More Federal oversight not needed says United Educators CEO

08/10/2009

The head of leading risk retention group United Educators has said the home, auto, and business insurance industry is healthy and competitive and does not need new oversight under proposals for a Federal Insurance Office (FIO).

Testifying before the US House Financial Services Committee hearing on Capital Markets Regulatory Reform, United Educators president and CEO Janice Abraham said the current system of insurance industry regulation is working relatively well.

Abraham was testifying on behalf of trade association the Property Casualty Insurers Association of America (PCI), which represents more than 1,000 insurers.

“Our insurance companies have weathered hurricanes Katrina, Rita and Ike in addition to handling their regular claims without having to ask for a government bailout,” said Abraham.

“We’re not broke, we didn’t cause the current financial crisis and we don’t need a new federal oversight that may ultimately increase costs for consumers.”

United Educators RRG, which came top of the 2008 Captive Review RRG Power 50 poll, both insures and is owned and governed by more than 1,160 educational institutions.

The draft bill put forward last week by chairman of the Committee’s Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Rep. Paul Kanjorski, proposes setting up the FIO within the Treasury Department.

The bill follows earlier proposals by Kanjorski and others to create an Office of Insurance Information (OII) and by the US Administration to create an Office of National Insurance (ONI).

The most recent Kanjorski draft amends the Administration’s proposal, renaming the entity as the Federal Insurance Office.

Abraham said that while PCI supports responsible regulatory reforms that reflect principles of good insurance regulation and it has not taken a position on the OII proposals, its members “have concerns and questions about a greatly expanded federal insurance oversight office”.

She went on to say that the intent of the initial proposals was to coordinate federal and international insurance policy. “However, the recent drafts create a potential for regulatory mission creep over time,” said Abraham.

“The Committee should take care to ensure that the FIO's mission and powers are limited to addressing gaps in federal and international policymaking coordination.”