With Congress and the incoming Obama administration sure to make reforming financial services regulation a top priority in 2009, there seems to be a growing sense in the insurance industry that some sort of federal insurance regulation is inevitable.
The only questions seem to be: how much federal regulation of insurance, and how soon will it be put in place.
I had the pleasure last week of moderating a webinar involving a panel of experts on the subject of insurance regulation, and they were unanimous in the opinion that federal regulation is coming. The Industry Focus Online Executive Forum, “The New Regulatory Reality: Reforming Regulation in Times of Turmoil,” if you want to give it a listen.
The panelists included Howard Mills, director and chief advisor in the insurance industry group of Deloitte L.L.P. in New York and former New York insurance superintendent, Francine L. Semaya, chair of the insurance corporate & regulatory practice at the Cozen O’Conner law firm in New York, and J. Stephen Zielezienski, senior vp and general counsel of the Washington-based American Insurance Assn., and between them there was no shortage of strong opinions about the future direction of insurance regulation.
Mr. Mills said he expects the new Congress to move quickly in all areas of financial services regulatory reform, including insurance. And, he said, the outcome might see the much discussed Optional Federal Charter for insurance companies becoming something much more than an option.
Under the reformed regulations, he speculated that state regulation may well continue over such areas as solvency and consumer protection, with a federal regulatory overlay, perhaps responsible for regulating systemic risk issues.
Meanwhile, Ms. Semaya suggested that in the clear climate, with “the insurance industry almost in an upheaval,” it’s possible the industry will see “not just an Optional Federal Charter, but more federal regulation than we ever asked for.”
Mr. Zielezienski agreed that there will “undoubtedly” be some federal role in insurance regulation. And he noted that much of the framework for those changes has already surfaced in Congress, with OFC bills introduced in the last two Congresses and a proposed federal Office of Insurance Information figuring prominently in the financial regulatory modernization blueprint presented by the U.S. Treasury earlier this year.
The panelists in the Industry Focus Online Executive Forum also covered such topics as efforts to harmonize insurance regulation worldwide, solvency issues and regulation, modernization of reinsurance regulation and the likely impact of this month’s elections on insurance regulation. It was quite an interesting discussion. You should check it out, if you can, at www.businessinsurance.com/webinars.