Two major topics dominated a conference of insurance professionals Tuesday at the Connecticut Convention Center — the role of the federal government in insurance and the changing health care market.
Hundreds of professionals filled a ballroom at the convention center for the 2013 Connecticut Insurance Market Forecast. The event was hosted by the Connecticut Insurance and Financial Services Cluster, a group that studies industry trends, and those who attended were a collection of health, property-casualty, life and retirement services executives as well as some regulators.
“The federal government must engage the states with a new, new outlook,” Gov. Dannel P. Malloy told the audience. “Instead of trying to create new requirements, or a new regulatory framework, which is what they’re trying to do, using their federal approaches or international forums as vehicles, it should acknowledge what works in the United States … and that is our state regulatory system.”
But in the aftermath of the financial collapse of 2008 and the recession, some in Washington D.C. and abroad have urged closer monitoring of financial institutions that are “too big to fail.” For example, the Financial Stability Board of Basel, Switzerland, and the federal Financial Stability Oversight Council are both making determinations about companies that are systemically important financial institutions, or SIFI, which means too big to fail.
On the insurance front, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act established the Federal Insurance Office, which now has the authority to monitor all aspects of the insurance sector.
However, people in the insurance industry have often said that it wasn’t insurance products that led to the financial crisis, but rather complex financial instruments such as mortgage-backed securities.
State insurance regulators have a system unique to each state with an umbrella organization called the National Association of Insurance Commissioners, or NAIC, to advise the states, said James Donelon, Louisiana’s insurance commissioner and president of NAIC. State regulation is a better system than a federal insurance regulator, he said.
“… When you dig down deep, we didn’t cause what happened to the world economy in 2008, but [federal regulators had] a lot to do with what happened,” Donelon said in defense of state insurance regulators.
During a break, several speakers answered media questions, including whether the Affordable Care Act could and should be modified to allow people to keep health plans they currently have, such as individual high-deductible plans that won’t fit federal requirements next year.
Connecticut Insurance Commissioner Thomas Leonardi said even if legislation the size of the Affordable Care Act could be reviewed holistically, to make tweaks that would improve it as it is rolled out, the political environment in Washington makes it almost impossible to make those changes.
New York Superintendent of Financial Services Benjamin Lawsky, who regulates insurance in his state, said: “Also, you would create such chaos because you’ve had two years, three years of implementation getting ready for Jan. 1. If you started tweaking it now, it has all kinds of ripple effects and unintended consequences.”