S. HRG. 110–1009 

THE STATE OF THE INSURANCE INDUSTRY: 

EXAMINING THE CURRENT REGULATORY AND 

OVERSIGHT STRUCTURE 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON 

THE CURRENT STATE OF INSURANCE REGULATION, OVERSIGHT AND 

WAYS TO ENHANCE CONSUMER PROTECTION, PROMOTE COMPETITION AND EFFICIENCY, AND TO ADDRESS WHAT ROLE, IF ANY, THE 

FEDERAL GOVERNMENT SHOULD PLAY 

TUESDAY, JULY 29, 2008 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 

jbell on DSKDVH8Z91PROD with HEARING

THE STATE OF THE INSURANCE INDUSTRY: EXAMINING THE CURRENT REGULATORY AND OVERSIGHT STRUCTURE 

jbell on DSKDVH8Z91PROD with HEARING

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

50–411 2010

S. HRG. 110–1009 

THE STATE OF THE INSURANCE INDUSTRY: 

EXAMINING THE CURRENT REGULATORY AND 

OVERSIGHT STRUCTURE 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON 

THE CURRENT STATE OF INSURANCE REGULATION, OVERSIGHT AND 

WAYS TO ENHANCE CONSUMER PROTECTION, PROMOTE COMPETITION AND EFFICIENCY, AND TO ADDRESS WHAT ROLE, IF ANY, THE 

FEDERAL GOVERNMENT SHOULD PLAY 

TUESDAY, JULY 29, 2008 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 

jbell on DSKDVH8Z91PROD with HEARING

(II) 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Pennsylvania 

JON TESTER, Montana 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

BOB CORKER, Tennessee 

SHAWN MAHER, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

AMY S. FRIEND, Chief Counsel 

MARK OSTERLE, Republican Counsel 

DAWN RATLIFF, Chief Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

jbell on DSKDVH8Z91PROD with HEARING

(III) 

C O N T E N T S 

TUESDAY, JULY 29, 2008 

Page 

Opening statement of Chairman Dodd .................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Shelby .................................................................................................. 3 

Senator Johnson ............................................................................................... 4 

Prepared statement ................................................................................... 45 

Senator Menendez ............................................................................................ 4 

WITNESSES 

Steven M. Goldman, Commissioner, New Jersey Department of Banking and 

Insurance, on behalf of the National Association of Insurance Commissioners ................................................................................................................... 6 

Prepared statement .......................................................................................... 47 

Alessandro Iuppa, Senior Vice President, Government and Industry Affairs, 

Zurich North America, on behalf of the American Insurance Association ...... 8 

Prepared statement .......................................................................................... 61 

John L. Pearson, Chairman, President, and Chief Executive Officer, the Baltimore Life Insurance Company, on behalf of the American Council of Life 

Insurers ................................................................................................................. 10 

Prepared statement .......................................................................................... 74 

Travis B. Plunkett, Legislative Director, Consumer Federation of America ...... 13 

Prepared statement .......................................................................................... 89 

George A. Steadman, President and Chief Operating Officer, Rutherfoord 

Inc., on behalf of the Council of Insurance Agents and Brokers ...................... 31 

Prepared statement .......................................................................................... 156 

Response to written questions of: 

Senator Shelby ........................................................................................... 328 

Thomas Minkler, President, Clark Mortenson Agency, Inc., on behalf of the 

Independent Insurance Agents and Brokers of America .................................. 32 

Prepared statement .......................................................................................... 278 

Response to written questions of: 

Senator Shelby ........................................................................................... 355 

Franklin W. Nutter, President, Reinsurance Association of America ................. 34 

Prepared statement .......................................................................................... 295 

Richard Bouhan, Executive Director, National Association of Professional Surplus Lines Offices ................................................................................................. 37 

Prepared statement .......................................................................................... 309 

Response to written questions of: 

Senator Shelby ........................................................................................... 355 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Letter submitted by the American Academy of Actuaries ................................... 358 

Letter submitted by the American Association of Independent Claims Professionals ................................................................................................................... 360 

Letter submitted by the American Bankers Insurance Association .................... 362 

Prepared statement of the American Association of Managing General Agencies ......................................................................................................................... 364 

Prepared statement of Lloyd’s of London .............................................................. 384 

Prepared statement of the National Association of Insurance and Financial 

Advisors ................................................................................................................ 426 

jbell on DSKDVH8Z91PROD with HEARING

Page

IV 

Prepared statement of the National Association of Mutual Insurance Companies ........................................................................................................................ 450 

Prepared statement of David A. Sampson, President and Chief Executive 

Officer, Property Casualty Insurers Association of America ............................ 461 

jbell on DSKDVH8Z91PROD with HEARING

(1) 

THE STATE OF THE INSURANCE INDUSTRY: 

EXAMINING THE CURRENT REGULATORY 

AND OVERSIGHT STRUCTURE 

TUESDAY, JULY 29, 2008 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, in room SD–538, Dirksen Senate Office Building, Senator Christopher J. Dodd (Chairman of the Committee) presiding. 

OPENING STATEMENT OF CHAIRMAN CHRISTOPHER J. DODD 

Chairman DODD. Good morning. The Committee will come to 

order. I thank all of you for being here this morning, and let me 

share some opening comments if I may, and then turn to Senator 

Shelby. Then I am going to turn to Senator Tim Johnson for some 

opening comments as well, and we will get to our panel of witnesses—we have two panels this morning—and a full discussion of 

this very, very important issue, ‘‘The State of the Insurance Industry: Examining the Current Regulatory and Oversight Structure.’’ 

Let me start off this morning by mentioning, as my colleagues 

know, that this Committee has spent a significant amount of time 

in recent months examining and responding to the crisis in our 

mortgage and financial markets. The culmination of that effort was 

the overwhelming bipartisan vote which occurred on Saturday 

morning to pass the Housing and Economic Recovery Act of 2008. 

I want to also take this time to thank all of my colleagues, in particular, of course, my friend and colleague from Alabama, Senator 

Shelby, as well as Senator Jack Reed of Rhode Island, for their significant contributions to achieving what we accomplished on Saturday. 

Today, the Committee turns its focus to another very important 

component of our financial system: the insurance market. While insurance issues have not been as central to the public discourse— 

or as vexing, I might add—as the challenges we faced in the mortgage and financial markets, the insurance industry is, nonetheless, 

a very critical underpinning of our economy and, as such, no less 

deserving of the time and attention of this Committee and its 

Members. 

Most of us only think about insurance when things go wrong. In 

fact, insurance is something that every one of us depends upon 

every day to provide us with the economic certainty that we need 

to function in an uncertain world. By protecting people, property, 

jbell on DSKDVH8Z91PROD with HEARING

2 

goods, and services from every imaginable risk, insurance provides 

stability to every sector of America’s $14 trillion economy. In short, 

a robust, vibrant insurance marketplace is crucial to the economic 

well-being of our Nation and the financial stability of our people. 

This morning’s hearing will focus on the current structure of insurance regulation and oversight in the United States and consider 

the impact of this regulatory structure on the insurance marketplace, industry participants, and policyholders. Unlike other participants in the financial services sector, such as banks and securities firms, the primary regulator of insurance is, of course, as we 

all know, located in our States. The State-based system has been 

in place since the 19th century and has been a source of important 

innovation and consumer protection with regard to insurance. At 

the same time, the insurance industry, like other segments of the 

financial services sector, is increasingly becoming national and 

even international in its scope. 

The ability of the insurers to spread U.S. risk broadly around the 

world has enormous benefits for American consumers, as it increases insurance capacity here at home. The European Union, one 

of our major trading partners with regard to insurance, is currently 

updating its approach to regulating insurer solvency in recognition 

of the fact that the insurance companies are now key players in the 

global capital marketplace. 

Given the importance of insurance to our financial markets and 

to the economy of our Nation as a whole, this Committee has a responsibility, in my view, to consider the current state of the insurance industry and the regulatory framework within which it operates. Insurance regulation has been the subject of hearings in this 

Committee during the last two Congresses, and I commend Senator 

Shelby for his attention to this issue when he was Chairman of this 

Committee. The Committee also has a responsibility to consider 

proposals intended to modernize and improve the regulation of insurance, and there is no shortage of legislative proposals in this regard. To date, nearly 20 bills have been introduced in this Congress, each of which to varying degrees seeks to reform or modernize our Nation’s system of insurance regulation. 

