Resolution Opposing Continuing Federal Insurance Chartering Efforts
NOTE: This resolution has expired.
WHEREAS, regulation, oversight, and consumer protection have traditionally and historically been powers reserved to state governments under the McCarran-Ferguson Act of 1945; and
WHEREAS, state legislatures are more responsive to the needs of their constituents and the need for insurance products and regulation to meet their state’s unique market demands; and
WHEREAS, state officials continue to monitor, review and regulate the banking, insurance and securities industries as it relates to their individual jurisdictions with distinction; and
WHEREAS, initiatives are being contemplated by certain members of the United States Congress and the U.S. Department of the Treasury that have the potential to destroy the state system of insurance regulation and create an unwieldy and inaccessible federal bureaucracy—all without consumer and constituent demand; and
WHEREAS, such initiatives include H.R. 5840—the Insurance Information Act—proposed legislation would create a foundation for an OFC that would bifurcate insurance regulation and result in a quagmire of federal and state directives promoting ambiguity and confusion; and
WHEREAS, the enactment of legislation leading to a federal insurance charter would allow companies to opt out of state insurance regulatory oversight and evade important state consumer protections; and
WHEREAS, a potential federal insurance office cannot by its very nature, respond, as state regulation does, to states’ individual and unique insurance markets and constituent concerns; and
WHEREAS, the attempt to link the financial collapse of the American International Group (AIG) to the lack of regulation at the state level is disingenuous since the insurance lines of AIG regulated by state regulators remain among its most financially viable and attractive assets; and
WHEREAS, AIG’s financial problems were precipitated by the parent company’s risky and largely unregulated securities transactions in credit default swaps, an area subject to the regulatory oversight of the federal U.S. Office of Thrift Supervision; and
WHEREAS, an optional federal regulatory system would only be optional for insurers, not for consumers, taxpayers, businesses and local economies; and
BE IT THEREFORE RESOLVED, that The Council of State Governments supports and encourages state actions to preserve the preeminence of state-regulated insurance systems and seeks to alert and educate state officials about the continuing efforts to preempt state regulatory authority with a movement toward an optional federal charter.
Adopted this 6th day of December, 2008 at the CSG 75th Anniversary Celebration and Annual Meeting in Omaha, Nebraska.