GAO: Federal Insurance Charter could Unintended Consequences

 

Thursday, Mar 05,2009, 11:22:54 PM   Click:

WASHINGTON (Jan. 12, 2009) - A new government report on the nation's financial regulatory system provides more evidence of the need for Congress to target specific areas of financial services regulation outside the establishment / insurance industry crash. The report, entitled "Framework for Handicrafts and the assessment of proposals for modernizing the regulation exceeded U.S. Financial System", was published by the Government Accountability Office last week.

The report summarizes developments in the regulation of U.S. financial system and attempts to trace the current problems to past decisions. While criticizing the system of financial regulation as the current "fragmented and complex," the point of the reform recommendations directly to the forces of the state's insurance regulatory system.

"Once again we see evidence of the state's insurance regulatory system working to protect the assets of insurance subsidiaries and for safeguarding the financial interests of policyholders," said Jimi Grande, NAMIC Vice president for federal and political affairs. "The stringent state insurance and financial accounting standards so that even the nation non-insurance businesses experience economic upheaval, the property / insurance sector remains solvent and able to meet claims obligations."

The report focuses on federal regulatory agencies and only briefly the state of the regulatory system of insurance. While stating that Congress "could consider the advantages and disadvantages of a federal charter option for insurance and the creation of a federally regulated entity insurance", the report makes no recommendation and recognizes that the authors n have not examined proposals for a FOC. It also notes that the creation of a federal insurance could "have unintended consequences of government and regulatory agencies of insurance companies as well."

"This report clearly indicates the need for better regulation and coordination of those sectors responsible for the economic crisis," said Grande. "The fact that the authors did not consider proposals to regulate federal property / insurance industry that emphasizes the fact that the state of solvency based on the regulation of P / C industry 's proven effective and is met from within the industry to continue to protect the needs of policyholders. "

For more information, please contact:

Nancy Grover
(202) 628-1558 Tel
(202) 628-1601 Fax
ngrover@namic.org