I would be remiss if I did not take this opportunity to acknowledge the hard work of Senator Tim Johnson, who has been a leading voice in favor of insurance regulatory modernization. It is my 

hope that this hearing will help the Committee consider the merits 

of the initiatives that have been proposed to date. And while I have 

yet to draw any firm conclusions on the merits or demerits of any 

particular piece of legislation, in my view consideration of insurance regulatory reform or a modernization initiative rests on three 

important principles. 

The first is strong consumer protection. Purchasers of insurance 

must understand what they are buying. Then they must be treated 

fairly and without deception, and they must know that the company insuring them will be there down the road when they have 

a claim. 

Second, our regulatory structure must promote competition in 

the marketplace, which will drive innovation and growth. 

And, third, regulation must be efficient and not place unnecessary burdens on those being regulated. 

jbell on DSKDVH8Z91PROD with HEARING

3 

With that in mind, I want to thank our witnesses this morning 

who are here, the two panels. I look forward to hearing from them 

and what they have to offer, some of their ideas. I know from my 

colleagues that there are many stakeholders not present at the witness table today, some of which have submitted testimony for the 

record, and I thank them for doing that. We could have had literally a roomful of witnesses who want to be heard on the subject 

matter. This will not be the only time we consider their voices, and 

obviously we are going to leave this record open in the coming days 

for our colleagues to raise additional questions and for others who 

want to be heard on the matters that we raise here this morning 

so we will have as much of a full body of testimony about these 

issues as possible. 

With that, let me turn to Senator Shelby, and then I will turn 

to my colleague Senator Johnson, and I see Senator Menendez has 

joined us as well this morning. 

STATEMENT OF SENATOR RICHARD C. SHELBY 

Senator SHELBY. Thank you. Thank you, Mr. Chairman. 

It has been 2 years since this Committee last examined our insurance regulatory structure. During this time, developments in 

our insurance markets as well as regulatory reforms abroad have 

strengthened the case that our insurance regulatory structure is 

out of date. If our insurance markets are to remain competitive and 

innovative, our insurance regulatory structure must keep pace with 

changes in the marketplace and in the international regulatory 

landscape. 

The most recent development is the crumbling of our bond insurance market. The bond insurance problems appear to stem from 

their decision several years ago to begin insuring riskier securities. 

This leads to the question of whether the regulatory regime governing bond insurers was properly calibrated to account for the 

changes in their activities. 

Because the financial problems of the bond insurers have impacted not only federally regulated institutions but also our overall 

economy, I believe that closer scrutiny of bond insurance regulation 

by this Committee is warranted. Over the past year, we have seen 

several insurance companies post sizable losses of investments in 

mortgage-backed securities. And while no major insurance company has yet failed due to the turmoil in our credit markets, recent 

economic history suggests that such an insolvency should never be 

considered outside of the realm of possibilities or probabilities. 

To ensure that we are prepared for the worst-case scenario, we 

need to make sure that our insolvency statutes are up to the task. 

Unless we have the right regulatory structure in place well in advance of insolvency, I fear that the Federal Government will once 

again be called upon to hastily organize yet another financial bailout. 

Recent regulatory reforms undertaken by other countries also demand that we examine how our regulatory structure interacts with 

the regulatory structures of other countries. In particular—and 

Senator Dodd referenced this—the European Union is moving forward with new regulations that will require that the U.S. and the 

EU determine how and to what degree they will rely on each othjbell on DSKDVH8Z91PROD with HEARING

4 

er’s insurance regulators when overseeing insurance companies operating in both the U.S. and in the European Union. The failure 

of the U.S. to secure such an agreement with the EU could place 

American insurers at a competitive disadvantage to European insurers. 

It is my hope that today’s hearing will shed additional light on 

these and other regulatory issues facing our insurance markets. I 

look forward to hearing what the States, as the primary regulators 

of insurance, already are doing and what additional steps need to 

be done to ensure that the U.S. has the most competitive and modern insurance regulatory regime. 

Also, I would like to encourage Senator Dodd, the Chairman, to 

hold additional hearings on insurance regulation. These are important issues that deserve more attention from this Committee. And 

I would also like to thank all of the witnesses in both panels for 

appearing before the Committee today. 

Thank you, Senator. 

Chairman DODD. Thank you very much. 

Senator Johnson. 

STATEMENT OF SENATOR TIM JOHNSON 

Senator JOHNSON. Chairman Dodd, Ranking Member Shelby, 

thank you very much for holding today’s hearing. 

For most of the 110th Congress, the Senate Banking Committee 

has been busy addressing the housing crisis. Out of this housing 

crisis has come the need to examine the overall regulatory structure overseeing financial services. I do not believe that insurance 

should be locked out of this discussion—as a financial service, as 

an important player in the capital markets, and as an important 

piece of the international economy. 

In 2006, Senator John Sununu and I began a bipartisan discussion about the need to modernize the insurance regulatory structure with the introduction of our National Insurance Act to create 

an optional Federal charter structure. 

The issue of insurance regulation and oversight is an issue of a 

fundamentally out-of-date system of State regulation that no longer 

serves the needs of all consumers, companies, and agents. Any efforts to reform this system should be done in a comprehensive 

manner. I believe that the best solution is the creation of an optional Federal charter and, therefore, a Federal insurance regulator. 

I ask that my full statement be submitted for the record. 

Chairman DODD. Without objection, it is so ordered. 

We have been joined by Senator Hagel as well. Any opening comments, sir? 

Senator HAGEL. No, Mr. Chairman. 

Chairman DODD. Senator Menendez, any opening comments? 

STATEMENT OF SENATOR ROBERT MENENDEZ 

Senator MENENDEZ. Very briefly, Mr. Chairman. 

First of all, let me take a moment to congratulate you and Senator Shelby on what is—you know, we have pieces of legislation 

that are desirable, and then we have pieces of legislation that are 

critical. And I appreciate both of your leadership in moving the 

jbell on DSKDVH8Z91PROD with HEARING

5 

housing bill that we passed last Saturday, which I believe is critical to the Nation, and you both worked in an exceptional fashion, 

and I appreciate your collective leadership. 

Chairman DODD. Thank you. 

Senator MENENDEZ. I did not get the early St. Patrick’s Day message about the ties, so I am sorry that I did not come in. 

[Laughter.] 

Chairman DODD. We call each other in the morning. 

Senator MENENDEZ. Very briefly, Mr. Chairman, let me thank 

you for holding today’s state of the insurance industry hearing. I 

particularly want to welcome and thank Commissioner Goldman 

from my home State of New Jersey for testifying today on behalf 

of the National Association of Insurance Commissioners. Commissioner Goldman is an exceptional public servant. Governor Corzine 

appointed him approximately a little over 2 years ago, and he has 

done an exceptional job in our State. He is a long-time veteran of 

one of the State’s most prestigious law firms, earned a master’s of 

law in taxation from NYU, a J.D. from GW, and a degree in political science from Boston University. We recently had a foreclosure 

prevention clinic where hundreds of people came, and it was incredibly successful. And I appreciate his leadership in this regard 

going above and beyond. 

Finally, Mr. Chairman, gaining insight to where things currently 

stand with the industry and where we need to make improvements 

is critical. The industry is a vital aspect of our economy, protecting 

homes and businesses from wind, fire, and a myriad of other disasters and accidents. Insurance provides financial security for individuals and families when a problem occurs or a disaster strikes. 

And while each of us hopes we never have to exercise our policy, 

it provides a sense of security in knowing that it is there. It is a 

safety net for so many of our families. And whether it is property 

insurance for one’s home, accidental insurance for one’s car, or a 

life insurance policy, Americans rely on the industry to protect 

their families and assets, and in many cases from the unexpected. 

So I am pleased that we are going to have an opportunity I hope 

not just to continue to listen to debate that—some of the earliest 

court decisions have gone back a couple centuries now, but at the 

same time, learn how we can best ensure that the industry has the 

solvency, the competition, and also how we can enhance consumer 

protections. I think that is critical as well. 

And so we look forward to all of the witnesses, and, once again, 

welcome to Commissioner Goldman. 

Thank you, Mr. Chairman. 

Chairman DODD. Thank you very much. 

I would note that we have been joined as well by Senator Martinez of Florida. Senator, thank you for joining us. Any quick comments? 

Senator MARTINEZ. Thank you, Mr. Chairman. Thank you very 

much. I will put a full statement in the record, and the only thing 

I would highlight is the great importance to our State of this industry, particularly as we now approach yet another hurricane season, 

and how tremendously important this is and how the people of 

Florida have been tremendously under siege in the last several 

years with the incredible premium cost to homeowners, which adds 

jbell on DSKDVH8Z91PROD with HEARING

6 

to the cost of—when you add it to the cost of gasoline, the problem 

with mortgages, and everything else, it is creating a real burden 

to Florida families. So I look forward to hearing from this excellent 

panel, and thank you. 

