The National Association of Insurance Commissioners (“NAIC”) recently sent a letter to U.S. Treasury Secretary, Timothy Geithner, declaring that state regulators are being denied an opportunity to weigh in on decisions made by the Financial Stability Oversight Council (the “Council”) created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) that will likely affect large insurers.
As previously reported here, U.S. Representatives and a group of large insurance companies sent letters to Secretary Geithner and other key lawmakers expressing their concerns that the Council is making decisions affecting insurers while two of the three positions slated for individuals with insurance expertise are vacant. The NAIC’s letter, however, states that even if the insurance expert seats are filled, the lack of state insurance regulator input in the current decision-making process of the Council is problematic.
According to the letter, aside from assistance of three NAIC employees, the Council has prohibited the non-voting NAIC representative on the Council, currently filled by the Director of the Missouri Department of Insurance, John Huff, to consult with other state insurance regulators and NAIC staff on insurance regulatory matters that will affect insurers nationwide. The letter also states that the U.S. Department of Treasury has limited the role of Director Huff by deeming that he is on the Council as a representative of the Missouri Department of Insurance, not as a representative of all state insurance departments. The NAIC declared that such limitations are interfering with Director Huff’s ability to offer meaningful input on Council decisions affecting insurers.
The letter states, “The NAIC believes that the U.S. Congress designated a member of the NAIC in a representative capacity to gain access to the collective experience of the state regulators, and that Huff should be allowed to consult with experts in the insurance arena to assist in advising the Council on insurance matters . . . . [O]nly the NAIC and the state regulators have the functional insurance regulatory expertise and the millions of insurance sector data elements that [the Council] requires and deserves. [Council] participation is heavily weighted to the banking and securities sectors, and with [the Council] moving forward on a rapid timeline of implementation, the credibility of [the Council] decisions that impact insurance will be jeopardized without appropriate insurance regulatory participation in these efforts. Simply hiring more staff at the [Federal Insurance Office] and appointing an independent member will not change this fact.”
For additional information on the Council, click here. For additional information on the Dodd-Frank Act, click here for an article authored by EAPD Attorneys Geoffrey Etherington and Nick Pearson.