Friday, May 14, 2010

NCOIL, NAIC Comment on Senate Financial Reform Bill

With a vote on financial reform legislation nearing, state groups are weighing in on how S. 3217, the Restoring American Financial Stability Act of 2010 should be structured.

Today, the National Conference of Insurance Legislators, Troy, N.Y., urged Sens. Harry Reid, D-Nev., Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., to oppose a proposed amendment that repeals the federal antitrust exemption for health insurers.

NCOIL, in a letter from its president, state Rep. Robert Damron, D-Nicholasville, Ky., reaffirmed its “our unwavering support for McCarran-Ferguson’s 1945 limited antitrust exemption, which in large part has contributed to the growth and health of our still-thriving insurance marketplace.”

NCOIL argued that it is not a “loophole” to avoid prosecution for violations of the law but rather a means to avoid “driving smaller insurers who depend upon sharing of loss history and other information—from the market.”

The National Association of Insurance Commissioners, Kansas City, Mo.; the Conference of State Bank Supervisors, and the North American Securities Administrators Association, both in Washington, expressed support this week for Senate Amendment 3754 to S. 3217, that would provide for non-voting membership for state banking, insurance and securities regulators on the Financial Stability Oversight Council (FSOC).

In a joint letter the three groups praised Sens. Patty Murray, D-Wash., and Susan Collins, R-Maine, for considering a comprehensive approach to addressing the accumulation of risk in the financial system.

“State regulators are uniquely positioned on the front lines of financial regulation and offer critically important perspective, expertise and regulatory data necessary to assess systemic risk,” said Jane L. Cline, NAIC president and West Virginia insurance commissioner. “The Council would benefit tremendously from the shared insights and knowledge of regulators who work vigorously each day to maintain an effective financial structure.”

The joint letter from leaders of the three regulatory groups stated, “In all financial sectors, state regulators gather and act upon large amounts of information from industry participants and from investors. State regulators would bring to the FSOC the insights of a team of ‘first responders’ who see trends developing at the state level, which have the potential to impact the larger financial system. Consequently, they serve as an early warning system identifying practices and risk-related trends that are substantial contributing factors to systemic risk.”

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