Gov. Racicot’s comment follows:
“Given the recent turmoil in the financial markets, Chairman Frank's and the House Financial Services Committee's decision to undertake a comprehensive review of the adequacy of oversight and regulation of the modern financial services sector couldn't be more timely. Today’s financial products, institutions and markets are increasingly interconnected, and the current industrial-era regulatory structure may no longer be the optimal approach. The Committee’s examination of how to modernize U.S. financial services regulation should include an in-depth examination of the antiquated multi-state insurance regulatory system in the U.S., which is rooted in an even older regulatory structure developed around the turn of the last century.
“Insurance plays an increasingly critical role in today’s integrated financial services markets. This was highlighted in Treasury Secretary Paulson’s ‘Blueprint for a Modernized Financial Regulatory Structure,’ which recognizes the importance of the insurance industry in this new financial world of interconnected markets.
“Treasury’s blueprint recommends an Optional Federal Charter for insurers, which is a positive development for consumers because it would create a more efficient, effective and rational market-based regulatory structure. Since the 1870s, how we regulate insurance has not changed, including the states' focus in property and casualty insurance on rate and form regulation. Allowing insurance companies the option to obtain a federal charter that reinforces the strengths of market-oriented regulation, like banks enjoy today, is a common sense approach that will benefit our economy.
"We appreciate that an optional federal charter represents comprehensive change, but that should not deter us from doing what’s best for the U.S. economy. Only Congress can create a modern financial regulatory regime that will protect consumers and American competitiveness, and AIA is ready to work with Congress as these hearings and the process to enact regulatory change move forward."