One of the architects of a pending federal insurance
regulation bill defended the plan during an
insurance policy forum as a way to deal with large
insurance companies such as American International
Group, Inc. (AIG). But other attendees
at the sixth annual Insurance Reform Summit
doubted that the proposed system would have
done much good in the big insurer's case.
"Recent events are a call to action," Rep. Melissa Bean (D-Ill.) told attendees
at the summit on March 4 in Washington, D.C., conducted by Indiana State
University's Networks Financial Institute.
On Feb. 11, Bean and Ed Royce (R-Calif.) announced the National Insurance
Consumer Protection and Regulatory Modernization Act (although Bean
offered a shorter name, National Insurance Modernization Act, at the summit).
Bean said the bill will be introduced within months.
The legislation would create an optional federal system overseen by the Office
of National Insurance, which would act as a systemic risk regulator. The office
would also have the authority to gather financial data, recommend regulations
and have enforcement authority over some insurance holding companies.
But even attendees who support the idea were skeptical of the national
regulator's ability to have prevented the AIG problems, because the insurer
problems stemmed from complicated financial products that were not considered
insurance and were essentially unregulated. The company's insurance
operations were, and still are, fundamentally strong.