PCI And NAMIC Square Off On OIR Question

Two of the largest property-casualty insurance trade groups have offered different approaches to the question of federal involvement in insurance regulation.

The comments of the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America (PCI) were submitted Tuesday to the Senate Banking Committee as part of the panel’s hearing on the status of insurance regulation.

In its testimony, NAMIC said it opposed creation of an optional federal charter system for insurers but supported more limited reforms, for example, passage of legislation creating an Office of Insurance Information within the Treasury Department.

In its statement, NAMIC also said it would support legislation already passed by the House reforming the surplus lines and reinsurance industries, as well as a bill which would establish licensing reciprocity for insurance producers that operate in multiple states.

But, in its submission, PCI declined to support any specific federal legislation and called for market-based reforms of a continued state regulatory system.

David Sampson, PCI president and chief executive officer, said in the organization’s statement that PCI’s members supported a “state-based insurance regulatory system based on sound principles of regulation and preserving the prerogatives of the states.”

However, Mr. Sampson did caution that PCI “also recognized that many states have not made sufficient reforms and that much work is needed to modernize and streamline the existing regulatory system.”

Chuck Chamness, NAMIC’s president and CEO, said that among the federal legislation dealing with insurance it supports the measure to create an Office of Insurance Information.

The bill is HR. 5840 and is awaiting House floor action. It was sponsored by Rep. Paul Kanjorski, D-Pa., and passed by the Capital Markets Subcommittee of the House Financial Services Committee that Rep. Kanjorski heads.

“Rep. Kanjorski’s bill addresses two key points raised by proponents of an OFC: assuring that information on the insurance industry is available to the federal government—especially in times of crisis—and providing a process for agreements on international trade,” Mr. Chamness said. “Therefore, we believe the establishment of an OII diminishes the argument for an OFC.”

However, Mr. Chamness said NAMIC would support creation of an OII as long as it contained the principles included in Mr. Kanjorski’s bill. This would mean an OII that has “the strongest confidentiality and privilege protections, is limited in scope, has a well-balanced advisory panel with limited preemptive authority, and is subject to congressional oversight,” Mr. Chamness said.