Chairman DODD. Thank you very much, Senator. 

Let me introduce our panel of witnesses. I again thank them for 

joining us. You have already been introduced to Steven Goldman, 

who is the New Jersey Commissioner for Insurance, and as pointed 

out, he has been involved over 2 years in that job and prior to that 

was a senior member of the firm of Sills, Cummis, Epstein and 

Gross, a large law firm in New Jersey. 

Alessandro Iuppa, we want to thank you for your green tie this 

morning as well. 

[Laughter.] 

You got the message this morning. 

Mr. Iuppa has been at Zurich Financial Services since 2007, previously served as Maine’s Superintendent of Insurance, where he 

was an active participant on insurance issues at both the national 

and international level, served as President of NAIC in 2006 as 

well. 

John Pearson—and, John, we thank you for joining us—is the 

President and Chief Executive Officer of the Baltimore Life Company. Prior to joining Baltimore Life in 1995, Mr. Pearson was 

President of Utica National Life Insurance Company. He also currently serves on the boards of the American Council of Life Insurers and LL Global, and we thank you for joining us this morning. 

Travis Plunkett is no stranger to the Committee. We see him 

quite frequently here. We thank him for coming again. He directs 

the Federal legislative and regulatory efforts of the Consumer Federation of America. He previously served as the New York State 

legislative representative for AARP and the associate legislative director of the New York Public Interest Research Group. We thank 

you for coming. 

I want to ask all of you to keep, if you can, your comments, with 

two panels and a lot of member interest, if you can keep it to 5 

to 7 minutes or so, and then I will take your full statements and 

make them part of the record, as they will be for all of my colleagues here as well. And then we will also accept any documentation and support you think is essential for us to have. 

Mr. Goldman, we will begin with you. 

STATEMENT OF STEVEN M. GOLDMAN, COMMISSIONER, NEW 

JERSEY DEPARTMENT OF BANKING AND INSURANCE, ON 

BEHALF OF THE NATIONAL ASSOCIATION OF INSURANCE 

COMMISSIONERS 

Mr. GOLDMAN. Good morning, Chairman Dodd. Thank you. 

Ranking Member Shelby, Members of the Committee, thank you 

for inviting me to testify today. Senator Menendez, thank you for 

that very kind introduction. I appreciate it. 

My name is Steven Goldman. I am the Banking and Insurance 

Commissioner for the State of New Jersey, and I am here today to 

testify on behalf of the National Association of Insurance Commissioners. I am pleased to be here to update the Committee on the 

current State-based structure of insurance supervision and on our 

jbell on DSKDVH8Z91PROD with HEARING

7 

ongoing, successful efforts to improve and strengthen that structure. 

State insurance officials are stewards of a vibrant, competitive 

insurance marketplace. The insurance industry in the United 

States has grown exponentially in recent decades under State supervision. 

Today, over 7,000 companies of various sizes compete to sell a 

vast array of products across State and national boundaries. The 

U.S. insurance market generates $1.4 trillion in annual premium 

volume, and insurance income represents roughly 12 percent of the 

country’s GDP. The industry has handled record claims volumes 

while earning record profits, and insurer surplus stands at over 

$500 billion. 

When State insurance markets are compared to other national 

insurance markets around the globe, the size and scope of those 

States’ markets—and, therefore, the responsibility of State regulators—typically dwarfs the markets of entire nations. Four of the 

top 10 and 26 of the top 50 insurance markets in the world are individual United States States. Mr. Chairman, the market in your 

home State of Connecticut is larger than the insurance markets in 

Brazil or Russia. Such a significant market demands a local, accountable, and responsive regulator. 

State insurance supervision has a long history of aggressive consumer protection and is well suited to the local nature of risk and 

the unique services offered by the insurance industry. Risks can 

change from zip code to zip code, and consumers sometimes just a 

few miles apart have different insurance needs. As State regulators, we live and work in the communities we serve and can respond accordingly. This kind of consumer-oriented local response is 

the hallmark of State insurance supervision, an asset that would 

be lost in any attempt to Federalize insurance oversight. 

While State insurance commissioners are strong advocates for 

consumers, we also strive to provide a stable, efficient regulatory 

environment for insurers, reinsurers, producers, and other industry 

participants. Insurance regulation must constantly be reformed and 

improved, and while those efforts should always start at the State 

level, we would ask that Congress work collaboratively with us and 

our colleagues in the State legislatures to appropriately target efforts to strengthen the existing State system where areas necessitating Federal assistance are identified. 

Indeed, we have worked to provide input on Federal legislation 

affecting producer licensing as well as on surplus lines and reinsurance legislation pending before this Committee. 

While most in the regulatory community believe such targeted 

proposals have merit, we all agree on one proposal that remains 

misguided policy. For over a decade, insurance industry lobbyists 

have called for the creation of a new Federal bureaucracy via an 

optional Federal charter that would create a dual system of oversight similar to the banking system. We do not want to repeat for 

the insurance sector the current climate of instability and insolvency that now plagues the banking sector. 

The OFC concept is a thinly veiled attempt to unravel the consumer protections, solvency structure, and oversight that have led 

jbell on DSKDVH8Z91PROD with HEARING

8 

to the largest and most successful insurance market in the world. 

Reforms should start at the State level, and they have. 

The NAIC has undertaken a number of initiatives with State insurance regulators in recent years. Insurance regulators have 

worked successfully to bring more cost-effective and sound insurance products to the market more quickly. Central to this effort is 

the Interstate Insurance Compact for speed-to-market filing and 

regulatory review of life, annuities, long-term care, and disability 

insurance products. This State-based effort creates a single point of 

filing under one uniform set of standards and is up and running, 

unlike an OFC, in 32 States and Puerto Rico. Several other States, 

including my own, are actively engaged in joining the compact. 

Due to improvements made by State regulators, there has been 

a 65-percent reduction in insurer insolvencies since the late 1980s. 

Ultimately, these improvements have allowed regulators to more 

easily identify when insurers are potentially troubled and react 

more quickly to protect policyholders and consumers, thereby 

avoiding the instability and uncertainty presently plaguing other 

areas of the financial sector. 

We have launched an online fraud reporting mechanism to allow 

consumers, employees, and others who suspect wrongdoing to report their suspicions anonymously to State enforcement authorities. The NAIC has developed a single point of electronic filing for 

insurance products, allowing insurers considerably shorter turnaround time than was possible under the traditional paper filing 

process. By developing and utilizing electronic applications and 

data bases, State insurance officials have created much greater efficiencies in licensing and appointing insurance producers in those 

States that require it. State insurance officials remain deeply committed to achieving greater uniformity in the producer licensing 

process. 

The NAIC has also developed an electronic system for company 

licensing designed to help insurers navigate State-specific requirements and provide a single entry opportunity when filing in all jurisdictions. 

State regulators understand that protecting insurance consumers 

is our first responsibility. We also understand that commercial insurance markets are constantly changing and that modernization 

of State insurance supervision is imperative. 

The NAIC and its members will continue to share our expertise 

with Congress on insurance issues having a national and global impact, and we welcome congressional interest to help us improve the 

existing system of effective oversight. We look forward to working 

with you in this regard, and I look forward to answering your questions. 

Chairman DODD. Thank you very much, Mr. Goldman. 

Mr. Iuppa. 

STATEMENT OF ALESSANDRO IUPPA, SENIOR VICE PRESIDENT, GOVERNMENT AND INDUSTRY AFFAIRS, ZURICH 

NORTH AMERICA, ON BEHALF OF THE AMERICAN INSURANCE ASSOCIATION 

Mr. IUPPA. Chairman Dodd, Ranking Member Shelby, Members 

of the Committee, good morning. As you have heard, my name is 

jbell on DSKDVH8Z91PROD with HEARING

9 

Alessandro Iuppa, and I am Senior Vice President, Government 

and Industry Affairs for Zurich North America. And I appreciate 

the opportunity to speak with you today on behalf of Zurich and 

the American Insurance Association on the subject of insurance 

regulatory reform. 

Prior to joining Zurich last year, I was an active member of the 

regulatory community for over 20 years, serving as Commissioner 

in both Nevada and Maine. In the court of my 9-plus years as the 

Maine superintendent, I also served as an officer and president of 

the National Association of Insurance Commissioners and in a comparable position as Chair of the International Association of Insurance Supervisors Executive Committee. 

