Efforts To Revive N.Y. Insurance Exchange Continue

Mr. Brooks acknowledged the previous failure of the exchange, but said market conditions and the economy are different today. He also said the plan is to offer tax incentives to encourage investment in the system.

He said he is not yet sure what the financial structure of the exchange would look like, and added efforts are currently geared toward attracting interest and securing the tax credit.

Mr. Brooks also said New York Gov. David Paterson is "very supportive" of the idea, and is intrigued by the idea of creating jobs and capacity in New York.

At a dinner hosted by Lloyd's in New York in June 2008, Gov. Paterson said a New York Exchange "would be complementary to what Lloyd's does on its side of the ocean."

Mr. Brooks also spoke about proposed federal legislation for federal involvement in insurance regulation. Input and participation from the states, he said, is crucial if such plans are to be effective. At times, he related states have had to "fight to make our presence known" in discussions over federal plans for regulation going forward.

But the states have all the expertise regarding insurance, and the federal government has very little, Mr. Brooks noted. "There's a role for both state and federal regulation," he said.

In discussing current federal proposals for regulation, Mr. Brooks repeatedly mentioned that states either are fighting to provide input, or have concerns with some provisions because they seek to preempt states in certain areas.

For example, a bill that would establish an "Office of National Insurance" received positive comments from Mr. Brooks for being a way to establish expertise at the federal level. But he opposed a provision where the ONI could preempt the state laws if they conflict with international agreements. Mr. Brooks said he was concerned that New York laws designed to ensure solvency could be preempted by the ONI.

Mr. Brooks said he supported the bill establishing the Federal Insurance Office instead because it has narrower language.

Preemption was also a concern with a plan to establish a Consumer Protection Agency at the federal level. Mr. Brooks said states already provide consumer protections, and while he said he was open to some federal involvement in this area, he asserted that states should not be supplanted on this issue.

States are also fighting for involvement in other areas, Mr. Brooks said. Plans discussed to establish a Financial Services Oversight Council to watch over large financial institutions includes a host of different federal regulators but excludes the state insurance regulators.

States have the expertise, he said, but need federal involvement in some areas. He said, for example, that he would like to be able to go to France and open markets there to New York domestic insurers, but states cannot enter into treaties.

Additionally, Mr. Brooks said although he does not agree, he understands the argument that lines such as reinsurance could be effectively regulated at the federal level.