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Insurance Law Committee Submits Comments to Federal Insurance Office on Federal Role in Insurance Regulation

On December 13, the Insurance Law Committee of the New York City Bar Association submitted a comment letter to the new Federal Insurance Office within the U.S. Dept. of Treasury concerning a potential Federal role for insurance regulation. The FIO had requested comments from the public in anticipation of its required January 2012 report to Congress on how to modernize insurance regulation in the U.S. The report to Congress is required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Insurance has historically been regulated at the state level, and the comment letter does not take a position on the “proper allocation (if any) of insurance regulatory responsibilities between the states and the Federal government.” Instead, the comment letter focuses on six areas of regulatory activity and suggests ways in which the Federal government, if it chooses to have a role, can most productively participate in these areas.

As to these six areas, the Committee’s comment letter concludes that

  • the U.S. can help insurers in enforcing foreign judgments against off-shore reinsurers more effectively than states;
  • regulation of insurance market conduct and insurer solvency should be conducted by the same level of government (i.e., state vs. Federal);
  • the U.S. can assist in harmonizing the insurance laws of the various states to promote uniformity;
  • state receiverships of insurance companies have a number of key features that differ from other resolution regimes;
  • policyholder priority over other claimants and the immunity of “separate account” assets from an insurer’s general liabilities are features of insurance law that should be perpetuated; and
  • any future Federal insurance regulator should work collaboratively with regulated entities, as state regulators often do now.

The comment letter is a product of the Committee’s ongoing focus on Dodd-Frank and other regulatory reforms affecting the insurance industry in recent years, particularly since the 2008 financial crisis. The comment letter has been posted to the U.S. government’s site for public comments and is available here: http://1.usa.gov/uqS5yn

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One Response to Insurance Law Committee Submits Comments to Federal Insurance Office on Federal Role in Insurance Regulation

  1. Eleanor Capogrosso says:

    it is nice that the Insurance Committee submitted a comment letter concerning Federal Role for the insurance regulation. However, it has turned a blind eye to the state regulation of insurance.

    I brought to the attention of Daniel Rabinowitz, Chair of the committee, two situations, I came across concerning the failure of Benjamin Lawsky, Superintendent of the NYS Department of Insurance from regulating Geico and Travelers insurance companies. Both of these companies are failing to follow the statutes and the regulators are not dealing with it.

    AIG Insurance Company collapsed the world’s economy. AIG’s main office is just a few blocks away from the New York State Insurance Department- an easy walk to audit them, but it seems the regulators were no where to be found. And my experience indicates this has not changed.

    We need a chair of the Insurance Committee who can deal with these issues and I strongly believe it is not Mr. Rabinowitz.

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