The House Committee on Financial Services recently held a hearing titled, “U.S. Insurance Sector: International Competitiveness and Jobs.” Witnesses included The Honorable Michael McRaith, director of the newly created Federal Insurance Office (FIO), and The Honorable Kevin McCarty, insurance commissioner for the Florida Office of Insurance Regulation, speaking on behalf of the National Association of Insurance Commissioners.
McRaith acknowledged the FIO’s long-overdue report and said he appreciated everyone’s patience as the FIO continues to work to provide the best analysis. The Automotive Service Association (ASA) worked with Congress in the creation of the FIO and opposed attempts to repeal the requirement of an FIO report to Congress on insurance modernization. McRaith also said the following regarding the FIO: “The states remain the primary regulators of the insurance sector in the United States the FIO’s creation and development does not alter the focus of insurance regulation. My friends and former colleagues at the state level are talented, hard-working, and are supported in every state by career regulators who are skilled and dedicated public servants.”
McCarty made the following comments regarding U.S. insurance regulations: “Our state-based system in the U.S. has a strong track record of evolving to meet the challenges posed by dynamic markets, and we continue to believe that well-regulated markets both here and abroad make for well-protected policyholders.”
The second panel included The Honorable Steve Bartlett, president and chief executive officer of the Financial Services Roundtable; Peter Ralph Kochenburger, executive director of the Insurance Law Center and associate clinical professor of law and director of graduate programs at the University of Connecticut School of Law; Allan E. O’Bryant, executive vice president and head of international markets and operations at the Reinsurance Group of America Inc.; Michael C. Sapnar, president and chief executive officer at Transatlantic Reinsurance Co. Inc.; William Toppeta, vice chairman at MetLife Inc.; and J. Robert Vastine, president of the Coalition of Service Industries.
Many of the panelists spoke about the recently created FIO, under the Dodd-Frank Act. This included Bartlett, who made the following statement regarding the FIO’s potential: “As the strong voice for the U.S. insurance industry, the FIO director can protect the industry from duplicative or contradictory regulations.”
Kochenburger discussed the importance of insurance, including its importance to businesses: “Insurance is a product that consumers, whether individuals or businesses, legally or practically must obtain to safeguard their assets and to engage in activities central to a market economy driving, purchasing a residence, owning and operating a business or practicing a profession. Insurance is also a contract where the policyholder’s premium is consideration for the insurer’s promise to pay a covered claim that may occur years in the future and where the amount of the claim is likely to be much greater than the premium collected. Once the premium is paid, the policyholder becomes dependent on the insurer’s ongoing ability and willingness to pay the claim should an insured loss occur, as it cannot contract with another insurer to cover a known loss.”