The president of the National Association of Insurance Commissioners said a call to regulate the insurance industry on a national level for international activity would make regulation more complex and not be prudent.
Responding to the recommendations in last week's report from Washington think tank Group of Thirty was NAIC President and New Hampshire Insurance Commissioner Roger Sevigny.
Commenting on that organization's call for a national regulator of insurance over international matters, Mr. Sevigny said in an e-mail statement: "While the report advocates national-level supervision for internationally active insurers, state insurance regulators caution against proposals that would only increase the complexity of regulation.
"By working together, states have achieved many of the elements of a national framework within the state regulatory system while retaining the nimbleness of local enforcement. In these challenging economic times, insurance companies have benefited from the conservative regulatory standards of the states. Undermining the part of the system that works does not seem to be a prudent approach.
"There is a need for improved oversight of systemic risk and a need for better coordination among regulators, but we caution against splintering oversight of the insurance industry in the name of regulatory reform."
Mr. Sevigny said the NAIC shares the report's notion "that review of the current system of regulating financial markets is necessary in light of the ongoing global financial crisis."
He added that "gaps in federal regulation and oversight" led to the current financial crisis, but warned "against any plan to create a regulatory system that is solely federally based."
"State insurance regulators are on the front lines of protecting consumers and have already developed many of the regulatory tools that are missing from the current federal regulatory regime," he continued, "including restrictions on derivative activities, limits on high concentrations in investment types, and appropriate minimum capital and surplus requirements."
He said the NAIC looks forward to working with Congress and the Obama administration to "strengthen and improve the existing state-federal regulatory system with meaningful reforms.
The Group of Thirty, headed by former Federal Reserve Chairman Paul A. Volcker, issued its steering committee report on financial reform last week.
The report primarily focused on improving the banking system throughout the world, but in one small section on insurance mentioned those nations that lack a "framework for national-level consolidated prudential regulation and supervision over large internationally active insurance companies."
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