FOR IMMEDIATE RELEASE

SYSTEMIC RISK: FOCUS OF NAIC CEO'S CONGRESSIONAL TESTIMONY
Vaughan Offers Regulatory Perspective, Assistance, Expertise

WASHINGTON, D.C. (March 5, 2009) - National Association of Insurance Commissioners (NAIC) Chief Executive Officer Therese M. (Terri) Vaughan, Ph.D., testified today regarding insurance regulatory modernization and financial stability regulation during a hearing titled, "Perspectives on Systemic Risk." Dr. Vaughan offered the NAIC's assistance and expertise to Congress as it tackles the enormous challenge of developing legislative solutions to the current financial crisis.

"The NAIC is a full partner with Congress and the Administration in seeking ways to improve the financial regulatory system and promoting financial stability," Dr. Vaughan told members of the U.S. House Financial Services Committee's Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises. "The state-based insurance regulatory system is one of critical checks and balances. We have a long history of consumer protection, conservative solvency oversight and market stability. Any system of financial stability regulation can, and must, build on this proven regime."

Dr. Vaughan highlighted a series of principles that insurance regulators have developed regarding systemic risk regulation, including:

  • Primary role for states in insurance regulation;
  • Formalization of regulatory cooperation and communication; and
  • Group supervision of holding companies

Specifically, the principles provide for sharing of information and formal collaboration among all financial regulators; development of best practices for systemic risk management; and preemption of functional regulatory authority only under extraordinary circumstances. Insurance regulators believe these principles must be incorporated into any comprehensive systemic risk system.

"Any framework established to regulate financial stability must integrate, but not displace, the successful state-based system of insurance regulation," Dr. Vaughan said. "For more than 150 years, state insurance regulators - working together with state legislators - have continued to improve, enhance and modernize state-based insurance regulation for the benefit of consumers and industry alike."

Dr. Vaughan also stressed the need to bring the best regulatory minds to bear on the challenges ahead, and pledged the NAIC's ability and willingness to serve as a resource as Congress navigates and analyzes the current financial landscape.

Click HERE to view the full text of Dr. Vaughan's testimony.

Dr. Vaughan served as Iowa Insurance Commissioner from 1994 to 2004. In that position, she served under the administrations of both major parties and was the longest-serving commissioner in Iowa's history. She was an active member of the NAIC, serving as president in 2002. Prior to being named CEO of the NAIC in February 2009, Dr. Vaughan was the Robb B. Kelley Distinguished Professor of Insurance and Actuarial Science at Drake University.

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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