5 March 2009

By Steven A. Morelli, editor

One of the architects of the insurance until a federal regulation bill defended the plan at an insurance policy forum as a way of dealing with major insurance companies such as AIG. But other participants at the sixth annual summit of insurance reform in doubt the proposed system would have done much good in the big business of the insurer.

"Recent events are a call to action", Rep. Melissa Bean, D-Ill., Said participants at the summit on Wednesday in Washington, DC, conducted by the State University of Indiana Financial Networks Institute.

Bean and other long-time supporters of a federal system of insurance regulation AIG raised the example as one of the symptoms of a fracture of the state regulatory system based on the good they have fought for a federal regulator for years. On 11 February, Bean and Ed Royce, R-Calif., Announced the National Insurance Consumer Protection Act and the Regulatory Modernization (although Bean gave the shorter name Act modernization of the National Insurance at the top). Bean said the bill will be presented in a few days.

The bill would create an optional federal system overseen by the National Insurance as a regulator of systemic risk. The office would also have the power to collect financial data, recommend regulations and authority over certain holding companies of insurance.

Bean AIG said that the crash was too difficult or impossible for a regulator to handle. The federal regulator would be able to identify problems and maintain the holding of large companies such as AIG default.

Even those participants who support the idea have been skeptical of national regulatory authorities of the ability of AIG prevented the insurer's problems because the problems stem from the complexity of financial products that are not considered such as insurance and are essentially unregulated. The insurance company operations have been and remain fundamentally strong.

Some were also Antsy on the concept of a regulatory system. In fact, it said it could help to create another AIG. Scott E. Harrington, insurance and risk management professor at the University of Pennsylvania Wharton School, asked whether the regulator's attention Bean could mean a company could be considered "too big to fail" to attract more ' businesses seek from consumers for security and growth even more important.

Bean admitted that it is a matter for discussion and is one of details that should be examined after the bill is presented. Bean said the proposal is based on the NAIC model structure and have offices in every state.

The new National Association of Commissioners CEO Insurance Therese M. Vaughn has some problem with the plan, though. Many have observed that a federal regulator has no place Bernard Madoff $ 50 million Ponzi scheme, but Vaughn was an example of how state regulators took a big scam artist in the past .

This was the strange case of Martin Frankel, who has acquired the insurance companies to drain their reserves. Although Frankel had worked for years under the supervision of the Securities and Exchange Commission, it was to enter the insurance that was Frankel loss. Frankel talked big and claimed connections to the Vatican. The Mississippi Insurance Commissioner received the suspicious and began sneaking around.

"I heard the story was he (the Commissioner) called the Vatican and said:" I am referring to the Pope! "Said Vaughn.
He did not speak to the Pope, but he did bring Frankel $ 200 million of the regime, among the largest to Madoff. Vaughn said that the 1999 is a lesson today.

"Big regulators," Vaughn said, "to make big mistakes."

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