AIA Welcomes Senate Eye on Insurance Regulation

Gov. Marc Racicot, president of the American Insurance Association (AIA), today commended the U.S. Senate Banking Committee for holding a hearing to focus on the state of the insurance industry and examine its current regulatory and oversight structure.

“AIA is a long-time advocate of an optional federal charter in order to create a stronger and more resilient insurance system," Racicot said. "We live in a new world of integrated and interconnected financial markets. Our current, disjointed state-based regulatory structure cannot keep pace with rapidly changing needs for risk protection, and the inefficiencies of the current system undermine competition and distort the market, to the detriment of all U.S. consumers, including drivers, homeowners, and businesses.

“As the rest of the world moves forward with regulatory standards suited for the 21st century, U.S. insurers and consumers are captive to an increasingly outmoded state-based regulatory system, as U.S. insurers are handicapped in their efforts to meet the needs of clients both nationally and internationally.

“Even if state insurance regulators agree with standards set by their international counterparts, they cannot bind the states to these standards. As the European Union, for example, moves to a regulatory initiative (Solvency II) that is intended to increase solvency protection, U.S. insurers may find themselves operating at a competitive disadvantage when doing business in the EU.

“We applaud the Senate Banking Committee for this needed look at insurance regulation, and trust that as the best course of action is deliberated, an optional federal charter will be at the heart of the debate.”