Zurich and the AIA are not opposed to the regulation of insurance. I assure you, if they were, I would not be here. We do, however, support prudent, strong, state-of-the-art insurance regulation 

that allows insurers to meet the needs of their policyholders and 

encourages competitive and thriving markets both nationally and 

globally. Although the existing structure works for some, it impedes our ability to achieve these goals. 

Financial markets in general have undergone extraordinary 

growth and structural change in recent decades. Much of this 

change can be attributed to the integration of capital markets, advances in information technology, as well as shifting attitudes toward competition and protection in the financial services arena. 

Unfortunately, the current U.S. regulatory structure is not fully 

equipped to supervise the sophisticated marketplace of the 21st 

century. The requirement to operate within the State patchwork of 

regulation often hinders insurers with clients who operate nationally and internationally. 

It is increasingly apparent across the political spectrum that the 

current regulatory system must be modernized and adapted. Insurance regulation, specifically Federal chartering, is featured prominently in both the Bloomberg-Schumer report and the Treasury 

Blueprint. Both report recommend the creation of an OFC. Likewise, the National Insurance Act of 2007, S. 40, introduced by Senators Johnson and Sununu, recognizes the OFC as the best approach. 

Zurich and the AIA strongly agree that an OFC would play an 

important role in the new world of integrated financial markets. 

State insurance regulators have attempted to institute regulatory 

reforms, but the reality is that the regulatory efficiency in the insurance industry lags behind the other financial services sectors. 

As an insurance regulator, I spent a great deal of time working 

on behalf of the U.S. regulatory community with our international 

colleagues, and despite our best efforts, our effectiveness was limited. For example, the IAIS has become the standard-setting body 

for the promulgation of international insurance standards. U.S. 

regulators have and will continue to be active in the IAIS. But no 

matter the extent of agreement that may exist among the regulators, the State representatives cannot bind individual States to 

adopt those standards. 

Likewise, the introduction of risk-based solvency requirements in 

the EU through ‘‘Solvency II’’ will pose enormous challenges to 

State-regulated insurers. U.S. insurers will not be easily integrated 

jbell on DSKDVH8Z91PROD with HEARING

10 

into Solvency II because the U.S. does not provide supervision 

equivalent to that of the EU. 

As was recently stated by Standard and Poor’s, and I quote, ‘‘in 

the absence of supervisory equivalence, non-EU insurers may find 

themselves operating at a competitive disadvantage in Europe.’’ 

Two areas that can especially benefit from Federal oversight are 

market deficiencies and product innovation. The lack of a sustainable market for terrorism coverage and property coverage shortfalls 

in some regions illustrates a deficiency in the U.S. marketplace. 

Regulation, however, can play an important role in maintaining the 

proper equilibrium among suppliers and purchasers through the 

encouragement of market efficiencies. But by sustaining each State 

as individual market, we inhibit the ability of insurers to spread 

risk and enhance capacity. 

A number of States still require pre-market regulatory approval 

or rates and policy forms. Through my experience, I have learned 

that for those products that did require prior approval, the regulatory search for noncompliance at the beginning substantially 

slowed the pace of product introduction. 

Despite recent improvements, the States are not likely to solve 

the problems of non-uniformity and inconsistency on their own, so 

we believe congressional action is necessary. Building consensus 

among regulators is a very difficult thing to do and, at times, almost impossible. An optional Federal charter will modernize the 

regulatory environment and enhance consumer choices. The availability of a national charter will not dismantle the longstanding 

State insurance regulatory framework or the ability of State-chartered insurers or agents to serve local market needs; rather, it will 

complement the State system with the addition of a Federal partner, one that concentrates on strong solvency oversight, protecting 

consumers, and speaking with a single unified voice at home and 

abroad. This will produce a dynamic and healthy national insurance marketplace able to keep pace with the demands of the global 

economy. 

I thank you for the opportunity and look forward to your questions. 

Chairman DODD. Thank you, Mr. Iuppa. I appreciate it very 

much. 

Mr. Pearson. And turn that microphone on. 

STATEMENT OF JOHN L. PEARSON, CHAIRMAN, PRESIDENT, 

AND CHIEF EXECUTIVE OFFICER, THE BALTIMORE LIFE 

INSURANCE COMPANY, ON BEHALF OF THE AMERICAN 

COUNCIL OF LIFE INSURERS 

Mr. PEARSON. Thank you. Thank you, Chairman Dodd and Ranking Member Shelby and Members of the Committee. On behalf of 

the American Council of Life Insurers, I would like to thank you 

and the Committee for the opportunity to appear before you today. 

In the 2 years since this Committee last held a hearing on insurance regulation, the case for regulatory reform has become even 

stronger. Despite continued efforts by the States and the insurance 

industry, transforming State-based regulation into a more uniform 

and coherent national system has seen only marginal results, with 

the Interstate Compact for life insurance product filing and apjbell on DSKDVH8Z91PROD with HEARING

11 

proval that has yet to be adopted by a number of States and little 

other significant progress. 

Importantly, domestic operational concerns have been joined by 

pressing international regulatory and competitive issues which the 

NAIC has acknowledged fall largely outside the State’s authority to 

address. 

The ACLI strongly supports the creation of an optional Federal 

charter, or OFC, for life insurers. That is why we strongly support 

Senate bill 40, the National Insurance Act, which was introduced 

by Senators Johnson and Sununu and which would establish the 

Office of National Insurance within the Treasury Department to 

issue charters and oversee and regulate Federal insurers. I want 

to specifically thank Senator Johnson and Senator Sununu for their 

strong leadership on this issue and their continuing recognition of 

the need to modernize insurance regulation. 

As the CEO of a small life insurance company, I can testify to 

the many and varied reasons that the time has come for Congress 

to enact an OFC bill. Lack of uniformity of State insurance laws, 

conflict State compliance requirements, the plethora of duplicative 

and unnecessary regulatory costs, the inability to get new and innovative products to market in a timely fashion, the unlevel regulatory playing field insurers face when competing with other financial services entities, the need for greater Federal Government expertise on insurance issues and the growing pressure of the 

globalization of the life insurance market all point to an overwhelming need to change the way insurance is regulated. 

All these are addressed in greater detail in my written testimony, but I would like to focus my comments today on the most 

important reason why change is necessary, the effects regulatory 

modernization will have on U.S. insurance consumers. 

The life insurance industry is advocating for an OFC built 

around strong solvency and strong market conduct oversight patterned after the best State statutes or model laws in existence 

today. This would necessarily include robust uniform regulation in 

the areas of capital, reserves, accounting, investments, and other financial areas. And consumers would enjoy a high level of protection under the system regardless of where they live or where their 

insurance is domiciled or a product is purchased. Anything less is 

not in the best interest of life insurance companies or their customers. 

Providing customers access to the same products and benefits 

wherever they live would afford them uniform rules regarding sales 

and marketing practices of companies and agents nationwide. It 

would ensure strict, frequent, and consistent market conduct and 

financial examination of national insurers. 

It would also give consumers the opportunity to work with a 

trusted company or agent if the customer moves from one State to 

another, where today the company or agent may not be licensed in 

every State. 

Moreover, an OFC holds the promise of a significant cost savings. 

Two recent academic studies have quantified those savings. As 

noted in the studies, the life insurance market in the U.S. is mature, and price competition is intense. It is entirely reasonable to 

jbell on DSKDVH8Z91PROD with HEARING

12 

expect that a meaningful portion of those savings would be realized 

by customers in the form of lower premiums. 

Now, those opposed to OFC would assert that it would be fundamentally inconsistent with the best interest of consumers. But 

when the facts I have just presented are carefully considered 

against the opponents’ arguments, it becomes evident that nothing 

could be further from the truth. 

Opponents would suggest that an OFC would lead to regulatory 

arbitrage. We are highly confident, however, that Congress will ensure that any Federal regulatory system is at least on a par with 

the strongest State systems. The industry is seeking strong, uniform regulation, not weak regulation or deregulation. 

Moreover, the potential for regulatory arbitrage already exists 

today in the current State-based system since insurers can readily 

change the state of domicile and choose to move to a different State 

as their primary financial regulator. This is not a problem today. 

We find it highly doubtful that the introduction of a strong Federal 

regulator into the mix will change things for the worse. 

Opponents also argue that consumers will be hurt by the loss of 

a local regulator who understands their concerns better than people in Washington. This argument, too, has no merit. First, the bill 

introduced by Senators Johnson and Sununu requires that at least 

six regional offices of the Federal regulator be established in addition to its D.C. headquarters. So consumers will not be required to 

turn solely to Washington for help or information. 

