Responding to a letter sent by consumer groups to Treasury Secretary Timothy Geithner challenging insurance regulatory reform efforts, American Council of Life Insurers (ACLI, Washington, D.C.) president and CEO Frank Keating issued a statement advocating optional federal insurance regulation.
Keating argued that a strong federal regulatory presence was required to guard against risks to consumers, the insurance industry and the financial system as a whole. He implied that existing state-based regulatory regime constitutes a barrier to such oversight that places the public at risk. The establishment of national insurance regulatory option would address that risk by regulating federally chartered insurers and connecting the industry to regulators of the financial system at large.
"Through its direct regulatory activities and interactions with fellow regulators, the office would have a window on the broader insurance market and be able to spot trends that might affect the system," Keating said.
Keating disputed the charge that optional regulation was a euphemism for a lack of regulation. "To the contrary, in the wake of the financial crisis, the marketplace will not have confidence in an insurance company that comes under weak financial and market conduct standards," he said. "The rhetoric about 'regulatory arbitrage' is overblown. An optional system would preserve state regulation for insurance companies that would be better served by it, perhaps smaller or regional companies. The key is to maintain high standards of financial solvency and marketplace conduct at both the state and federal levels."
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio