In addition to deciding America’s next President, the 2008 election included several races at the state level of importance for the insurance industry. State insurance commissioner races were decided in five states Ã¢â‚¬“ Delaware, Montana, North Carolina, North Dakota and Washington. Other decisions closely watched were the governorsÃ¢â‚¬â„¢ races in six states with appointed insurance commissioners Ã¢â‚¬“ Indiana, Missouri, New Hampshire, Utah, Vermont and West Virginia. At the Congressional level, Rep. Paul Kanjorski (D-PA), chairman of the Capital Markets and Insurance Subcommittee of the House Financial Services Committee was re-elected in Pennsylvania. For complete election results, check out BestÃ¢â‚¬â„¢s Election News Web site.Ã‚
Risk managers questioned for a new Economist Intelligence Unit survey point to regulatory risk as the most significant threat to their business, ahead of country risk, market and credit risk, IT and people risks, or terrorism and natural disasters. The reportÃ¢â‚¬â„¢s publication is timely given the widespread calls for increased global regulatory oversight in response to the financial crisis. While respondents to the surveyÃ‚ support the concept of regulation, they voiced strong concerns about the quantity and complexity of their compliance obligations, as well as the lack of regulatory harmonization between different jurisdictions. The findings form part of From Burden to Benefit: Making the Most of Regulatory Risk Management, a new Economist Intelligence Unit survey and report sponsored by ACE, KPMG, SAP and Towers Perrin. According to the results, audit and reporting regulations cause the biggest headaches, but other areas are also causing concern for many companies. In particular, respondents point to workforce and environmental legislation as areas that consume large amounts of resources and management time. Research for the report is based on an online survey of 320 global executives with responsibility for risk.
The unregulated $62 trillion credit default swap (CDS) market Ã¢â‚¬“ the Achilles heel of the emerging financial crisis Ã¢â‚¬“ yesterday was served notice by New York State that part of the sector will be subject to regulation for the first time by the state insurance department. Announcing the move, Governor Paterson urged the federal government to regulate the rest of the credit default swap market. The new guidelines, which will take effect from January 1, 2009, establish that certain credit swaps are insurance contracts, and therefore subject to state regulation. This reverses a decision by the state insurance department in 2000 that all CDS were not insurance. The insurance department has also issued new best practices for financial guarantee insurers,Ã‚ includingÃ‚ measures designed to limit risks for financial guarantee insurers and increasing the minimum amount of capital and reserves they must maintain.Ã‚
Amid the financial markets turmoil of recent months andÃ‚ developments at certain multinational insurers, the annual conference of the International Association of Insurance Supervisors (IAIS) which will take place in Budapest from October 14 through 17 is likely to see some lively discussions. We note that this yearÃ¢â‚¬â„¢s conference is focused on the general topic Ã¢â‚¬Å“Insurance and the Globalisation of Financial Services: Challenges for Worldwide Regulation and SupervisionÃ¢â‚¬ . Among the issues to be covered: cooperation and transparency in crisis situations; the impact of future solvency standards; supervision of insurance groups and market conduct. Check out I.I.I. information on proposed international standards in accounting.Ã‚
A plan outlined yesterday by the Securities and Exchange Commission (SEC) could lead to the use of International Financial Reporting Standards (IFRS) by publicly listed U.S. companies, including insurers, beginning in 2014. The Commission said it would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors. For decades, publicly owned U.S. companies have reported to the SEC using Generally Accepted Accounting Principles (GAAP). However, more than 100 countries around the world, including all of Europe, currently require or permit IFRS reporting. Approximately 85 of those countries require IFRS reporting for all domestic, listed companies. The SEC says a common accounting language around the world would give investors greater comparability and confidence in the transparency of financial reporting worldwide. However, some U.S. experts believe that the new standards will be more complicated and less useful to investors. For more on this story, check out todayÃ¢â‚¬â„¢s article in the Wall Street Journal by reporters Kara Scannell and Joanna Slater. The I.I.I. update on accounting provides further information.Ã‚
The current regulatory structure and oversight of the industry will be the subject of a hearing tomorrow before the Senate Banking Committee. Testifying on the first panel are representatives of the National Association of Insurance Commissioners (NAIC), the American Insurance Association, the American Council of Life Insurers and the Consumer Federation of America. The second panel will feature representatives of the Council of Insurance Agents and Brokers, the Independent Insurance Agents and Brokers of America, the Reinsurance Association of America, and the National Association of Professional Surplus Lines Offices. The hearing begins at 10:00am at 538 Dirksen Senate Office Building. Check out further I.I.I. information on regulation modernization.Ã‚
The first of three public hearings takes place in Buffalo, New York, today on the form and disclosure of producer compensation (including contingent commissions). Co-hosted by the New York Superintendent of Insurance and the attorney general, the hearings are expected to elicit views about the proposed addition of a new regulation to the Insurance DepartmentÃ¢â‚¬â„¢s regulations regarding permissible forms of insurance producer compensation and disclosure by insurance producers of all forms of compensation. Two other hearings are scheduled for later this month: one in Albany on July 23 and one in Manhattan on July 25. You can follow the meetings live at www.totalwebcasting.com/live/nysins.
Markup of three insurance bills, including H.R. 5840 the Insurance Information Act of 2008, will begin later today at a meeting of the Capital Markets Subcommittee of the House Financial Services Committee. H.R. 5840 would establish a federal Office of Insurance Information within the Treasury department. Creation of this office was part of the financial services regulatory reform package unveiled by the Treasury in April (see our March 31 posting). The two other pieces of insurance legislation up for consideration are: H.R. 5792, Increasing Insurance Coverage Options for Consumers Act of 2008 and H.R. 5611, National Association of Registered Agents and Brokers Reform Act of 2008. H.R. 5792 would amend the Liability Risk Retention Act of 1986 to allow risk retention groups to provide property insurance in addition to current liability coverage to their members. Check out further I.I.I. content on regulation modernization,Ã‚ the optional federal charter (OFC), riskÃ‚ retention groups and otherÃ‚ alternative risk financing options.Ã‚
Those following the TreasuryÃ¢â‚¬â„¢s plan to establish an optional federal charter (OFC) for insurers, will turn their attention to Capitol Hill tomorrow where a hearing is scheduled before the Capital Markets Subcommittee of the House Financial Services Committee on H.R. 5840, the Insurance Information Act of 2008. H.R. 5840 would create a federal Office of Insurance Information within the Treasury department. Creation of this office was recommended as part of the blueprint on federal regulation of financial services, including insurance, unveiled by the Treasury in April (see our March 31 posting). The hearing will take place at 10am, 2128 Rayburn House Office Building. Check out further I.I.I. info on the OFC.Ã‚
Industry eyes today will be on the news out of the Treasury department, where U.S. Treasury Secretary Henry Paulson is expected to outline the agencyÃ¢â‚¬â„¢s blueprint for federal regulation of financial services, including insurance. Word on the street is that the TreasuryÃ¢â‚¬â„¢s plan would endorse optional federal charters (OFC) for both insurers and producers. It would also propose the creation of an interim federal insurance regulator. Check out National UnderwriterÃ¢â‚¬â„¢s March 31 online article by Arthur Postal and Daniel Hays for more information on the proposal. Check out the I.I.I.Ã¢â‚¬â„¢s online update on the OFC.