So much for the summer doldrums. There is a lot going on. So, let’s begin with the praise the Property Casualty Insurers Association of America, Des Plaines, Ill., offered the National Conference of State Legislatures, Denver, on adopting a resolution that expresses support for state regulation over insurance as established under the McCarran-Ferguson Act and affirmed most recently by the Gramm-Leach-Bliley Act.
The resolution, made by NCSL during its summer meeting in Philadelphia, issued the resolution “Continued State-Based Insurance Consumer Protection,” says that insurance consumer protection should remain with the states; and declares that neither the Financial Product Safety Commission Act of 2009, which would be established by companion bills S. 566 and H.R. 1705, nor the Consumer Financial Protection Agency Act, H.R. 3126, should have direct or indirect jurisdiction over insurance-related products.
PCI commended that recommendation and noted that the property-casualty industry has a “proven track record” of protecting consumers through a state-based system as noted by Deirdre Manna, vice president of industry, regulatory and political affairs for PCI.
The message for state-based regulation follows a letter to Congress from the National Conference of Insurance Legislators, Troy, New York, of NCOIL’s efforts to guard against credit default swap abuse. NCOIL held a lengthy hearing on how to address credit default swaps during its own summer meeting in Philadelphia a little over a week ago. The letter signed by NCOIL President Sen. James Seward (NY) and Financial Services & Investment Products Committee Chair Assem. Joseph Morelle (NY), pointed to NCOIL development of draft Credit Default Insurance Model Legislation—a year-long process grounded in the belief that certain CDS are insurance.
In speaking of the letter, Sen. Seward said, “As Congress grapples with how to address an under-regulated market, we feel it essential to alert federal lawmakers of the progress we have made to protect consumers from the widespread economic fallout of controversial CDS transactions. The premise of our draft model act—that credit default swaps with material interest are insurance—means consumers would be protected by the safeguards inherent in state-regulated coverage.”
The letter explains that the proposed model act, which is scheduled for final NCOIL review in November during its annual meeting on Nov. 19-22, would regulate certain “covered” CDS—those that maintain a material interest in an underlying asset—as a new form of insurance, known as credit default insurance (CDI), and would prohibit so-called “naked” CDS, or swaps in which a party has no material interest in the underlying asset.
The National Association of Insurance Commissioners, Kansas City, Mo., who is also making its case for state insurance regulation before Congress, released its 22nd edition of the Insurance Department Resources Report mid-month to help state insurance departments assess their resources in comparison to other states.
Among the findings in the report are:
• Premiums increased by 3.5 percent to $1.6 trillion from 2007 to 2008.
• In 2008, the five states with the most premiums written in all lines were California, New York, Florida, Texas and Pennsylvania. These five states accounted for 40.4 percent of all insurance premiums in the U.S.
• There were 7,948 domestic U.S. insurers in 2008.
• State insurance departments received more than 337,000 official complaints and 2.2 million inquiries.
The staff breakdown for state insurance departments in 2008, according to the report, was led by resources devoted to financial regulation at 18% and consumer affairs at 13.7%.
Aggregate insurance department budgets will increase to $1.85 billion in 2010 up from $1.6 billion in 2009 and up from $947 million in 2002.
Revenues for state departments totaled $18.3 billion in 2008 with 82.05% coming from taxes.