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More than Money: What

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More than Money: What's Really at Stake in the Quest for Insurance ... Model laws, to be uniform, require legislators to forfeit their right to legislate. ... – PowerPoint PPT presentation

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Title: More than Money: What


1
  • More than Money Whats Really at Stake in the
    Quest for Insurance Regulatory Reform?
  • Alan Liebowitz
  • President
  • OMNIA Life (Bermuda) Ltd.

2
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • In the wake of the Gramm-Leach- Bliley Act, Banks
    and Insurance Companies Agree
  • Uniformity Efficiency must be brought to
    Insurance Regulation.

3
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • The Problems
  • Inconsistent Inefficient Regulation
  • Barriers to Product Introduction/ Innovations
  • Anti-Competitive Rate Pricing Regulation
  • Inconsistent Market Conduct Regulation
  • A Patchwork of Privacy Regulation

4
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • How badly do bank-insurance organizations want
    this uniformity?
  • Banks and Insurers are willing to pay for Both
    state and federal regulation if the federal
    option promises one set of uniform rules.

5
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Several organizations have seized on the idea
    that a federal system means loss of revenue for
    states.
  • Optional Federal Charter is the only idea that
    does not mean loss of revenue to states.

6
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • The Elements of the Optional Federal Charter
    (OFC)
  • Unified Federal Regulator in the Department of
    the Treasury
  • Charters National Companies/Agencies
  • Regulates Solvency, Market Conduct, Accounting of
    national entities

7
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • States Continue to regulate and license State
    chartered entities
  • States Continue to regulate solvency, market
    conduct, and accounting standards for State
    chartered entities.

8
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Preserves State Premium Tax Structure
  • Cost of federal regulation borne by those
    entities that choose it.
  • States can use resources previously spent on
    regulating companies that choose national
    regulation for other purposes.

9
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Preserves State Guaranty System
  • Only resorts to federal system if a particular
    state does not meet certain minimum standards.

10
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • For those who have concerns that the dual banking
    system isnt the right model for insurance, go
    home and look at the state and federally
    chartered banks co-existing on the same street.
  • Does it appear to you that consumers are harmed
    by having so much choice?

11
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Why the Interstate Compact wont achieve
    uniformity.
  • States are free to join the Compact, or withdraw
    from it, at their leisure.
  • States may agree to the Compacts rules for one
    product line but withhold agreement for another.

12
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • The Compacts Catch-22
  • To achieve uniformity, States must subordinate
    their right to regulate insurance to the drafters
    of the Compact.
  • To retain sovereignty, States will resist
    transferring their adjudicatory powers to the
    Compacts stewards.

13
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • The NAICs proposed solutions will be more than 5
    years in development and who knows how long in
    implementation.
  • Model laws, to be uniform, require legislators to
    forfeit their right to legislate.
  • Show of hands How many state legislators are
    willing to give up this right?

14
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Congressional Action will present the same
    dilemma
  • House Financial Services Committee Chairman Mike
    Oxley and Subcommittee Chairman Richard Baker
    will create a federal nexus - mandates - that
    require state legislators to give up their right
    to legislate.

15
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Federal Standards could set minimum federal
    criteria to which states would be free to layer
    additional requirements.
  • Far from achieving uniformity, minimum Federal
    Standards would exacerbate the patchwork system
    of disparate state laws, by adding a federal
    regulatory layer.

16
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Alternatively, federal standards could be
    mandatory and exclusive they would not be an
    alternative to state regulation they would
    replace it.
  • State insurance commissioners would become agents
    of the federal government.
  • State legislators lose the right to legislate
    insurance questions.

17
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Optional Federal Charter is the only
    modernization proposal that preserves state
    regulation as it is constructed right now.
  • Legislators dont have to decide between
    uniformity and sovereignty.
  • States continue to regulate all insurance
    questions in their state, not just those the
    federal government leaves to them.

18
More than Money Whats Really at Stake in the
Quest for Insurance Regulatory Reform?
  • Preserving State Insurance Regulation
  • The debate about whether Congress will act or
    not is over Congress will introduce reform bills
    this year.
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