NU Online News Service, July 2, 10:35 a.m.EDT

Property and casualty insurance trade groups are voicing generalsupport for financial services reform legislation as passed by theHouse, especially because it preserves state regulation ofinsurance.

Several trade groups also lauded the decision of the confereesearlier this week to reopen the conference and remove a provisionthat would have imposed a tax on financial services companies,including insurers, to pay the cost of implementing thelegislation.

The bill is H.R. 4137, the Dodd-Frank Wall Street Reform andConsumer Protection Act.

At the same time, however, officials of the Property andCasualty Insurers Association noted their overall "deep concern"about the long-term impact of the bill on U.S. competitiveness inthe global financial services sector.

And the National Association of Professional Surplus LinesOffices lauded the decision of the House to support a provision ofthe legislation reforming and streamlining the regulation of thenonadmitted and reinsurance markets.

"NAPSLO is pleased that the surplus lines regulatory reformlanguage was included in the financial services reform legislationapproved by the House and NAPSLO believes that the Senate willadopt these reforms, shortly," NAPSLO Executive Director RichardBouhan said in a statement.

He added, "We believe we are now close to meaningful surpluslines regulatory reform legislation becoming a reality, and thenthe work of implementing this legislation in the states willbegin."

Officials of the Independent Insurance Agents & Brokers ofAmerica said they were "pleased" that the conference committee thatreconciled the House and Senate bills decided to limit theauthority of the Federal Insurance Office the bill creates in thefinal bill.

IIABA officials said the "most significant changes to the FIOlanguage will go a long way to prevent unnecessary and arbitrarypreemption of state laws–laws that have protected consumers foryears and were particularly critical during the financialcrisis."

These changes include allowing for a de novo court review of FIOpreemption decisions, "thereby creating a more level playing fieldfor state regulators to challenge a decision that adversely impactsstate laws and insurance consumers."

Robert Rusbuldt, IIABA president and CEO, said he believesCongress "made the correct decision in the final financial servicesregulatory reform legislation by leaving day-to-day regulation ofthe insurance market at the state level."

He said that "property and casualty insurers were not to blamefor the financial crisis and pose no systemic risk to the overalleconomy," adding that state regulation of insurance has a "proventrack record of ensuring insurer solvency and consumerprotection."

Charles Symington, IIABA senior vice president of governmentaffairs, however, made clear that the IIABA "has not endorsed thelegislation."

He also said the IIABA supported the provisions that streamlineand reform regulation of the nonadmitted and reinsuranceindustries.

"This is a perfect example of the proper way to modernizeinsurance regulation: targeted federal legislation to improve thestate system without creating a federal regulator," he said.

David Sampson, PCI president and CEO, said the trade group was"pleased that the conference committee ultimately recognized thatlevying $19 billion in new taxes on the financial services industrywould lead to broad unintended consequences for consumers and themarketplace."

Jimi Grande, senior vice president of federal and politicalaffairs for the group, agreed. "As critics have noted, thisso-called fee was not a part of either the House or Senate versionsof the bill and was added without any prior consideration," Mr.Grande said.

He noted that the fee would have unfairly included some p&cinsurers "in a prefunding mechanism to fix problems that ourindustry did not cause, burdening insurers and their customers withthe costs of the bill."

Mr. Grande also said that throughout the legislative process,NAMIC "raised concerns when we thought the legislation was undulystepping on the toes of the state-based regulatory system, and forthe most part we believe those concerns have been addressed."

Leigh Ann Pusey, president and CEO of the American InsuranceAssociation, said the AIA supports efforts to reform and modernizefinancial services regulation.

She said that, "to the extent property and casualty insurershave been considered in these reforms, in most instances thelegislation appropriately recognizes that our industry does notpose systemic risk."

Ms. Pusey expressed relief that existing state-based resolutionmechanisms are still in place and that policyholders remainprotected by the state guaranty fund system.

AIA, she said, is also "encouraged that the legislationestablishes a federal office of insurance and believes that thisprovision offers a substantial contribution toward broadening anddeepening our nation's understanding of the critical role ofinsurance in our financial system."