Systemic Risk: Focus On NAIC CEO's Congressional Testimo

 

Friday, Mar 06,2009, 10:16:43 AM   Click:

Vaughan offers a regulatory standpoint, assistance, expertise

WASHINGTON, DC (March 5, 2009) - National Association of Insurance Commissioners (NAIC) CEO Dr. Therese (Terri) Vaughan, Ph.D., said today the modernization of the rules of Insurance and financial stability during a settlement hearing, entitled "Perspectives on systemic risk. "Dr. Vaughan offered the assistance of the NAIC and expertise to Congress as it tackles the enormous challenge of developing legislative solutions to the current financial crisis.
"The NAIC is a full partner with the Congress and the administration in seeking ways to improve the system of financial regulation and promoting financial stability," Dr. Vaughan said members of the U.S. House Financial Services Committee's Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. "The state's insurance regulatory system is a critical control and balance. We have a long history of consumer protection, conservative solvency monitoring and market stability. Any system of financial stability of the regulation can and should build on this proven system. "

Dr Vaughan has highlighted a series of regulatory principles of insurance have developed in regard to the regulation of systemic risks, including:

Role for states in regulating insurance;
Formalization of regulatory cooperation and communication, and
Monitoring group of holding companies
In particular, the principles provide sharing of information and formal collaboration among all financial regulators, the development of best practices for risk management and systemic functional preemption of regulatory authority in extraordinary circumstances. Insurance regulators estimate that these principles must be incorporated into any comprehensive system of systemic risk.

"Any framework to regulate financial stability should include, but not to move, the success of the state system of insurance regulation," said Dr Vaughan. "For over 150 years, the state of insurance regulators - in collaboration with state legislators - have continued to improve, strengthen and modernize state regulation of insurance for the benefit of consumers and industry. "

Dr. Vaughan also stressed the need to provide the best spirit of regulation to bear on the challenges, and promised the NAIC's ability and willingness to serve as a resource that Congress navigate and analyze the financial landscape present.
Click HERE to see the full text of Dr. Vaughan's testimony.

Dr Vaughan has served as Iowa Insurance Commissioner from 1994 to 2004. In this position, she served in the administrations of both major parties and was the former Commissioner of the history of Iowa. She was an active member of the NAIC, serving as president in 2002. Before being appointed CEO of the NAIC in February 2009, Dr. Vaughan was the Robb B. Kelley professor emeritus of insurance and actuarial science at Drake University.

About the NAIC

Established in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of chief insurance regulatory officials of the 50 states, the District of Columbia United States and five territories. The NAIC has three offices: Executive Office, Washington, DC, Headquarters, Kansas City, Mo., and securities valuation office of the New York City. NAIC serves the needs of consumers and industry with an objective to support the state regulation of insurance because they protect consumers and maintain the financial stability of the insurance market. For more information, visit www.naic.org.