NAIC’s President-Elect Huff updates Congress on insurance issues

NAIC President-Elect John M. Huff testified before Congress on Sept. 29 on behalf of the National Association of Insurance Commissioners (NAIC). The hearing, titled “The Impact of Domestic Regulatory Standards on the U.S. Insurance Market,” was held by the U.S. House Financial Services Subcommittee on Housing and Insurance.

Federal government action necessary?

“Despite extensive state responsiveness, we understand that the Treasury Department and the USTR [U.S. Trade Representative] are preparing to start negotiations on a covered agreement with the EU to address further reduction of reinsurance collateral,” testified Huff, who also serves as the Missouri Insurance Director. “We question whether a covered agreement or any formal action by the federal government is necessary to resolve equivalence as it is clear that recognition can be achieved through other mechanisms.”

In addition to negotiations on a covered agreement, topics discussed at the hearing included insurance capital standards for systemically important insurance companies, coordination of state and federal regulators and the impact of the Dodd-Frank Act on insurance regulation. Representatives from the Financial Stability Oversight Council (FSOC), the Federal Reserve Board of Governors and the U.S. Treasury also testified.

Call for FSOC to change its process

“FSOC has now voted twice to designate insurance companies over the objections of members who know the insurance industry best,” Huff asserted. “Neither the designated companies nor the primary regulators have been given the insights necessary to de-risk the firms. This is unacceptable and contributes to—rather than reduces risk to—the financial system.” Huff then called on Congress to take action if FSOC does not change its process to develop an exit ramp for designated firms.

Read Huff's submitted testimony.

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