Reinsurance and bond insurance could lose state system
New York Insurance Superintendent Eric Dinallo said he expects a federal regulation package being put together in Washington to include insurance oversight, but it would go too far if it entirely replaced state supervision, Reuters reported.
But reinsurers and bond insurers could be handled solely by a federal regulator.
"A systemic risk regulator needs to be entirely separate, and have free access to company information, and there needs to be a black box around the information it gets," said Dinallo.
He said a system of multiple regulators is a proven way to protect the interest of various parties -- from consumers to investors.
He opposes the formation of an optional federal charter for insurance companies, which would give insurers a choice over state or federal regulation, because it will promote so-called "regulatory arbitrage."
Similar attempts to institute a federal regulator have failed in the past, partly due to opposition from states, regional insurers, and consumer groups which say it would mean higher costs, insurance rates, and weakened consumer protection.
A blueprint drawn up under former US Treasury Secretary Henry Paulson last year called for a federal Office of Insurance Information. Dinallo said this might be a better federal approach since it would leave states with control, but create a system to pool information, and standardise rules and procedures.
Reinsurers and bond insurers could also be handled solely by a federal regulator, Dinallo added.
