Federal Functional Regulation For Life Insurance Essential E

Washington, D.C. (June 16, 2009)—Creation of an optional federal functional regulator for the life insurance business is an essential element of sound regulatory reform and comprehensive oversight of systemic risk in the wake of the financial crisis, Patrick S. Baird, chairman of the American Council of Life Insurers (ACLI) and CEO of AEGON USA, told a congressional panel today.

“This Congress will reach a number of important national policy decisions regarding how to improve regulation of the U.S. financial markets and minimize the chances of a similar crisis occurring in the future,” Baird testified at a hearing on Systemic Risk and Insurance conducted by the House Financial Services Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

“However, absent a federal insurance regulatory agency, there will be no federal agency with the necessary expertise on insurance to either advise Congress on relevant policy matters or to implement policy with respect to life insurers,” Baird said.

An optional federal functional regulator would:

• Establish in-depth regulatory knowledge at the federal level for a systemically-important industry;
• Establish strong, national standards of consumer protection that would be a model for the rest of the nation;
• Create a more efficient regulatory system for federally-chartered insurers;
• Provide the federal government the expertise and capacity to coordinate and harmonize systemic risk oversight with insurance regulators around the globe.

“Understanding and implementing critical federal policy solely through reliance on hoped-for cooperation on the part of 51 state regulators rather than through an enforceable federal statute is not a model Congress should embrace,” Baird said.

The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association whose 340 member companies account for 93 percent of the life insurance industry’s total assets in the United States, 94 percent of life insurance premiums and 94 percent of annuity considerations. In addition to life insurance and annuities, ACLI member companies offer pensions, including 401(k)s, long-term care insurance, disability income insurance and other retirement and financial protection products, as well as reinsurance. ACLI's public Web site can be accessed at www.acli.com.

Contact:  Jack Dolan, 202-624-2418, jackdolan@acli.com