WASHINGTON, D.C., July 29, 2008— The Independent Insurance Agents & Brokers of America (the Big “I”), the nation’s largest insurance association, testified today before a hearing of the Senate Committee on Banking, Housing and Urban Affairs on insurance regulation.
Tom Minkler, an independent agent from New Hampshire, chairman of the IIABA government affairs committee and a recently elected member of IIABA’s executive committee, testified on the importance of maintaining the consumer protection strengths of the state-based insurance regulatory system while making needed improvements, specifically in the area of agent licensing.
Minkler testified that unlike some federal regulators of other financial industries, state regulators have done an excellent job in the area of financial and solvency regulation, which ensures that companies meet their obligations to consumers. However, he noted that some inefficiencies do exist in the state-based system and it has become clear that specific areas in the current insurance regulatory system should be reformed and modernized.
"Unlike other financial services markets, there is no ‘crisis’ in the insurance market that necessitates a risky, massive overhaul of the current regulatory system,” Minkler said. “Yet despite our longstanding support of state regulation, we believe that Congress has a vital role to play in helping to modernize the state regulatory system and overcome the obstacles to reform that currently exist.”
Minkler emphasized the Big “I”’s support of legislation to establish complete nonresident licensing reciprocity. Such legislation would be deferential to states’ rights as day-to-day state insurance statutes and regulations, such as laws regarding consumer protection, would not be preempted. The NARAB Reform Act incorporates these principles as it addresses marketplace entry and leaves regulatory authority and marketplace oversight in the hands of state officials. Minkler said that the NARAB II bill “ensures that any agent or broker who elects to become a member of NARAB will enjoy the benefits of true licensing reciprocity.”
Minkler also reiterated the Big “I”’s opposition to optional federal charter (OFC) proposals, noting that an OFC would be at odds with consumer protection. “The recent crisis in certain sectors of the financial services industry also has shown us that federal regulation is not a panacea for market ills,” he said.
Founded in 1896, IIABA (the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.