Susan Voss, who is the Iowa insurance commissioner as well as head of
the NAIC, Kansas City, Mo., talked about the role of the states in
insurance regulation today during a conference call hosted by securities
analysts in the New York office of Sterne Agee Group Inc.

The negotiations leading up to passage of the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 sparked debate over whether the federal
government should play a bigger role in insurance oversight.

The final version of the act merely created a Federal Insurance Office (FIO)
at the U.S. Treasury Department and suggested that the FIO should assess of the
insurance regulatory system.

“I don’t see a wholesale shift of regulatory oversight from the state level
to the federal at this point,” Voss said.

Federal regulators seem to be interested in learning more about insurance but
not in regulating it, Voss said.

One major obstacle federal regulators face is lack of insurance expertise,
Voss said.

At the federal level, “everything is very focused on banks,” Voss said.
“The idea is, if you regulate this, you can regulate insurance, and you
can’t.”

In theory, regulators could take some interest in how insurers interact with
banks designated as “systemically important financial institutions” (SIFIs), but
the SIFI concept may come up more at the international level than at the U.S.
federal level, Voss said.

States still have primary financial oversight over insurers, Voss said.

One caller asked whether any large insurers are at risk of becoming insolvent
in the near future.

Voss said that none appear to be at risk of a near-term insolvency.

“We do stress tests of the top 100 every week,” Voss said.

Also during the call, Voss warned against intentional or unintentional
moves to favor large financial institutions and neglect small and midsize
companies that may be doing a great job of serving their customers.