Second, consumer issues surrounding life insurance products are 

simply not local in nature. If anything, the long-term promises to 

consumers made by life insurers, combined with the mobile character of our society today, requires persons concerned about consumer issues to recognize the truly national nature of insurance 

products. 

In fact, national uniform regulation of life insurance products is 

much more valuable to consumers than local regulation. This is a 

point made in the findings of the GAO report issued just last week 

on long-term care insurance, which cited variations in State laws 

as the reason some consumers enjoy greater policy protections than 

other consumers. And, frankly, the lack of an appropriate nationwide uniform consumer protection is an industry concern. 

For example, since it was adopted in 1998, the industry has supported the NAIC Annuity Disclosure Model regulation, which requires that companies deliver a buyer’s guide and other important 

disclosure documents to annuity purchasers. Ten years later, only 

16 States have seen fit to adopt that model rule, and 25 States still 

have no law or regulation addressing the issue of annuity disclosure. Contrast this to the fact that under an OFC any annuity disclosure law put into place would immediately affect all national insurance annuity purchasers nationwide. This, as well as other examples of variation in State laws, makes a solid argument that national and uniform regulation holds more value for consumers than 

local regulation does. 

In conclusion, we believe the facts support the belief that insurance regulatory modernization that includes the creation of an OFC 

will benefit U.S. consumers. 

jbell on DSKDVH8Z91PROD with HEARING

13 

Thank you, Mr. Chairman, for holding this important hearing 

and allowing me to testify before you and the Committee today. We 

look forward to working with you and other Committee Members 

as the issue moves forward, and I will be happy to answer questions. 

Chairman DODD. Thank you very much, Mr. Pearson. 

Mr. Plunkett, welcome. 

STATEMENT OF TRAVIS B. PLUNKETT, LEGISLATIVE 

DIRECTOR, CONSUMER FEDERATION OF AMERICA 

Mr. PLUNKETT. Mr. Chairman, Senator Shelby, Members of the 

Committee, my name is Travis Plunkett. I am the Legislative Director of the Consumer Federation of America. I would like to 

thank you for holding a very timely hearing. Consumers are presently facing a number of serious problems in the insurance market 

regarding availability, affordability, unfair claims practices, and 

the hollowing out of insurance coverage. 

I appreciate the fact that the focus of the hearing is an overall 

examination of the successes and failures of regulation rather than 

just reviewing proposed legislation. Most of the regulatory proposals that have been introduced in Congress to date have been 

driven by the priorities of the insurance industry rather than a 

need to help insurance consumers. 

The optional Federal charter legislation and others that the insurance industry has conceived promote the myth that regulation, 

strong regulation, and competition are incompatible. The truth is 

that the unique and complex nature of insurance policies and insurance companies requires more extensive front-end regulation 

than other consumer commodities. Without regulation, insurers can 

‘‘compete through adverse selection,’’ which hurts our Nation’s most 

vulnerable consumers—the oldest, the poorest, and the sickest. 

Regulation is also necessary to promote price competition and loss 

mitigation efforts and to deter unfair sales and claims settlement 

practices. 

Consumer groups do not care who regulates insurance. We only 

care that the regulatory system be excellent. We are critical of the 

current State-based system, but we are not willing to accept a regulatory regime that undermines consumer protections by pitting 

Federal and State regulators against each other in a contest to 

lower standards or a Federal system that establishes one uniform 

but very weak set of standards. We do agree that coordination and 

more consistent standards for licensing and examinations are desirable and necessary, as long as the standards are high. However, 

the burden of proof is now on those who want to shift away from 

more than 150 years of State insurance regulation to show that 

they are not asking Congress and the American people to accept a 

dangerous ‘‘pig in a poke.’’ 

There are a number of problems, as I mentioned. Let me give you 

a little more information about the problems that consumers are 

dealing with in the insurance market. Six problems. 

First, many concerns have been raised in recent years about abusive claims practices by insurers in the wake of natural disasters, 

especially Hurricane Katrina. Insurers have reduced their payouts 

and maximized profits by turning their claims operations into profjbell on DSKDVH8Z91PROD with HEARING

14 

it centers by using computer programs like Colossus designed to 

systematically underpay policyholders without adequately examining the validity of each individual claim. And in my written testimony, I urge the Committee to examine this problem at length. 

The second concern: The study released by CFA earlier this year 

found that property/casualty insurers in recent years have overcharged consumers and reduced the value of home and automobile 

insurance policies, leading to profits reserves and surplus that are 

at or near record levels. The pure loss ratio, the actual amount of 

each premium dollar insurers pay back to policyholders in benefits, 

was only 55 cents at the beginning of this year, down from 70 cents 

20 years ago. Meanwhile, insurers earned an unprecedented $253 

billion in profits over the last 4 years, despite increased hurricane 

activity. 

The third concern: Insurers have hollowed out property coverage 

by adding insurance deductibles and by making it much more expensive for consumers to get reimbursed for true replacement costs, 

and they are now cherrypicking the locations in which they will underwrite. They have also become adept at cost shifting some catastrophic claims to Federal programs, like the National Flood Insurance Program. 

Fourth, insurers have used new risk classification data such as 

credit scoring and information about an insured party’s occupation 

and education as a form of redlining. These factors are clearly 

proxies for economic status, and sometimes race. 

Fifth, anticompetitive behavior in the industry allowed by the 

Federal McCarran-Ferguson antitrust exemption. 

Sixth, I have already touched on some of the behavior along the 

Nation’s coastlines regarding rate increases and pullouts. 

I urge the Committee to examine proposals that will confront 

these problems head on rather than starting with the industry-conceived proposals. The experience in the States that have regulated 

well is that it is possible to improve competition and oversight of 

the insurance market while increasing regulatory uniformity and 

protecting consumers. Appropriate regulation enhances competition. It requires insurers to compete fairly and in a manner that 

benefits consumers, and it results in a generous return for these 

companies. 

CFA released an exhaustive study of automobile insurance regulation over the last two decades this year. We found that the 15 

States that require insurers to receive advance approval of rate increases had the lowest rate increases of all the States as a group. 

They also—and this is a key point. These States performed well in 

spurring competition and generating significant profits for insurers. 

California was the top-ranking State in the country in this study. 

In closing, I propose a number of other detailed recommendations 

for achieving the twin goals of improving competition and also improving regulation, and I urge this Committee to look at those recommendations. 

Thank you once again. 

Chairman DODD. Thank you, Mr. Plunkett, very, very much. We 

appreciate your testimony. 

Let me, if I could, I am going to turn the clock on to about 6 minutes—additional Members have shown up, and I appreciate their 

jbell on DSKDVH8Z91PROD with HEARING

15 

presence—so we can give everyone a good chance to raise questions, and we have a lot of panelists. And I will leave the record 

open, by the way, for Members who want to submit questions as 

well, if you do not get a chance to raise every one you would like. 

And I will certainly ask our panelists, in the next week or so if you 

could get back to us so we can complete the record, so we don’t necessarily cover all the ground here. 

Let me ask, if I can, all of you, let me—it is kind of a two-part 

question, and so I will just get the whole question out, then ask 

you to comment if you would. It has been referenced already—I 

think maybe Mr. Goldman, or someone talked about drawing the 

comparisons to the dual banking-like system, in a sense, what this 

would mean. Several of you alluded to this approach to insurance 

regulation that models our systems in banking regulation. I would 

like to sort of bore into that a little bit, if I can. 

I wonder if each one of you would share your view on the impact 

that a dual banking-like approach on insurance regulation would 

have, positively or adversely, in each of the three areas that I identified in my opening statement, with the areas the three pillars 

that I see, anyway, we should be examining as we approach this 

whole idea of modernization or regulatory reform: consumer protection, competition, and regulatory efficiency. 

And, second, should different lines of insurance be treated differently? And, again, this is something I think all of us have some 

appreciation for as evidenced by the fact we have eight witnesses 

on this panel today. That was not by accident. It was not because 

we had eight people who wanted to be here. It is because we tried 

to cover the waterfront on the issues of insurance, which cover a 

broad array of stakeholders. Insurance is not monolithic. Obviously, to state the obvious to the people gathered in our room 

today, insurance products cover life, property, liability, health; they 

cover businesses, public entities, individuals. 

