NAIC TESTIFIES ON CONSUMER FINANCIAL PROTECTION AGENCY
New agency would "cause overlaps, lead
to preemption of state laws"
WASHINGTON, D.C. (June 24, 2009) - Testifying on
behalf of the National Association of Insurance Commissioners
(NAIC), Maryland Insurance Commissioner Ralph S. Tyler addressed the
House Committee on Financial Services on "Regulatory Restructuring:
Enhancing Consumer Financial Products Regulation."
view, insurance solvency regulation and consumer protection are
inextricably linked," Tyler told members of the U.S. House Committee
on Financial Services. "State insurance regulators have long been
responsible for not only the safety and soundness of an insurer, but
also how the insurer treats its customers and what protections are
in place around its often complex products."
"The states have
developed a wide range of consumer protection tools designed around
these complex products and unique interactions between insurers and
policyholders," Tyler testified. "For these reasons, we believe a
new agency to regulate consumer protections in insurance is not
necessary, and would cause the kind of overlaps that lead to
preemption of state laws and rules designed specifically to address
the complexities of insurance."
Tyler highlighted the
numerous strides made by the states to enhance consumer protection,
such as streamlining of the company and producer licensing
processes, increasing consumer services and education, fighting
fraud, and establishing the Interstate Insurance Product Regulation
Compact for life and annuities products. He credited the high level
of communication and coordination among the states in catching
consumer abuses and minimizing redundancies. "Stripping this
fundamental authority from the states, or bifurcating it with a
federal entity that inevitably will cause conflicts, confusion, and
down the road, preemption, will do nothing to solve the problems
exposed by our financial crisis," Tyler noted.
"As a state
insurance regulator, it is not for me to decide whether a separate
agency is necessary for other financial sectors, or whether
empowering existing regulators with a consumer protection mandate is
the best course of action for those different products," Tyler
emphasized. "What the Congress should not do, in our view, is to
empower that agency to wade into insurance - an area where strong
consumer protections have long been a fundamental tenet of
supervision and embedded in our regulatory and legal systems."
for full text of Tyler'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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