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DODD STATEMENT: INSURANCE & REGULATORY MODERNIZATION

We Must Provide Americans with the Safety Net They Need

July 28, 2009

WASHINGTON – Today, Senate Banking Committee Chairman Chris Dodd (D-CT) brought together an expert panel of witnesses to testify on regulatory modernization and the insurance industry.
 
“As we talk about the modernization of financial services regulations, insurance plays a very, very critical role,” said Dodd.  “The insurance industry provides millions of Americans in our country with the safety net they need, whether they be individual homeowners, small businesses or larger enterprises.”
 
“At times such as these, people are already faced with uncertainty.  Millions have lost their jobs, their homes, and their retirement.  We need to provide them with peace of mind. We need to protect our policy holders, to make sure that our insurance industry is strong, and stays strong during this time of economic difficulty.”
 
Travis B. Plunkett of the Consumer Federation of America, Baird Webel of Congressional Research Services, Hal Scott of the Nomura Professor of International Financial Systems at Harvard Law School and Martin Grace of the Department of Risk Management and Insurance at Georgia State University testified at the hearing.
 
 
Read testimony or watch the webcast:
 
Below is Dodd’s full opening statement as prepared for delivery.
 
“As we talk about the modernization of financial services regulations, insurance plays a very, very critical role.  The insurance industry provides millions of Americans in our country with the safety net they need, whether they be individual homeowners, small businesses or larger enterprises.”
 
“At times such as these people are already faced with uncertainty.  Millions have lost their jobs, their homes, and their retirement.  We need to provide them with peace of mind. We need to protect our policy holders, to make sure that our insurance industry is strong, and stays strong during this time of economic difficulty.”
 
“It is a critically important industry and has played an important role in capital formation throughout the better part of the 20th century, and as we get into the 21st century, the role of insurance is going to be even more important.”
           
“We live in an uncertain world.  The economic crisis has claimed as casualties millions of Americans who have lost jobs, homes, retirement savings, and their families’ economic security.
 
“But even in the best of times, there is always risk.  And that’s why the insurance industry exists – to provide stability to families and businesses. 
 
“Today’s hearing is the latest in a series examining our financial regulatory system and exploring ways to modernize it for the 21st century.  At issue is what should be done to better regulate the insurance industry.”
 
“As always, our primary concern is protecting working families of this nation who have paid the highest and most unfair price for our regulatory deficiencies.”
 
“What to do about insurance regulation is complicated.  Some have called for federal regulation of insurance, while others strongly defend the current system of state regulation.”
 
“It is important we get this right.  A strong economy requires the effective flow of capital.  Insurance, and the security it brings, is a key element in getting credit moving again.”
 
“In my home state of Connecticut, we have had a long and proud history of acting as a home, a major home, to insurance firms that provide a foundation of security for all manner of transactions, from the purchase of a home to the building of a new factory.”
 
“And so, there is a solid case to be made that state-based regulation of insurance has worked well for more than a century.  Millions of American families, too, have relied on one form of insurance or another in a time of crisis – when they needed to rebuild their homes after a devastating fire or needed economic security after the loss of a breadwinner in their family.”
 
“But, there is also a case to be made that it’s time for a change.  Insurance companies have become more global and more complex.   And even though the insurance industry did not create the economic crisis, like almost every other industry it has been hit hard, and as a result many are calling on us to modernize regulations and reflect the 21st century in which the insurance industry exists.”
           
“The Administration’s plan for regulatory modernization would create an office of National Insurance within the Treasury to collect information and coordinate insurance policy at the federal level.”
 
“It is one of many ideas that we will be considering in the coming weeks, and so today we have assembled an impressive panel of academics and experts.  I am grateful to each and every one of you for being here, you are extremely knowledgeable in this subject matter and can provide some insights and thoughts as to how we might progress in this area of modernizing our financial regulatory structure with particular emphasis on insurance and the insurance industry.
 
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