Faegre Baker Daniels LLP and FaegreBD Consulting were pleased to partner again with Networks Financial Institute in presenting the 9th Annual Insurance Public Policy Summit in Washington, D.C. on March 20, 2013. This year's Summit focused on the theme "Navigating U.S. and International Cross Currents."
Participants in this year's NFI Summit included U.S. Senator Jack Reed, U.S. Congressman Blaine Leutkemeyer, Montana Commissioner of Securities and Insurance and NAIC Vice President Monica Lindeen, and Federal Insurance Office Senior Insurance Regulatory Policy Analyst Elizabeth Sammis. Industry panelists included Kimberly O. Dorgan, Senior Executive Vice President, Public Policy, ACLI; Brady Kelley, Executive Director, NAPSLO; Leigh Ann Pusey, President and CEO, AIA; and David A. Sampson, President and CEO, PCI. And also present were Georgia State University Professor Martin Grace and Temple University Professors J. David Cummins and Mary Weiss.
All research presented at the Summit is available on NFI's website. Below are a few points of interest from each speaker's remarks:
Dr. Dan Bradley, President, Indiana State University, and Dr. Brien Smith, Acting Executive Director of NFI and Dean, Scott College of Business, Indiana State University, welcomed the audience of industry professionals, Congressional staff, state regulators, Treasury Department and other federal officials, academics and industry stakeholders.
Senator Jack Reed (D-RI), a senior member of the Senate Banking Committee:
- Gave a complete status report on Dodd-Frank implementation and the 2013 agenda of the Senate Banking Committee.
Congressman Blaine Leutkemeyer (R-MO), a senior member of the House Financial Services Committee:
- Related his personal story of owning an insurance agency and being a former Missouri state bank inspector as he expressed his ongoing support for keeping insurance regulated on the state level and limiting the impact of Dodd-Frank.
Industry Panel, with Kimberly O. Dorgan (ACLI), Brady Kelley (NAPSLO), Leigh Ann Pusey (AIA) and David Sampson (PCI):
- Dorgan said that life insurers are focused on the economy improving; a strong economy means better investment opportunities for company assets and beneficiaries' premiums.
- Kelley said the Nonadmitted and Reinsurance Reform Act (NRRA) passed as part of Dodd-Frank is a success, and the surplus lines industry hopes it remains in place despite efforts to reform Dodd-Frank.
- Compared to last year, Pusey said, many things are still the same, noting a slowly recovering economy, ongoing rollout of Dodd-Frank regulations and a yet-to-be released Federal Insurance Office (FIO) report. However, the international focus is moving from Solvency II to ComFrame.
- Sampson said that the property casualty industry survived the financial crisis very well but lamented what he called the "tyranny of momentum," a rush forward in the face of a crisis that may result in too much regulation.
- The panel agreed that FIO is a good resource for all federal concerns, including acting as a voice for the U.S. at the international level.
- Regarding the Financial Stability Oversight Council's role in designating systemically important financial institutions (SIFIs), the panel reiterated its belief that unique standards for insurance companies should be utilized and not the blanket approaches for banks.
- There was broad support among the panelists to begin working with Congress this year to encourage reauthorization of the Terrorism Risk Insurance Act which expires at the end of 2014. Some panelist noted the difficulties in extending the current law without amendment to reduce the federal government's role in this program.
NAIC Vice President and Montana Commissioner of Securities and Insurance Monica Lindeen:
- The NAIC intends to continue being a voice on state regulatory issues nationally and internationally and is prepared to work with FIO whenever possible.
- ORSA, the shift from risk-based capital to principles-based reserving and the monitoring of death master files for life insurers are continuing topics of interest at the NAIC.
- NARAB II, about which Lindeen had testified before the Senate Banking Committee the day before, is federal legislation that she is confident will be passed with widespread support from the industry and other stakeholders.
- The NAIC continues to play a presence on the international front by participating in the EU-US Dialogue Project and at the International Association of Insurance Supervisors (IAIS).
Federal Insurance Office representative Elizabeth Sammis:
- Sammis gave an overview of FIO organized around three parts: regulatory policy, financial stability and consumer issues.
- On the consumer piece, FIO is performing its statutory duty to examine the affordability and accessibility of non-health insurance products. They have met with 27 groups and examined the literature on this issue. They seek not to repeat any past research but to look forward and answer the statutory charge with fresh answers.
Professor Martin Grace's presentation entitled "Research Perspectives, International Capital Rules: Harmonizing Conflict or Competition":
- Capital rules differ between the EU and US and are a concern for protecting consumers. There is a misunderstanding of the pros and cons of the two systems.
- It is not clear that EU capital regulation is more onerous than the US' RBC-style regulation.
- The ongoing conversations and agreements between the US and EU present a roadmap forward and harmonization, avoiding the potential for a trade issue between the two jurisdictions.
Professors J. David Cummins' and Mary Weiss' presentation entitled "Systemic Risk and Regulation of the U.S. Insurance Industry":
- Cummins and Weiss examined the question of whether US insurers are systemically risky, looking at core and non-core activities through the lens of statistical analyses.
- Core activities of property casualty insurers are not systemic, but certain activities of life insurers could have some systemically significant characteristics.
If you have any questions about the presentations and dialogue at the Summit, please contact any member of our insurance practice group.