It leads me to ask the following question: What would be the 

most effective approach to this Committee’s consideration of insurance regulatory reform proposals? Should we consider changes to 

the regulatory structure more broadly? And some of you have certainly implied that in your testimony here, as envisioned by the 

Treasury Blueprint? Or should we focus any efforts on ways to improve the regulation of particular lines of insurance, recognizing 

there are significant differences in the insurance that is being offered in terms of how—what expectations are of people, life insurance versus property and casualty, for instance? There is an expectation, I think, of how people expect it, and there is an expectation 

of how we treat these from a national perspective as well. 

So would you kind of—we will begin with you, Mr. Goldman, just 

run down, and, again, I ask you to be relatively brief so everybody 

can get a chance. It is a large question, but it is one that is important to me. 

Mr. GOLDMAN. Thank you, Mr. Chairman. Let me respond first 

to the question about the banking model and emulating the banking model. I am the Banking and Insurance Commissioner in New 

Jersey, so I have had experience directly dealing with the existing 

bifurcated regulatory system in the banking sector. And the experience has been that when the Federal Government decides to exerjbell on DSKDVH8Z91PROD with HEARING

16 

cise its preemptive power, as it has aggressively in the last number 

of years, the ability of the States to protect their consumers, their 

local consumers, is dramatically reduced. And the consequence of 

that I think is partly manifested in some of the problems we have 

seen in the banking sector over this last year and a half. 

I know, for example, in New Jersey, just to give a brief example, 

we have a statute called HOSA. It is the Home Owners Security 

Act, and it was designed to prevent some of the more aggressive 

efforts on mortgage origination and sales. And we attempted to enforce that Act not only with respect to New Jersey-chartered banks 

but also with respect to the operating subsidiaries of federally chartered banks. And as a result of an OCC preemption effort, we were 

precluded. And, frankly, a number of the problems that are present 

now in New Jersey as a consequence and that I think have manifested themselves around the country have resulted from our inability to act on behalf of our consumers to prevent some of these 

problems. And, frankly, I fear a similar sort of potential problem 

were we to then bifurcate the regulations of insurance. 

I think one of the things the Committee importantly should recognize is that the fabric of insurance regulation, while there are 

many lines, as you mentioned—and there are—is very much a holistic process. For example, trying to pull out reinsurance, which 

provides an enormous capacity in the marketplace for direct insurers, and regulate that independently of the rest of the market 

would have a dramatic impact on the regulatory framework 

throughout the country. 

And so even though the lines are separate, it is important to recognize the holistic nature of the regulatory structure and the way 

the industry itself and its various components interrelate. Some 

lines are more distinct than others, yes—life and health, for example, versus property and casualty. But, nevertheless, they are all 

related in important ways. There are important reinsurance considerations that apply to the life industry. So I think that is an important consideration as we begin to think about these issues to recognize. 

With respect to the question of looking at this in a broad reform 

effort or a narrow reform effort, I think this is a real opportunity 

for creative federalism. The States, I believe—and as I mentioned 

to someone earlier today, this is not a world that I come from. I 

was a mergers and acquisitions lawyer before I took this job. So I 

did not come to this—— 

Chairman DODD. It sounds like perfect training. 

[Laughter.] 

Mr. GOLDMAN. Yes, it was. But I did not come to this job with 

any preconceived notions about the industry or its constituents. 

And I have come to believe, after being in this job for about 2.5 

years, that the State-based system works quite well. It does not 

work perfectly. There are problems with it. But those problems can 

be addressed and should be addressed in the context of what I believe is a very effective operating system today. Some of the statistics I mentioned in my testimony I think evidence that. You have 

a very vibrant industry here in the United States. It is growing. 

It is profitable. It is growing as a percentage of the GDP in the 

country. And each of the States and the U.S. market in the aggrejbell on DSKDVH8Z91PROD with HEARING

17 

gate is far and away the largest insurance market in the world and 

I think the best regulated insurance market in the world. 

And so I think if you look at the problems that have presented 

themselves in the other financial services areas—in the commercial 

banks, in the investment banks, in the rating agencies—and you 

see the failures that have taken place there, you do not see that 

degree of failure in the insurance industry, and that is not by accident. I think it is because they are a well-regulated group, by and 

large—not without exception, but by and large. 

Chairman DODD. Well, I have already exhausted the time I said 

I have, and I have to ask three other people. Just quick comments, 

Mr. Iuppa and Mr. Pearson. 

Mr. IUPPA. Yes. With regard to the three pillars, I think with regard to consumer protection—and I spent 20 years as a regulator. 

The ultimate consumer protection is the solvency and soundness of 

the companies doing business in my State, that they will be there 

when a claim comes in and so forth. Below that, you have sort of 

the market practices, which are also addressed. And I think that 

certainly with the National Insurance Act proposal, there is a sufficient framework that is in the bill at this point for consumer protection through regional offices, Office of Consumer Protection, and 

I have every confidence that Congress is not going to put something out there that is not going to provide that type of protection. 

With regard to regulatory efficiency, I will use one example. Zurich is the third largest commercial writer of property/casualty insurance in the world and the U.S. We have put together a commercial auto policy that was probably somewhere in the neighborhood 

of about 30 pages long as a policy that we could deliver to our policyholders. 

After going through all the approval processes in the various 

States, the aggregate number of pages was in excess of 300 in 

order for us to be able to sell that across the country. 

Competition, I think, is very much a possibility under the dual 

approach. We are not advocating that the State system be eliminated. What we are talking about is providing another choice for 

some of the 7,000 companies that do business in the U.S. If there 

is an OFC enacted and when that happens, I do not think you are 

going to see 90 percent or 95 percent of those companies seek to 

become licensed at the Federal level. I think you are likely to see 

probably 5 percent, and that may even be an aggressive number. 

But either way, the sooner you can get products into the marketplace, the more innovative you can be. You provide choices for consumers, and consumers include not just individuals but the small 

businesses that do business here in our country, as well as national 

and multinational companies. So I think we have to keep that balance in mind. 

With regard to the different lines of insurance, I think that we 

are, frankly, best to look at this from a comprehensive perspective. 

Some of the inefficiencies that we see in the current system are not 

necessarily limited to the life business or the property/casualty 

business, so I would encourage you to continue looking at this from 

a comprehensive perspective. And I will stop there. 

Chairman DODD. Mr. Pearson, quickly. 

jbell on DSKDVH8Z91PROD with HEARING

18 

Mr. PEARSON. I will. First of all, I have spoken broadly in my 

opening comments about consumer protection. Let me talk briefly 

about efficiency, if I may. 

I think we are actually a very good example of a company—we 

are a small life insurance company, yet we have 50 jurisdictions. 

Our total assets are just a shade over $1 billion. We have 140 employees in our home office. And yet we have—because of the distribution network that we have, we are forced to deal with 50 different jurisdictions. And, frankly, it is very different than the banking model, obviously, where the banks tend to be a very local fashion. 

I guess the other thing I would talk about is different lines of insurance. We are supportive of the surplus lines bill that I believe 

has come to the Committee. But, again, just as Mr. Iuppa has said, 

we also believe that a full comprehensive rather than an incremental approach is a better long-term solution. 

Chairman DODD. Travis. 

Mr. PLUNKETT. Mr. Chairman, real quickly, regarding whether 

the dual banking system is a good model for insurance regulation, 

we obviously think it is, especially given recent experience, a very 

bad model. I have worked now at both the State level in New York 

and at the Federal level, and I have seen problems from both ends. 

In New York, I can tell you every single time New York regulators 

considered placing a new burden on State-chartered banks, they 

hesitated and were very concerned about State-chartered institutions jumping to a national charter. And, eventually, a very big 

one, Chase, did. So that slowed consumer protection significantly at 

the State level. 

From the Federal perspective, we have seen a situation where 

the Office of the Comptroller of the Currency, the primary regulator of national banks, has extended preemption very broadly and 

very aggressively in a move to keep large financial institutions that 

fund that agency in their realm, and that is a very bad approach 

as well because it has reduced consumer protection overall and 

hurt consumers and weakened State protection. 

Chairman DODD. Thank you all very much. I apologize for taking 

that long, but thanks. 

Richard. 

Senator SHELBY. Thank you, Mr. Chairman. 

I do not see anything fundamentally wrong with establishing an 

optional Federal charter because I can see the efficiencies of a large 

company, be it American or European, doing business in 50 States, 

including my own State, or the inefficiencies of that and the cost. 

And why couldn’t we create an optional Federal charter and have 

a strong regulator, at the same time legislate protections for the 

consumer? Because we are all consumers here. Mr. Plunkett raises 

a good question. He is an advocate for the consumer. That is part 

of his deal, and he does a good job there. But now he is working 

with the Federal—of course, there is no Federal charter for insurance now, so he has to work 50 States. 

