PCI Wants Further Clarity in Establishing Federal Insurance Information Office

David A. Sampson, president and CEO of the Property Casualty Insurers Association of America, on Tuesday told a Congressional subcommittee that legislation to establish a federal insurance information office needs additional clarity.  
  
In his testimony before the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Sampson praised the subcommittee and its chairman, Rep. Paul Kanjorski (D-Pa.), for their efforts, and called for a cooperative effort in producing the best possible regulatory legislation.  
  
“We must work to ensure that actions taken will drive efficiencies while producing meaningful results and not create more burdensome, costly bureaucracy,” Sampson said. “PCI is committed to helping create good public policy through strong collaboration with forward-looking leaders. We look forward to working with Chairman Kanjorski and this subcommittee to address concerns.”  
  
Sampson noted the need to adhere to principles of good regulation and to avoid the danger of overregulation, despite calls to economic populism in a challenging financial services market.  
“The primary responsibility of regulation should be to enhance solvency protection for policyholders,” Sampson said. “The best regulator of price is a competitive market.”  
  
In this context, Sampson expressed several concerns about the legislation to establish an Office of Insurance Information (OII). He noted that PCI’s Board of Governors had not yet taken a position on the bill and had several fundamental questions regarding its public policy consequences. He provided several considerations that PCI believes must be taken into account relative to this proposal, including:  
  
• Avoiding unnecessary and expensive data collection requirements  
  
“The current legislation would need additional clarity on the intent of use for data collection and reporting to ensure appropriate use, non-duplication of work, and unnecessary expenditures, which if occur negatively impact consumers,” Sampson said. “Further details are needed for the type of potential inquiries and the uses of data, as data should be targeted to the purpose for which it is sought.”  
  
• Preserving confidentiality of private data  
  
“Capturing or reporting data could compromise the proprietary nature of the data or threaten the privacy interests of insurers, their customers or claimants,” Sampson said. “If the intent of the OII is to ‘receive, analyze, collect, and disseminate data and information and issue reports regarding all lines of insurance except health,’ we need to ensure the objectivity, confidentiality, certainty to privilege, and credibility of the data as well as protection of privacy.”  
  
• Defining and limiting federal preemptive authority over state laws  
  
“The draft bill would, for the first time, give this potential federal entity preemptive authority over state insurance laws as an administrative process, rather than as a legislative one,” Sampson said. “This could create an uncertainty in the industry about the regulatory environment in which we must operate. Thus, we advocate that preemption, if necessary, be accomplished by legislative action, not left to be developed by an administrative process. The legislative process is the most appropriate way of answering questions such as what happens to existing structures like the McCarran-Ferguson Act.”  
  
About PCI  
  
PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.