For the 12th consecutive year, Faegre Baker Daniels and FaegreBD Consulting partnered with Networks Financial Institute (NFI) and the Scott College of Business at Indiana State University to present the Insurance Public Policy Summit in Washington, D.C. on March 17, 2016. This year's Summit focused on the impact the upcoming elections will have on the insurance industry here and abroad.
The much-anticipated debate between Barney Frank, former Chairman of the House Financial Services Committee and one of the key architects of the Dodd-Frank Wall Street Reform Act, and Tim Pawlenty, President and CEO of the Financial Services Roundtable and former Minnesota Governor, was spirited and informative, with election impact predictions from the Democrat and Republican perspectives. Scott Kosnoff, Partner, Faegre Baker Daniels, moderated. Highlights:
- Both Chairman Frank and Governor Pawlenty discussed each candidate’s view on insurance regulation and how prudential regulation of insurance could shift under a new administration.
- Chairman Frank conveyed confidence in Democrats’ chances of taking back the Senate and keeping the White House and displayed cautious optimisim that the Democrats could put up a good fight to take back the House as well.
- Governor Pawlenty stated that neither Donald Trump nor Hillary Clinton seem to have put much thought into insurance regulation at this point, but that could change as the election gets closer.
- Chairman Frank mentioned that there continues to be a conscious decision by both parties not to disturb state authority over insurance regulation outside of health care, and that the politics of trying to nationalize insurance would be disastrous.
Below are highlights from other insightful NFI Summit presentations:
Dr. Daniel J. Bradley, Indiana State University President, and Dr. Brien N. Smith, Dean of Indiana State’s Scott College of Business, welcomed the standing room only audience of industry professionals, Congressional staff, past and current state regulators, federal officials, academics, and industry stakeholders and commentators. Student Kyle Varble spoke for the NFI Scholars. The Indiana State University speakers were introduced by Charlie Richardson, Partner, Faegre Baker Daniels.
Senator Ben Sasse (R-NE), a member of the Senate Banking, Housing & Urban Affairs Committee and its Subcommittee on Securities, Insurance & Investment, gave the Senate perspective:
- Presented an overview of Senate priorities and the Insurance Subcommittee’s agenda for the current session
- Cautioned against the U.S. becoming more of a regulatory state and how contrary increasing federal regulation is to the founders’ conception of America
- Argued that the Consumer Financial Protection Bureau has no constraint to its authority and that the Financial Stability Oversight Council is actually creating more systemic risk for the industry
- Discussed the regulatory burden placed on community banks and smaller financial institutions in the wake of Dodd-Frank
Congressman Blaine Luetkemeyer (R-MO), Chairman of the House Financial Services Subcommittee on Housing and Insurance, gave the House perspective:
- Provided an update on the Subcommittee’s priorities related to insurance, including FSOC oversight and the designation of non-bank SIFIs, Capital Standards and Basel III, reauthorization of the National Flood Insurance Program (NFIP) and monitoring the implementation of Dodd-Frank and its impact on the insurance sector
- Discussed the importance of U.S. involvement in the shaping of international capital and other standards and cautioned against “one-size fits all” international regulation being imposed on the U.S. insurance market
- Gave an update on the recently passed flood insurance legislation and the importance of private sector involvement in writing flood policies for homeowners
- Discussed current legislation that would grant the independent member on the Financial Stability Oversight Council more power and allows that member to have a greater role in participating in international negotiations
The Senator and Congressman’s remarks were introduced and placed in context by Libby Baney, Principal, FaegreBD Consulting.
Congressional Cyber Data Breach Panel, with Nick Rossi, Staff Director, Senate Commerce Committee; Milan Dalal, Senior Economic Advisor for Sen. Mark Warner (D-VA), Senate Banking Committee; Paul Nagle, Chief Counsel, House Subcommittee on Commerce, Manufacturing and Trade; and moderated by Kathleen Rice, Senior Director, FaegreBD Consulting:
- Provided an update on House and Senate legislative efforts relating to data breach notification and security standards
- Agreed that federal legislation is needed to simplify the current patchwork of 47 different state data breach notification laws and that federal legislation could also provide consistency across 12 state security laws
- Discussed the need to find the right balance between clarity for industry and protection for consumers
- Mentioned that cyber liability insurance could be a driving force in decreasing the likelihood of and overall damage from cyber-attacks/data breaches
Michael McRaith, Director, Federal Insurance Office, gave a comprehensive FIO report:
- Director McRaith’s prepared remarks can be found here
- Discussed the complexities and increasing role of international insurance regulation and its impact on the U.S. insurance industry and the overall globalization of the U.S. insurance market
- Gave an update on the recent covered agreement negotiations with the European Union and discussed FIO’s efforts in shaping Com-Frame and insurance capital standards
- Reaffirmed the role of state regulators in regulating insurance and stressed the NAIC’s important role in helping shape international negotiations
- Gave an update on international and domestic work streams, including the development of an Insurance Capital Standard, further examining insurer’s role with data security, and the implementation of the reauthorized Terrorism Risk Insurance Program
Thomas Sullivan, Associate Director, Division of Supervision and Regulation, Board of Governors, Federal Reserve System, gave a comprehensive Federal Reserve report:
- Provided an update on discussions surrounding the implementation of a domestic Insurance Capital Standard and the Board’s efforts to continue to tailor prudential regulations to insurers’ unique business models
- Discussed new developments in regulation discussions, including the Board’s upcoming review of insurance savings and loan holding companies and the supervision on non-bank Systemically Important Financial Institutions (SIFIs)
- Gave an update on the Board’s efforts on international standard setting and the “Team USA” effort
Director McRaith’s and Mr. Sullivan’s remarks were introduced and put in context by Sara Powell, Partner, Faegre Baker Daniels.
John Huff, NAIC President and Missouri Insurance Director, gave a comprehensive NAIC report:
- Urged the European Union to grant equivalence to the current U.S. insurance regulatory framework under Solvency II
- Outlined the NAIC’s efforts regarding data collection on terrorism insurance and outreach to FIO regarding TRIA implementation
- Discussed the NAIC’s work on data security standards for insurers and regulation of the cyber liability insurance market, as well as the NAIC’s opposition to certain legislative proposals that would undermine state regulation and decrease consumer protection
- Discussed the regulatory role in retirement security and NAIC engagement with the Department of Labor regarding the pending fiduciary duty rule
- Mentioned the NAIC’s work in developing Principles-Based Reserving requirements (PBR) and the anticipation that the PBR will be fully implemented in each state by 2017
Value of Public Service for Business Objectives, with Reza Houston, NFI Director of Research and Assistant Professor, Indiana State University:
- Discussed the value to the private sector’s hiring of former legislators and staff, and the positive impact that former legislators and staff have on mergers and acquisitions
Industry Panel, with Chuck Chamness, President and CEO, National Association of Mutual Insurance Companies; Dirk Kempthorne, President and CEO, American Council of Life Insurers; Peter Gallanis, President, National Organization of Life and Health Insurance Guaranty Associations; David Sampson, President and CEO, Property Casualty Insurers Association of America; and moderated by Pat Hughes, Partner, Faegre Baker Daniels:
- Outlined new challenges facing the industry in light of current state, federal and international regulatory regimes
- Stressed the importance of U.S. input in shaping international insurance regulations
- Cautioned against expanding regulatory reach and rhetoric that mischarterizes the financial services industry
- Discussed the need for further changes in FSOC’s designation of non-bank Systemically Important Financial Institutions (SIFIs)
- Discussed the Department of Labor’s fiduciary duty rule and its negative impact on the industry
- Mentioned how new technology is fitting into underwriting and assessing damage