(March 5, 2009 – Washington, D.C.) — Melissa Bean, D-Ill. announced that she and Rep. Ed Royce, R-Calif, will co-sponsor the National Insurance Modernization Act (NIMA) in the next several weeks. Bean made the announcement March 4, in Washington DC at the 2009 Insurance Reform Summit presented by Networks Financial Institute at Indiana State University. Previously referred to as the National Insurance Act in the 109th and 110th Congress, Bean said that the bill is undergoing fine-tuning as sponsors finalize discussion on key elements such as consumer access, uniformity and whether a federal charter would be optional or mandatory for insurers deemed systemically significant.

Bean provided some insight into new measures the bill will contain, including the placement of a physical branch of the Office of National Insurance (ONI) in every state. The bill also would create a systemic risk regulator with the authority to oversee insurance firms defined as “systemically important.” Bean said the scope of the proposed systemic risk regulator’s authority is still under discussion as well as the definition of the term “systemic risk”. During the Summit, many alluded to systemic risk  as synonymous with “too big to fail,” although Bean said the definition is still being ferreted out. “As with many issues, the devil is in the details,” she noted.  Beyond a systemic risk regulator and an ONI presence in every state, Bean said the NIMA will foster new product innovation and improve the ability for insurance firms to bring new products to market in a timely manner. She said the bill would facilitate and enhance free-market pricing and provide the industry with a national voice to speak on national issues, such as tax policy, international issues, and during times of large-scale crisis such as Hurricane Katrina.

Bean noted that the current insurance regulatory structure has created redundancy and lowered choice for consumers. “I don’t hear people saying we need more regulation; I hear them saying we need better regulation,” she stated. She noted that the current regulatory structure has been lacking in “issues of efficacy” and that the problems currently impacting the greater financial services environment can be attributed in part to a lack of structure that anticipated systemic risk. “We’re really looking for better effectiveness. Consumer protection must be consistent and robust,” Bean said.

Rep. Spencer Bachus, R – Ala, ranking minority member of the House Financial Services Committee advocated an incremental approach to insurance regulatory reform, while acknowledging that the states have done a good job of ensuring that insurance firms are well capitalized and maintain adequate reserves. “In a global economy, it’s very hard to get products out and maintain a sensible, efficient system,” Bachus stated. He mentioned that he will co-sponsor H.R. 1065 - the Non-Admitted and Reinsurance Reform Act - set to be introduced by Reps. Dennis Moore, D-Kan. And Scott Garrett, R-N.J. He described the Act as “a good example of legislation that increases efficiency in the market and doesn’t cost consumers anything.”

Bachus was cautiously supportive of creating an Office of Insurance Information (OII) such as that proposed by Insurance Subcommittee Chairman Paul Kanjorski, D-Pa, in the last Congress. While he expressed concern that the OII needs to be better defined, he said that such an office might have been able to detect early indications of problems at AIG. Regarding AIG’s difficulties, Bachus noted that the recently re-negotiated agreements with the U.S. Treasury and separately, with the Federal Reserve Bank have a much higher probability of success than the original agreements. “The markets have known for some time that the first agreements were not working. There is a much higher probability of stabilizing the company under the new agreement,” Bachus noted.

Industry association and corporate leaders, including those representing the Financial Services Roundtable, National Association of Mutual Insurance Companies, American Council of Life Insurers, Independent Insurance Agents & Brokers of America, Inc; National Organization of Life and Health Insurance Guaranty Associations and National Conference of Guaranty Insurance Funds, as well as Therese Vaughan, CEO of the National Association of Insurance Commissioners spoke at the Insurance Reform Summit and shared their perspectives on regulatory issues critical to the U.S. insurance industry and its competitiveness in an increasingly global and volatile economy. A summary of the perspectives shared by leadership during the Insurance Reform Summit will be available on Monday, March 9 at www.networksfinancialinstitute.org.

Networks Financial Institute at Indiana State University was founded in 2003 with a grant from Lilly Endowment, Inc. The non-profit organization strives to facilitate a more effective national and international financial services marketplace through student programs, financial literacy and thought leadership surrounding industry issues. Networks Financial Institute is headquartered in Indianapolis with offices on the campus of Indiana State University in Terre Haute and outreach in Washington, D.C., and internationally.  For more information about Networks Financial Institute, visit www.networksfinancialinstitute.org.

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