NEW YORK (June 28, 2010) —The Risk and Insurance Management Society, Inc. (RIMS) is pleased to see that following two weeks of negotiations, members of the House and Senate have reached an agreement on the most comprehensive overhaul of the nation’s banking system in decades. The House and Senate are expected to approve the conference report next week.
The provisions coming out of the joint conference committee include surplus lines legislation, and allow for the creation of a federal insurance office—satisfying two of RIMS’ long-term legislative priorities. The conference report also contains “risk committee” provisions that RIMS helped to shape, marking another legislative victory for RIMS.
“For most of 2009, the House Financial Services Committee and Senate Banking Committee focused on an overall effort to modernize our federal financial regulatory structure, and we have taken the opportunity to further our agenda on Capitol Hill with regard to the commercial insurance industry,” says Scott Clark, board liaison to RIMS External Affairs Committee and risk and benefits officer for Miami-Dade County Public Schools. “The legislation we’ve seen come out of Congress this morning gives us much reason for optimism about how our efforts will shape the financial future of the country, and how they will positively impact individual risk managers.”
The surplus lines language sustained throughout the negotiations contains RIMS’ preferred definition of a “qualified risk manager,” which allows more sophisticated insurance buyers to directly access the surplus lines or nonadmitted insurance market.
Additionally, the provision that allows for the creation of a Federal Insurance Office (FIO) would allow the federal government to collect data and develop an overdue expertise on insurance matters. The FIO is designed to coordinate with the U.S. Trade Representative to jointly negotiate on international insurance matters, allowing the U.S. to further its influence abroad. RIMS also views the creation of the FIO as a necessary first step toward the creation of an optional federal charter for commercial property and casualty insurers.
The language in the Senate version of the bill and, ultimately the underlying text of the conference, requires “risk committees” to be comprised of independent directors and at least one “risk management expert” to consider enterprise wide risk, a result of RIMS’ involvement in crafting the language. During Senate deliberations, these provisions were narrowed to apply only to publicly traded holding companies and thrift holding companies with assets over $10 billion. RIMS’ ultimate goal is to secure a more widespread application of the risk committee requirement and will work toward that end in the future.
For more information on RIMS’ agenda and/or to take part in the legislative process, please visit the RIMS Legislative Action Center.