Mr. Iuppa, you had the experience, as Senator Dodd pointed out, 

as Superintendent of Insurance in the State of Maine. Now you are 

involved as an executive, a senior vice president of a large international company, Zurich. What would a Federal charter offer, asjbell on DSKDVH8Z91PROD with HEARING

19 

suming it is done right, a company like yours that is doing business all over the world? 

Mr. IUPPA. Well, I think one of the principal things it would offer 

to us—again, in sort of looking at it from our client base, as a commercial insurer we are doing business, as I said, with small businesses but also multinational businesses. Our clients come to us 

and tell us, Look, we do business in Asia, we do business in South 

Africa, we do business in Europe, we are doing business in the U.S. 

We need to be able to know that we have got the proper coverages 

and the ability to have a product there. And we can tell them that, 

yes, we can give you a policy that will cover you for your business 

in South Africa; we can give you a policy that will cover your business in China. But for your operations in the U.S., we are going 

to have to deviate from that, and we are going to have to add coverages, perhaps provide you coverages that you would normally not 

buy, and so forth. So we have—an ability to offer products that 

match our clients’ needs is often constrained. 

Senator SHELBY. What if we had—and let’s hope it will not happen, but it probably will—what if we had a large American or European or Asian company fail? Let’s just say an American company 

that became totally insolvent, and they were chartered by a State 

here. Do you believe X State could deal with something of that 

magnitude? I am talking about a huge insurance company. And 

what happens to the consumers in that case now as opposed to possibly a—— 

Mr. IUPPA. You know, I think one of the things you are perhaps 

referring to here is sort of perhaps a systemic risk that may be 

generated from a major insurer failing. And the reality—I mean, 

there is a system in place to provide a basis for policyholder protection that exists today. But, again, it is State-based. 

So, for instance, if this large company happened to be based in— 

let’s pick Maryland, it would be the Maryland courts that would 

have the ability to approve any kind of workouts, any sale of the 

assets, without regard to perhaps some of the interests in the other 

States. 

Senator SHELBY. This leads me to the bond insurers regulated by 

States, which are of great concern to a lot of us in the financial industry today. What lessons should the ongoing problems with the 

bond insurers teach us about the weaknesses in our insurance regulatory structure? Mr. Pearson, do you want to take that? 

Mr. PEARSON. We have not been particularly involved. It is not 

something that affects us directly, and so I really do not have a 

great answer, quite frankly. 

Senator SHELBY. Mr. Iuppa, do you have anything on that? 

Mr. IUPPA. Well, I think, you know, when we are looking at systemic risk, the bond market—the bond insurance market is a good 

example. They have for the most part tended to be based in New 

York. I think we have at least one in the Midwest. The expertise 

that perhaps is needed to supervise—— 

Senator SHELBY. Haven’t some of those companies either have 

failed or are about to fail? 

Mr. IUPPA. It is my understanding that some of those companies 

have had their ratings turned down. 

jbell on DSKDVH8Z91PROD with HEARING

20 

Senator SHELBY. Is that because of a lack of capital and too 

much risk, too little capital, a combination? 

Mr. IUPPA. Well, perhaps that they engaged in putting products 

in the marketplace that they may not have had the expertise to do. 

And perhaps, again, they are operating under that State framework. There could be issues with knowledge of the business, both 

on the part of the regulator and the bond insurer. And I think if 

you had a bond insurer operating under a Federal charter, for instance, you would be able to bring considerably more resources to 

the table from the standpoint of drawing on Treasury, drawing on 

the Fed; the SEC would have an opportunity to weigh in. And you 

also have the ability to have those Federal agencies perhaps react 

faster than the States can in terms of coming together to a solution. 

Senator SHELBY. Mr. Plunkett, do you have any comment on 

that, the bond insurers and the problems there? Because that is a 

real risk to our whole financial system. 

Mr. PLUNKETT. Senator, the issue there appears to be regulatory 

expertise, the ability to assess as a regulatory the financial risks, 

in this case the risks to the capital markets, of a very complex financial product. And on that issue, so far the Federal Government 

does not have a very good track record either. So I would not assume that regulatory expertise—— 

Senator SHELBY. I was not choosing one over the other there. I 

think they are all flawed. 

Mr. PLUNKETT. Yes, well, it has been a problem. It has been a 

problem. 

Senator SHELBY. Sure. Mr. Goldman? 

Mr. GOLDMAN. Which question, Senator, would you like—the 

bond insurers? 

Senator SHELBY. The bond insurers, seeing as you are the Insurance Commissioner and the Banking Commissioner. You have a 

dual role here, so you have some experience here. Go ahead. 

Mr. GOLDMAN. None of the bond insurers has failed at this point, 

as Mr. Iuppa has indicated. 

Senator SHELBY. If they have not failed, are they under great 

stress? 

Mr. GOLDMAN. They are under—a number of them are under 

stress. There have been a couple of new entrants into the market, 

actually. One of Warren Buffett’s companies has decided to start a 

new one. 

Senator SHELBY. Well, that is municipal bonds, isn’t it? 

Mr. GOLDMAN. That is municipal bonds, not the 

collateralized—— 

Senator SHELBY. A lot less risk there than there is in other 

things. 

Mr. GOLDMAN. Well, that is true. And had they stuck with that 

position—— 

Senator SHELBY. Buffett is smart, isn’t he? [Laughter.] 

Mr. GOLDMAN. Had they stuck with that, they wouldn’t be, some 

of them, where they are today. But none of them, in fact, has 

failed. They have been downgraded, a number are under pressure. 

As I say, there have been some new entrants into the market, 

which have been quickly approved—around the country, I might 

jbell on DSKDVH8Z91PROD with HEARING

21 

add—by the States. I think all 50 States approved Mr. Buffett’s 

new company within 60 or 90 days. I think 40 States approved it 

within 30 days to get more capacity into the market. 

And if I might, the issue of speed to market, which I think was 

mentioned with the life insurers, the Interstate Insurance Compact, which the States have put into effect, and which is in effect 

in 32 States and Puerto Rico, does address that problem and is well 

on its way, I think, to solving the issues that are raised in that regard. 

Senator SHELBY. Thank you, Mr. Chairman. 

Chairman DODD. Thank you very much. 

And as mentioned by many of us already here, there is no one 

who has been more active and more involved in these questions on 

this Committee than Tim Johnson. And so I thank him immensely. 

As I mentioned, I am sort of agnostic on these questions, anxious 

to sort of hear the arguments that are being presented here this 

morning. But I am very grateful to Tim for raising the issues. He 

has been very coherent and very smart in talking about them, so, 

Tim, we thank you immensely. The floor is yours. 

Senator JOHNSON. Mr. Iuppa, Mr. Pearson, and Mr. Goldman, 

the surplus lines and reinsurance bill has passed the U.S. House 

unanimously twice. Where do the trades stand in their support for 

passage of the surplus lines and reinsurance bill? Are there any 

reasons why this Committee should not pass the bill? And would 

it help pave the way for comprehensive reform such as OFC? Mr. 

Iuppa. 

Mr. IUPPA. Thank you, Senator. Yes, I think it is important to 

recognize that the bill does seek to address some real problems in 

the marketplace when you are talking about the surplus lines proposal. I think that at this point the AIA is supportive of that legislation, and as I said, we believe it really does address some real 

concerns that we have. But I guess I would urge you with regard 

to that to not look at that as solving all the concerns or addressing 

all the concerns, that we still believe that a comprehensive approach and one that would incorporate some of those measures is 

probably the prudent way to go. And if the Senate chooses to go 

unilaterally on that particular bill, we would really ask that you 

provide some assurance that the comprehensive approach would 

not be abandoned and still be a topic for discussion. 

Senator JOHNSON. Mr. Goldman. 

Mr. GOLDMAN. Thank you, Senator. I think the NAIC and the 

States have been working constructively with the Congress on that 

bill. We have made a number of suggestions we think would improve the surplus lines portion of that bill. And we are supportive, 

with those changes, of the surplus lines portion of the bill. 

With respect to the reinsurance portion of the bill, I am presently 

chairing a reinsurance task force for the NAIC, and we are in the 

process of and I believe making good progress on developing a comprehensive modernization proposal for reinsurance regulation in 

the United States and answering some of the questions that have 

been raised about mutual recognition and solvency and some of 

those questions. So our view has been that we think we are fairly 

close, and we would rather deal with a comprehensive proposal on 

jbell on DSKDVH8Z91PROD with HEARING

22 

the reinsurance regulatory modernization framework that we are 

working on. 

