States' insurance supervision more than adequate, Connecticut commissioner says
In testimony before a Congressional committee, Connecticut insurance commissioner Thomas Sullivan suggested that existing supervision of insurers need not be supplanted by federal oversight.Sullivan spoke on behalf of the National Association of Insurance Commissioners, citing the "laws, values and unique risks of each state" in his argument that state insurance departments should continue overseeing insurance companies. The NAIC has solvency guidelines for all 50 states, Sullivan added, ensuring that the "same baseline solvency standards" are in place.
He went on to note the success of state regulatory frameworks in avoiding "insolvencies and market meltdowns" that occurred in other parts of the financial industry. Insurance companies are typically subject to, not responsible for, systemic risk, and even if an insurer fails, states' guarantee funds would pay policyholders' claims.
Sullivan cautioned the committee against "redundant, overlapping responsibilities" that increased federal insurance regulation would provide, implying that it "will harm individuals, families, and businesses that rely on insurance."
Existing state regulations and solvency standards have ensured both policyholders' safety and insurers' stability, he said, noting that state insurance departments have experience with company insolvencies, too.
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Posted: November 3, 2009
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