Talk:Insurance regulation
From Riski
Therese M. Vaughan, chief executive of the National Association of Insurance Commissioners, recently praised President Obama’s regulatory proposals but added that state regulators still have improvements planned for their oversight.
“The general structure proposed by the administration is consistent with our principles in the sense that it’s collaborative,” she said during a media conference call. “It’s based on regulators’ working together, good information sharing among the different regulators, and it preserves the concept of functional regulations.”
Mr. Obama’s white paper detailing the financial regulatory overhaul proposed the creation of the Office of National Insurance inside the Department of the Treasury, which would develop expertise, gather information and recommend to the Federal Reserve any insurers that it thought should be supervised as Tier 1 financial holding companies.
The current state-based regime remains intact.
As part of his proposal, Mr. Obama also called for a new Financial Services Oversight Council to oversee systemic risk. Ms. Vaughan said that she thinks that state regulators should play a role in the systemic risk dialogue too.
“When the council was created, that was a mechanism to discuss systemic risks and the policies around them — that’s something that state regulators should be a part of,” she said. “We look forward to working with the administration to find the appropriate way to make that happen.”
But Ms. Vaughan said she is suspicious of the Office of National Insurance’s ability to identify insurers as being systematically risky when they may not be. “The administration needs to be sure they’re not branding companies that are too big to fail and creating a self-fulfilling prophecy,” she said.
No one insurer is too big to fail in the United States, Ms. Vaughan added, stressing that New York-based American International Group Inc.’s problems were outside its insured entities.
- Maine’s disclosure law
Source: Investment News, June 23, 2009
The Life Insurance Settlement Association today applauded new legislation in Maine which requires that insurance customers be apprised of their rights to sell their policies on the secondary market.
The Maine Public Law, which Gov. John Baldacci signed June 12, requires the state’s insurance superintendent, Mila Kofman, to develop an informational brochure in lay terms, and provide it to carriers and producers free of charge.
The brochure will inform customers that insurance coverage is part of a larger financial plan, and that there are other alternatives to allowing the policy to lapse.
The rule also requires that the insurer notify the insured that there are “alternative transactions” available if the client is older than 60 years old or chronically ill when the client asks for a surrender of the policy or an accelerated death benefit. Insurers must also advise clients of their options if the company sends an initial notice that the policy may lapse.
The law also requires that life settlement producers must behave as fiduciaries to individuals who sell their policies and provide descriptions of all offers, counteroffers, acceptances and rejections for any proposed settlement of the policy. Settlement producers must also tell clients if others are compensated either directly or indirectly for the settlement contract, identify those individuals and share the amount of compensation paid to those individuals and the method of calculating that pay.
Maine was the second state to approve such a law. Washington was the first, in April."
