Last week, the Treasury Department’s Federal Insurance Office (FIO) released a report titled How to Modernize and Improve the System of Insurance Regulation in the United States. The report was mandated by Title V of the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act. Now that the industry has had a chance to digest the FIO’s 71-page study, let’s take a look at some of the responses across the P&C insurance industry:
NAIC President Jim Donelon is “pleased the Treasury Department continues to embrace the state-based system of insurance regulation.” NAIC CEO Ben Nelson clarified that the role of the FIO, as defined by the Dodd-Frank act, “is not a regulatory agency and its authorities do not displace state insurance regulation.” However, he equivocated that statement by saying “we appreciate FIO’s suggestions for improvement, [although] the states have the ultimate responsibility for implementing regulatory changes.”
PCI President and CEO David Sampson was far more critical of the report. Sampson stated “Any discussion of insurance regulatory modernization needs to start with the recognition that the state-based system has benefited consumers by creating the largest insurance market in the world and one that is innovative, competitive, financially sound and comprehensively regulated.”
To summarize, most P&C Insurance industry experts are cautious of federal involvement in a system of regulation that endured the 2008 financial crisis, in stark contrast to the federally regulated financial sector. With that being said, there seems to be a consensus that the current regulatory environment could use some modernization. The debate for the role of federal regulation in the P&C insurance market, it seems, is only beginning.