Following news that financial reform legislation will proceed to the Senate floor, Senate Banking Committee Chairman Christopher Dodd (D-Conn.) told reporters this morning that negotiators will begin the process of bringing uniformity to the House and Senate financial-overhaul bills in the coming days.
"I'm confident we can get a bill," Mr. Dodd said, hinting that lawmakers are now prepared to move toward a broad review and rewrite of the rules governing financial institutions. "I've very hopeful in light of our conversations over the last couple of days that we can have a good, strong bill on the floor of the United States Senate within the next month."
Dodd’s "Restoring American Financial Stability Act of 2010" contains 11 titles, and is crafted to address gaps in the regulatory framework and help douse the specter of systemic risk. While insurers are largely excluded from new oversight, the bill still contains a proposal to have large financial services firms, including a few insurers, pay into a bailout fund.
Leigh Ann Pusey, president and CEO of the American Insurance Association, said that insurers should not be included in the assessment mechanism at all.
"We appreciate that the Committee bill now recognizes in meaningful ways that property /casualty insurers did not cause the crisis and do not present a risk to the U.S. financial system, and that failing insurers are best overseen, and insurance consumers are best protected, by the state-based resolution process and an industry-funded guaranty mechanism,” Pusey said. “However, we remain concerned with a resolution mechanism that envisions assessing low-risk, low-leveraged property/casualty insurers for losses outside our industry, particularly where the failing firms are high-risk, high-leveraged entities. It remains a one-way proposition for property/casualty insurers to be compelled to pay for a system that will likely never resolve an insurer—and pay for losses not incurred by an insurance company.”
One area where insurance industry concerns were addressed in the bill’s final language is the issue of how much subpoena power to grant the proposed Office of National Insurance (ONI). An amendment filed by Senator Tester (D-Mont.), clarified that the definition of “insurer” for mandatory data collection does not include insurance agents and agencies. “Without this amendment, the proposed ONI would have inadvertently had the ability to require countless agents and brokers to produce any data and information demanded by ONI,” Robert Rusbuldt, president & CEO of the Independent Insurance Agents & Brokers of America, said in a statement.
Also included in this legislation is the “Nonadmitted and Reinsurance Reform Act,” which aims to streamline the regulation of surplus lines insurance and reinsurance through state-based reforms.
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