News: 2009 Press Release

Insurance Commissioner Poizner today issued the following statement regarding the proposed Royce-Bean legislation that provides for an optional federal charter for insurers and insurance producers.

"Congress has rejected this recycled idea time and again," said Commissioner Poizner.  "This is not a reform bill; it is a deregulation bill that will have the effect of allowing insurers to choose their own regulators. It defies both federalism and common sense.

"In light of the current financial turmoil, the American people have called for more rigorous regulatory systems. Indeed, Secretary Geithner and key Congressional leaders have stated that charter shopping - where the regulated picks its regulator - should be eliminated in financial reform efforts. This misguided bill goes in the opposite direction."

If passed, this bill would allow nearly any function of the national insurance regulator to be carried out by self-regulatory industry groups, effectively handing the keys of supervision over to those being supervised. This bill would essentially dismantle existing state-based consumer protections.

The proposed legislation authorizes the formation of a separate guaranty fund for federally regulated insurers, along with a requirement that federal insurance offices be set up in all 50 states.  There is already a more comprehensive national system in place: the existing state-based insurance regulatory regime.

State insurance solvency oversight has kept insurance companies stable and protected policyholders from the worst of the financial meltdown, and state regulators continue to provide a local response to consumer issues at no cost to federal taxpayers.

"There are a number of areas in the financial sector that suffer from little or no regulation; insurance is not one of them," said Commissioner Poizner.  "This proposal distracts people from solving the real problems exposed by our financial crisis.

"Federal and state regulators should work together to protect consumers and promote financial stability, not in competition. There are areas in which we might need federal assistance, but that assistance should streamline the strong state-based regulatory framework - not supplant it with a new federal bureaucracy."

State insurance regulators have outlined for Congress and the Administration a series of principles for systemic risk regulation as it relates to insurance, that they believe must be incorporated into any system of comprehensive systemic risk supervision.

Principles for Systemic Risk Regulation

State insurance regulators recognize that federal action can manage systemic risk within the nation's financial marketplace. Commissioner Poizner, along with the National Association of Insurance Commissioners, believes such proposals should incorporate the following principles:

• Consumer access to state-based regulatory officials.
• Formalized state and federal collaboration to regulate financial conglomerates.
• Limited and extraordinary federal financial-stability regulatory authority, exercised
  in conjunction with functional regulators.

Principles for Insurance Regulatory Modernization

For 150 years, state insurance regulators have continually improved and strengthened the state-based insurance regulatory system. Commissioner Poizner and the NAIC believe that fresh reforms must incorporate these principles:

• Uniform standards where appropriate; local or regional where necessary.
• Continued state responsibility for standard-setting and enforcement, as well as
  managing taxes and fees.
• Equal standing for state insurance regulators with other regulators; formalized
  collaboration with federal financial-services regulators and full participation in  
  information sharing. Collaboration with international insurance and financial-services
  regulators on matters related to the U.S. insurance marketplace.