RIMS Files Comment Letter Recommending Federal Oversight in Modernizing Insurance Regulation
NEW YORK (December 15, 2011) – An official comment letter submitted by RIMS (the Risk and Insurance Management Society, Inc.) to and at the request of the U.S. Department of the Treasury stressed the Society’s support for more uniform and national insurance regulations that would enable commercial insurance consumers to readily and affordably purchase the appropriate lines of insurance, pivotal to their organization’s economic stability and well-being.
“With a state-by-state patchwork of laws related to producer licensing and forms and procedures, additional costs are commonly incurred by consumers; inefficiencies have become more profound, raising questions about fundamental fairness in the insurance market,” said RIMS President Scott B. Clark. “The recent implementation of the surplus lines law is a great example of the confusion caused by state-by-state implementation of a Congressional directive.”
Other key issues in the comment letter filed by RIMS include:
RIMS requests that the Federal Insurance Office Director’s report to Congress advocate for greater uniformity through Congressional action to clarify its intent for the states to adopt such a standard. The recommendation was made to counter the inherent weakness in the state-based system that allows states to legislate variance to national standards or model laws or simply apply or interpret these standards in a manner that diverges from any national standard.
RIMS identifies the lack of uniformity in licensing requirements, new product entry, requirements, or terms and conditions, without any sound policy justification for differences as creating significant barriers to entry into the market.
In regards to insurance subsidiaries of groups that are internationally active, RIMS advocates in favor of credit to be given to the capital held at the subsidiary level and that capital requirements should be the same for domestic and international insurers and subsidiaries. Disparate regulations can lead to lower credit ratings, higher borrowing costs for international groups, as well as affect capacity and therefore increase cost of insurance to consumers.
On December 9, 2011, Janice Ochenkowski, former RIMS President and current Chair of the Society’s International Committee attended a one-day conference held by the Department of the Treasury titled “Insurance Regulation in the United States: Modernization and Improvement.” The session brought together approximately 100 industry leaders, insurance regulators and association experts to explore the challenges and best practices to enhance the country’s current insurance system.
Both the conference and solicitation for comment by Treasury are part of an effort to seek input from interested parties on a study and report due to Congress early next year. The report is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Link to full letter.
For more information about RIMS External Affairs initiatives or about the RIMS International Committee, visit www.RIMS.org.