New York Insurance Superintendent Howard Mills told a bar group today that the current debate in Congress over insurance regulation will help spur a "slow and ponderous" National Association of Insurance Commissioners into action.
Mr. Mills spoke at the City Bar Center for Continuing Legal Education at an insurance seminar in New York attended by regulators from several states.
The superintendent said, "The threat is a good thing because it will force the NAIC to move with greater dispatch, and if state regulation of insurance is undermined than it could be seen as the fault of the states."
Mr. Mills said he was not aware that the NAIC lost its so-called "place at the table" in the current Capitol Hill discussions. "At New York we currently have good relations with our state's representatives."
Currently in Washington, there is a bill introduced in the Senate that will provide insurers with the choice of U.S. regulation with an optional federal charter.
A House measure–the State Modernization and Regulatory Transparency Act (SMART)–due for introduction later this year would leave the state-based insurance regulatory system in place but facilitate a major overhaul and eliminate conflicting state laws and regulations.
Efforts are underway in the House to draft legislation that will impose federal standards on state regulators.
Maryland Commissioner Steven Orr reminded the audience that with 23 of the needed 26 states approving an interstate compact dealing with life speed-to-market issues, the NAIC has been taking steps to answer its critics in Washington and in the big companies that 50-state regulation slows the marketplace.
Mr. Mills said he remained concerned that the federal government will opt out of any role in providing a backstop for terror risk once the Terrorism Risk Insurance Extension Act expires next year.
He recalled the attitude among some federal lawmakers at a Senate hearing he testified at that the private market should solve the issue. "I told them the private market will provide a solution, but it will not be one you like." The result, he said, would be an exit of carriers from certain terror target zones that could stymie construction and other business enterprises.
Mr. Mills said he plans on spending next week touring Long Island reminding residents that the area is due for the kind of catastrophic hurricane that struck the area in 1938.
In other matters, District of Columbia Acting Commissioner Thomas Hampton said the time was ripe for the NAIC and states to come to some resolution on the issue of collateralization requirements for reinsurers not domiciled in the U.S.
"If we don't do it now, a solution will be imposed up us," he said.
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