P-C Insurance Won't Fit Fed License Mold

Property-casualty insurance products are more state-specific than life insurance products and "might call for differing regulatory approaches" on the issue of federal chartering, a Treasury official said at a state regulators meeting.

The address by Assistant Secretary for Financial Institutions Emil Henry supplemented topics came at the National Association of Insurance Commissioners' meeting that ends Wednesday in Naples, Fla.

In his address to commissioners, Mr. Henry cited "several basic realities that are self-evident" regarding "federal involvement in the insurance regulatory process."

Among the points he cited:

o Most businesses operating across state lines would "prefer not having to abide by 50-plus state standards."

o Reciprocity among states has improved the producer licensing process, but "a lack of uniformity in many aspects of state regulation still remains."

o "Our country is well served" by an insurance marketplace that offers a level playing field.

Mr. Henry, according to a transcript of his speech to the commissioners, also noted that collateral requirements reinsurance, an issue affecting both domestic and foreign reinsurers, is one the NAIC is addressing and is that Treasury will "watch closely."

On the Terrorism Risk Insurance Act, which provides a backstop for insurers against major terrorism losses, Mr. Henry noted that "from its inception, TRIA was intended as a temporary program--a "bridge" to allow the marketplace a transitional period to recover from the 9/11 losses, as well as to adjust to a new risk and design its own long-term, private-market solution."

He encouraged commissioners to "work to create and incentivize market-based solutions for terrorism insurance."

And on natural disasters, Mr. Henry said, "At Treasury, we are not convinced a federal government role is necessary, but we are interested in hearing all aspects of the debate..."