1987 - GOV (House) - Developments In State Insurance Regulation

  • 1987 0701, 0729 and 1014 - GOV (House) - Developments In State Insurance Regulation, James J. Florio (D-NJ)  ---  [BonkNote]
    • [PDF-511p-GooglePlay, VIDEO-?]
    • 1987 0701 - General Overview
    • 1987 0729 – Life Insurance Company Solvency
    • 1987 1014 - Financial Guarantee Insurance
    • House - Committee on Energy and Commerce - Subcommittee on Commerce, Consumer Protection, and Competitiveness
  • (p11) - NAIC - John Washburn - Illinois Insurance Commissioner and Vice President of the NAIC
    • (p25) - Market Conduct and Other State Regulatory Mechanisms
      • Additionally, the NAIC is considering amendments to the NAIC Model Rules Governing the Advertising of Life Insurance which will impose new restrictions and disclosure requirements on universal life products and establish standards for marketing and advertising of life and annuity products.
  • (p59) - State of Minnesota, Commissioner of Commerce - Michael A. Hatch  Very frankly, I don't think that the current situation with regard to the insurance industry works very well, and I think it has to be addressed at a national level, particularly if we perhaps follow some of the schemes, some of the devices that have been used in other areas of regulation, and I refer specifically, for instance, to the banks.
    • After all, as we all know from reading in the newspapers and the complaints from various industries, they are all selling each others' products today anyway, and as long as everybody calls for a level playing field, there ought to be a level approach as to how they are regulated.
  • (p59) - State of Minnesota, Commissioner of Commerce - Michael A. Hatch
    • Indeed, as Commissioner Corcoran had mentioned with regard to life insurance, I think the issue with regard to the life insurance industry will make the property casualty pale by comparison in the future.
      • It is a much bigger industry, it is selling products not normally associated with the traditional life insurance products, and that is good, there is nothing wrong with that.
      • But it does mean it is a different type of product, and perhaps we ought to borrow from others, for instance bank-related products, security-related products, take a look at the type of regulation that ought to be applied.
  • (p91) - State of Minnesota, Commissioner of Commerce - Michael A. Hatch
    • There is not a whole lot of difference between many of the products sold by the life insurance industry and the bank products. They are very similar, and security products for that matter. Mutual funds, annuities. Bank deposits, et cetera.
    • Depending on what annuity you are talking about or single premium, whole life or whatever, it is a similar product. You have to regulate differently. Between securities and banking you have overlaps. There are overlaps all over the place. 

1988 0729 - Life Insurance Company Solvency

  • (p105) - James Florio (D-NJ) - In recent months it has been suggested to the subcommittee that problems are developing in the life insurance industry as well, problems that could be at least as damaging as the problems we have had in property and casualty insurance.
    • (p105-106) - tendency for some insurance companies to invest heavily in junk bonds.
    • (p106) -  A related concern is that the burden of misguided investment strategies might fall on other insurers and their policy holders.
      • In States that have guarantee funds, solvent insurers have to contribute to the fund to pay claims for an insolvent company. 
    • (106) - These forces have transformed the industry and I am not sure the public perception and understanding has kept pace with these changes. I am hopeful that today's hearing will begin the process of improving our understanding.
    • (106) - The life insurance industry contributes in a number of ways to important aspects of our economy, providing security to individuals and capital for American businesses.
      • We need to find out whether the ability of the industry to perform any of its functions is in any way jeopardized and whether adequate accountability exists to ensure the public interest continues to be served.
    • (p106) - Millions of Americans have staked their wellbeing on the life insurance industry.
      • If problems exist, we need to ensure that they are addressed, so that the crisis of which some have warned never occurs. 
    • (p108) - What it is that we are trying to do is to understand about the industry, we are trying to understand what the problems are and quite frankly and quite candidly, some of us at least are trying to formulate appropriate responses at the time that I suspect the responses are going to be demanded by the American public.
      • If the current wave of insolvencies continues and if the evidence that has been presented to us that the existing patchwork quilt of guarantee plans that we have around the States is not going to provide appropriate remedies for individuals, then it may be that at some point there will be the need for some type of remedial response and such a response can only be a meaningful one if we understand the fundamentals of the industry and the fundamentals of some of the problems associated with different aspects of the financial services industry, one of which, of course, is the insurance industry.
      • So with our responsibility of gathering facts....