Insurers React to Financial Reform Signing

President Obama made financial reform a reality today when he signed the Dodd-Frank regulatory overhaul bill.The bill, according to The Wall Street Journal,

will touch every corner of the financial universe, curtailing certain risky activities of the nation's largest finacial firms, affecting how average Americans obtain credit cards and mortgages, and dictating how the government dismantles failing financial firms.

Insurance groups are generally optimistic about the new framework. Frank Keating, president and CEO of the American Council of Life Insurers (ACLI), says:

The nation must rely on the expertise and professionalism of the agencies to implement H.R. 4173 in a way that honors its underlying spirit of reform, but does not hamper well-functioning markets and the services we provide our policy owners through inappropriate or excessive regulation. Throughout this process, ACLI's top priority will be to assure that regulations affecting life insurers and our products are carefully designed and appropriate for the unique character of our industry, an industry that differs markedly from banking and securities. In that spirit, we welcome the creation of the Federal Insurance Office, the first federal agency with responsibility for understanding and advising policymakers on a broad range of insurance issues. While the federal government has long monitored discrete aspects of insurance, we hope the new FIO will provide policymakers with expert advice on the full spectrum of industry much as federal banking and securities regulators do for their industries. We look forward to initiating a dialogue with the FIO as soon as it is up-and-running.

And, National Association of Mutual Insurance Companies president and CEO Charles M. Chamness adds:

For the past 20 months, we've worked to educate lawmakers about the unique position of property/casualty insurance in the financial services arena. While the state-based regulatory system is not perfect, adding a federal bureaucracy on top of that, as had been proposed, would have only compounded the costs and problems within the system without benefitting consumers. For the most part, our arguments were accepted and the legislation rightly respects the role of state insurance regulators.

The FIO will play an important role in helping guide federal policy and trade negotiations with regard to property/casualty insurance. However, we must remain vigilant to ensure that it is not allowed to expand beyond its intent. The FIO was designed to, and should, work in concert with the state regulatory system, not duplicate it.

NAMIC, along with others in the insurance and business communities, has for years sought for a more streamlined regulatory system for multi-state surplus lines risks, and we are pleased that Congress finally enacted this provision. It will help reduce costs and allow businesses to focus on growth and job creation.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio