NAIC TESTIFIES TO STRENGTH
Effective' Oversight Fosters Stability
WASHINGTON, D.C. (March 17, 2009) - Testifying
on behalf of the National Association of Insurance Commissioners
(NAIC), Illinois Insurance Director Michael McRaith provided details
on the ongoing successful efforts of state regulators to strengthen
and modernize insurance regulation.
"Insurance companies are integral capital market participants and
are not immune from the unprecedented global economic turmoil.
However, insurers have not caused the turmoil - and, as a whole, the
industry is a source of calm in an otherwise turbulent time,"
McRaith told members of the U.S. Senate Committee on Banking,
Housing and Urban Affairs. "Vigilant, engaged and effective
prudential supervision by the states fosters this insurance
marketplace stability. We urge caution in any federal initiative
that might jeopardize the state-based platform for such oversight."
McRaith highlighted the strong solvency and consumer protections
that have bolstered the insurance industry while under state
supervision, reiterating that an optional federal regulator for
insurance would lead to regulatory arbitrage and gaps in oversight.
McRaith noted that while the states are strongly opposed to a new
federal insurance bureaucracy, they have worked proactively with
Congress on targeted reforms for licensing insurance producers and
improving surplus lines tax allocation, and are working on
legislative implementation of a modernized reinsurance framework.
McRaith also discussed state insurance regulators' principles for
support of systemic risk regulation - a necessary and critical
element of an improved financial regulatory system - and how state
insurance regulation should be integrated, not displaced, by that
"The current financial crisis illuminates the need for a
collaborative approach to regulation of financial conglomerates and
better cooperation among regulators," McRaith said. "The state-based
insurance regulatory system includes critical checks and balances,
eliminating the perils of a single point of failure and opaque or
omnipotent decision-making. With a fundamental priority of consumer
protection - and with a system that has fostered the world's
largest, most competitive insurance market - state insurance
regulators embrace this opportunity to build on our proven regime."
Click HERE to view the full text of McRaith's
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners
(NAIC) is a voluntary organization of the chief insurance regulatory
officials of the 50 states, the District of Columbia and five U.S.
territories. The NAIC has three offices: Executive Office, Washington,
D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office,
New York City. The NAIC serves the needs of consumers and the industry,
with an overriding objective of supporting state insurance regulators as
they protect consumers and maintain the financial stability of the
insurance marketplace. For more information, visit www.naic.org.
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