U.S. insurance consumers.
The event was part of PCI’s 2016 Capital Engagement Series. The panel included industry experts Mark Calabria, director of financial regulation studies, the Cato Institute, Tom Leonardi, senior advisor, Evercore, Terri Vaughan, dean of the College of Business and Public Administration, Drake University and Ethan Sonnichsen, director, government relations, National Association of Insurance Commissioners.
The forum highlighted the mounting concerns about the escalating number of closed-door meetings international regulators are holding and the standards the international regulators are seeking to impose on the U.S. insurance consumers and markets. The panelists also discussed the legislation that has been introduced to strengthen the U.S. voice in international negotiations and increase transparency and accountability of international standard setting. Senators Dean Heller (R-NV) and Jon Tester (R-MT) introduced the bipartisan International Insurance Capital Standards Accountability Act of 2015 (S. 1086) and House Subcommittee Chairman Blaine Luetkemeyer introduced the Transparent Insurance Standards Act of 2016 (H.R. 5143), which passed the House Financial Services Committee in June 2016.
“The problem of unintended consequences grows when international policymakers and regulators are developing regulatory policy in a vacuum without the input of consumers and the companies they regulate,'' said Leonardi.
“Given the failures of bank regulation prior to the financial crisis, we should be cautious of any approach that extends the framework of bank regulation to insurance,” said Calabria
“The best approach to addressing problems is to proceed in a logical manner: understand the problem, develop alternative solutions, evaluate their impacts, and, finally, adopt and implement a solution,” said Vaughan. “Unfortunately, these steps have been short-circuited in international deliberations regarding the insurance sector. The international tendency is to jump directly to solutions that have already been adopted for banking, and the result is a distinct lack of creativity in addressing potential problems and a serious risk of unintended consequences.”
“As we see increased regulatory uncertainty in international markets, particularly in Europe, the U.S. regulatory environment continues to improve in its ability to provide consistency as well as address and resolve issues. Given this, and the role of states as the primary regulators of the U.S. insurance sector, it is critical that international discussions be transparent to stakeholders and take place with the full participation of state insurance regulators. This includes deliberations taking place at standard setting organizations like the Financial Stability Board and negotiations over a Covered Agreement with Europe,” said Sonnichsen.
“PCI applauds Congress for its work on important legislation that requires consensus among federal negotiators and insurance regulators and increases transparency and accountability,” said David A. Sampson, PCI’s president and CEO. “We urge Congress to come together and enact bipartisan legislation this year to defend the reliable and successful U.S. state-based insurance regulatory system.”
Vaughan and Calabria’s report and other resources can be found on PCI’s website.