Tuesday’s election has signaled the beginning of several possible changes to the P&C industry, including new faces in oversight committees and an expanding role for the Federal Insurance Office.
“We had a lot of change in some respects. We knew we were going to have a change in the house financial services committee with Mr. Bachus being termed out, and Mr. Hensarling tapped to take it, but people have been preparing for that,” said Leigh Ann Pusey, president and CEO of the American Insurance Association, referring to outgoing Chairman of the House Committee on Financial Services Spencer Bachus, (R-Al) and Jeb Hensarling (R-Texas) who will replace him.
“Hensarling brings experience and leadership, which is a good thing.” In addition, Congresswoman Judy Biggert (R-IL), who served as chair of the Subcommittee on Insurance, Housing and Community Opportunity and known for her leading role in the creation of the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012, lost her reelection bid.
Pusey also said that AIA is engaged in the ongoing regulatory modernization debate, both in the United States and abroad, which is centered on group supervision, capital adequacy and systemic risk. “AIA will work with the Federal Insurance Office to promote international regulatory initiatives that foster coordination, cooperation and communication, and ultimately result in more efficient and effective regulation that promotes a level competitive playing field and development of private markets,” she said.
Peter Kochenburger, executive director of the Insurance Law Center at the University of Connecticut, said that while the FIO will have an expanding role, the agency likely will be more active on the international stage than domestically.
“The federal government absolutely has the right to regulate insurance. That has been decided since 1944, but it has consistently declined the opportunity to do so.” Kochenburger said. “It’s a long overdue office, but it has not exercised its jurisdictional authority in any kind of way that assumes it’s going to override the states.”
The value of the FIO is on the international stage, Kochenberger, and fills several needs for the insurance industry. The insurance industry is regulated at the state level, but the states cannot negotiate treaties on behalf of the United States. The FIO can. “We will see international regulatory issues become more important as well as the FIO role in it,” he said. FIO also is tasked with addressing issues of systemic risk, and encouraging countries to cooperate in understanding risk and regulations, citing AIG as “the poster child, but not the only one.”
On the domestic front, P&C insurers are likely to see the pace of change begin to accelerate, says Jimi Grande, SVP of federal and political affairs at the National Association of Mutual Insurers. To read more about Grande's election reactions, click here.
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