Like many, National Association of Insurance Commissioners’ CEO Therese Vaughan found plenty to like in the recent financial services reform blueprint released by the Obama administrations.
“The general structure that the administration proposed is one that is consistent with our principles,” Vaughan told reporters at a press briefing. “What’s particularly important is that it preserves the concept of functional regulation. It recognizes that you need specialists that recognize the unique characteristics of the insurance sector.”
Vaughan found a greater measure of relief in what the document didn’t call for— a federal regulator.
“This document could come out stating ‘we need a federal regulator,’” she said. “It didn’t say that.”
Yet, Vaughan said the ambiguous nature of text is causing some consternation in the case of the proposed Office of National Insurance (ONI).
The ONI appears similar Office of Insurance Information (OII) proposed by Rep. Paul Kanjorski and is intended to give insurance regulators a consolidated voice when dealing with international insurance regulators. “We support OII,” Vaughan said, noting that NAIC worked closely with Kanjorski to make sure that an OII could work effectively at an international level without preempting state regulations. “It’s not entirely clear to us what the ONI is going to be doing.”
Another area of ambiguity vexing Vaughan is the proposed Consumer Financial Protection Agency. “It’s not clear from the proposal how broad the reach of that agency will be, but our prospective is that it needs to be there to fill gaps,” she said, but noted that state insurance have always taken the perspective that protecting consumers is important. “Those protections that we already have in place should not be duplicated by a new federal agency.”
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