WASHINGTON, Feb. 12 /PRNewswire-USNewswire/ -- Frank Keating, president and CEO of the Washington-based American Council of Life Insurers (ACLI), issued the following statement in response to a letter sent by consumer groups to Treasury Secretary Timothy Geithner challenging insurance regulatory reform efforts:
"The federal government must develop an insurance regulatory presence with the capacity to monitor the insurance marketplace and identify risks to consumers, the industry and the broader financial system before they reach the crisis stage. Life insurance is a $5 trillion industry which affects the lives of almost all Americans and closely interacts with banks and securities firms. Consumers cannot afford a regulatory structure in which federal financial regulators are effectively walled-off overseeing the insurance marketplace.
"Establishing a national insurance regulatory option would close this gap. The national insurance regulatory office would perform two functions. First, it would directly regulate those insurers that are federally-chartered. Second, through its direct regulatory activities and interactions with fellow regulators, the office would have a window on the broader insurance market and be able to spot trends that might affect the system.
"An optional system is not a euphemism for 'no regulation.' To the contrary, in the wake of the financial crisis, the marketplace will not have confidence in an insurance company that comes under weak financial and market conduct standards. The rhetoric about 'regulatory arbitrage' is overblown. An optional system would preserve state regulation for insurance companies that would be better served by it, perhaps smaller or regional companies. The key is to maintain high standards of financial solvency and marketplace conduct at both the state and federal levels."
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