Garamendi Introduces Bill to Bolster Oversight of Nation’s Financial System

Congressman John Garamendi (D-CA) has introduced the “Primary Regulators of Insurance Act” with Congressman Barry Loudermilk (R-GA). Congressman Garamendi served as California’s first-ever elected State Insurance Commissioner from 1991 to 1995, and again from 2003 to 2007. Congressman Loudermilk is a senior member of the House Committee on Financial Services.

The “Primary Regulators of Insurance Act” would add a dedicated voting seat for state insurance commissioners on the federal Financial Stability Oversight Council (FSOC), established under the 2010 Dodd-Frank law in response to the global financial crisis and the Great Recession. This bipartisan bill would ensure that the expertise of the nation’s primary insurance regulators, state commissioners, has equal weight in the FSOC’s decision-making and risk monitoring activities, which directly impact the national insurance industry and market for hundreds of millions of American consumers.

“With this bill, we will better protect consumers by ensuring that the impact insurance companies have on our financial stability is sufficiently monitored at the national level. As former State Insurance Commissioner of California, I know the frontline role that state regulators can have in holding insurance companies accountable,” said Congressman Garamendi. “Unlike other financial sectors, insurance markets are largely regulated at the state level. Our bill will ensure that the state officials leading that effort have a full and equal voice at the national level to ensure stability, fairness, and accountability in our financial system and the insurance industry nationwide.”

“The business of insurance has been primarily regulated by the states for decades, and this system has proven to work well. This bill recognizes the importance of the state-based system and ensures that state insurance regulators have a vote on matters considered by the Financial Stability Oversight Council, consistent with the primary regulators of the other parts of the financial services industry,” said Congressman Barry Loudermilk (R-GA). “I look forward to working with Congressman Garamendi to advance this bill.”

“The NAIC is highly supportive of the Primary Regulators of Insurance Act of 2021. As the primary regulators of the insurance industry in the U.S., state insurance regulators have the necessary expertise and access to information to inform FSOC’s risk monitoring work. Further, state insurance regulators are best positioned to help identify any systemic risks that could impact the insurance sector, and importantly, are the only members of the Council that can commit to regulatory action across the sector to address any risks the Council may identify,” said National Association of Insurance Commissioners President and Florida Office of Insurance Commissioner, David Altmaier.

In response to the 2007-2009 global financial crisis, Congress enacted the 2010 Dodd-Frank Act (Public Law 111-203) to reduce systemic risks in our financial system, including the insurance industry following the collapse of the nation’s largest private insurance company. Among other reforms, Dodd-Frank established the U.S. Department of the Treasury’s FSOC comprised of federal regulators, state regulators, and industry experts to identify systemic risks, respond to emerging threats to financial stability, and recommend potential regulatory actions. Currently, the state commissioner member of the FSOC serves in a non-voting, largely observer capacity and has no binding say in the FSOC’s actions.

Endorsements: National Association of Insurance Commissioners (NAIC), American Property Casualty Insurance Association, National Association of Mutual Insurance Companies, Insured Retirement Institute, Reinsurance Association of America, American Council of Life Insurers.