Senator JOHNSON. How close are you? 

Mr. GOLDMAN. We are hopeful to have a complete proposal, if we 

are a little bit lucky, by the end of this year. 

Senator JOHNSON. Mr. Pearson. 

Mr. PEARSON. ACLI is supportive of the surplus lines bill. We 

think it is a positive step. But we do see it as addressing very narrow boutique issues, and we concur with Mr. Iuppa that ultimately, 

if insurance reform is to be done properly, comprehensive reform 

is the right answer. 

Senator JOHNSON. Mr. Iuppa or Mr. Pearson, what is the average 

time that it takes to bring a new insurance product to market? 

Isn’t product innovation discouraged because of the time that it 

takes to get a product approved? 

Mr. IUPPA. Looking back in my career, one of the things that I 

saw, there was great variety across the States. In some States, you 

could get products approved in a fairly short order, within 30 days. 

In others, there are some products that I am aware of that would 

take a year or 2 years to perhaps get it approved or even to get 

a disapproval. 

Mr. PEARSON. Our process, generally it is about a year for a 

product to get full approval in all 50 jurisdictions where we operate, and industry data is suggesting as much as 2 years for some 

products. And, frankly, in today’s fast-moving world, products are 

outdated within 2 years. 

Let me also, just if I may, mention on the compact, we have been 

very supportive of the NAIC moving the compact along and applaud them for what they have done. But our concern, first of all, 

is that it is but one issue that needs modernization. 

Second, there are 33, I think, States and Puerto Rico, but the big 

States are not in, and, frankly, we do not think we will ever be in. 

And it is yet to be proven whether it is going to work. It is a bit 

too early. 

Senator JOHNSON. Mr. Iuppa, some believe that there would be 

more congressional and industry consensus on OFC legislation if it 

was life only. Why should P&C be included? 

Mr. IUPPA. Well, P&C faces many of the same issues that the life 

industry faces with regard to the need for an OFC. The other thing 

is, again, to look at this from the standpoint—and I will go back 

to some of the earlier comments about the competitiveness of the 

industry, not only from an insurance perspective but also dealing 

in the capital markets and competitiveness there. The P&C 

issues—you know, at one time P&C coverages were very local, especially for things like homeowner’s, auto insurance. But I was 

talking with some folks this morning, and one example that I mentioned is that it seems a bit of an anomaly—I live here in the District. I drive over to Virginia. My insurance coverage comes with 

me. However, if I move from the District over to Virginia or to 

Maryland, I have got to start the process again of being able to obtain coverage. And we have heard previously by others who have 

testified on this that just that single thing alone provides a significant burden, especially for people who are engaged in businesses 

jbell on DSKDVH8Z91PROD with HEARING

23 

or perhaps even the military service where there is regular movement because of the deployments or transfers, that sort of thing. 

I think, too, from the standpoint of looking at, again, global competitiveness that we are confronted with, again, in the context of 

the OFC, it is not meant for every company. But it is going to be 

positive. It is going to be a benefit for those that do business across 

the country or across the globe. 

Senator JOHNSON. I am out of time, but, Mr. Pearson, can you 

answer the question about why should P&C be included or if it 

should not? 

Mr. PEARSON. First of all, we clearly believe that there is a very 

strong position for life insurers and the need for an optional Federal charter, and I am here as representing small companies to 

suggest that it is not just an issue that impacts the very large but, 

in fact, companies of our size as well. 

We are supportive of Senate bill 40, and I think I probably 

should leave it at that. 

Senator JOHNSON. Thank you. 

Chairman DODD. Thank you very much, Senator. 

Just to clarify, Senator Johnson asked a very important question 

about the surplus lines, and as I understand it, you are for it, Mr. 

Goldman? 

Mr. GOLDMAN. We have made a number of suggested changes to 

the bill that we think address the—— 

Chairman DODD. So you would not support it in its present form 

here? 

Mr. GOLDMAN. Well, we think that the bill addresses a number 

of important concerns, and we would be supportive of it. We do 

think some changes are appropriate in the bill. But with those 

changes, we would be supportive of it, yes. 

Chairman DODD. All right. Because this is a matter—I think 

there is a lot of consensus about it. It passed overwhelmingly in the 

House, that and the Office of Insurance Information were two 

pieces of legislation that went through rather handily over there, 

and we are looking at a package over here of things we might be 

able to do. And so I want to get some clarity from the witnesses 

on it. And you are for it, as well, as I understand it, surplus lines? 

Mr. IUPPA. Yes. We do support it. 

Chairman DODD. And Mr. Pearson as well. Travis, do you have 

a point on that? You were asked that question. 

Mr. PLUNKETT. Senator, we are opposed to it, for a number of 

reasons. For one, it still applies to personal lines, not admitted personal lines as well. Given the lack of access to guarantee funds, we 

would like to see that carved out. And there are a number of problems with the State of domicile regulation for both nonadmitted insurers and reinsurers in particular. 

Chairman DODD. Did you oppose—the House bill passed overwhelmingly. 

Mr. PLUNKETT. We did oppose it. 

Chairman DODD. OK. Senator Menendez. Excuse me. I am sorry. 

Senator Martinez. I apologize. 

Senator MARTINEZ. Thank you, Mr. Chairman. 

Mr. Goldman, I wanted to ask you about another matter which 

is very important to many people in my State. New Jersey last 

jbell on DSKDVH8Z91PROD with HEARING

24 

March, I understand, became the 11th State to protect consumers 

from the practice by some life insurance companies to deny coverage or charge excessive premiums for coverage based on past or 

future lawful foreign travel. In June, the National Association of 

Insurance Commissioners approved an amendment to the Unfair 

Trade Practices Act to address unfair life insurance discrimination 

on the basis of this lawful foreign travel. Unwarranted denial of 

coverage by insurance companies affects family members, humanitarian aid workers, and also businesspeople seeking opportunities 

abroad. So as the Commissioner of the New Jersey Department of 

Banking and Insurance and the representative of NAIC here, can 

you tell us why New Jersey acted to address this form of insurance 

discrimination? 

Mr. GOLDMAN. Because we agree with you, Senator, that it is inappropriate for people to be charged an excess premium just because they are going to travel to a particular jurisdiction. And so 

we felt, the legislature of New Jersey felt it was appropriate to ban 

the practice, and did so. 

Senator MARTINEZ. And I understand you have feelings about 

State and Federal issues, but would it be helpful, do you think, for 

us to enact a Federal piece of legislation that would strengthen 

what has been done in New Jersey and perhaps make it be applicable throughout the country? 

Mr. GOLDMAN. Well, I think that, you know, that is one of many 

issues that I think State Insurance Commissioners around the 

country do deal with, and I think the cooperation of State legislatures is necessary, as it was in New Jersey, to enact the ban you 

are mentioning. We obviously agreed in New Jersey that it was appropriate. 

I think, you know, given a little bit of time, I think a number 

of States, if not all States, might come to that same conclusion. So 

I don’t know if it would be necessary on that narrow issue, for example, for the Congress to act. But we certainly agree with the 

principle. 

Senator MARTINEZ. On another note, you and the other commissioners that make up the NAIC in your difficult roles are responsible for facilitating a functioning and a robust insurance marketplace while at the same time keeping consumer safety first and 

foremost. Are you familiar with the legislation that Senator Nelson 

and I introduced last year, the Nonadmitted and Reinsurance Reform Act, is regulatory reform of the surplus lines and reinsurance 

marketplace and seems to have a lot of support in this Committee? 

And would you share your thoughts on this type of regulatory reform, especially if you believe it could boost the vitality of the insurance marketplace while preserving critical consumer protections? 

Mr. GOLDMAN. Yes, Senator. As I indicated, the NAIC would support it, with some changes—I think the Insurance Commissioner in 

Illinois, Mr. McRaith, has been very active and the lead person on 

behalf of the NAIC in discussing some changes that the NAIC 

would like to see in that bill. We think that the simplification of 

the tax allocation process is helpful. We think that vesting the control of the carrier in the home State is helpful. We think establishment of uniform eligibility standards is equally helpful, and the 

jbell on DSKDVH8Z91PROD with HEARING

25 

centralizing of data reporting. So we have a lot of areas of that bill, 

as I said, that we think make sense, and we are supportive with 

some of the changes that we have suggested. 

Senator MARTINEZ. You have some tweaks that you would like to 

see made, but on the whole, you are in support of the concept. 

Mr. GOLDMAN. That is correct. 

Senator MARTINEZ. Mr. Chairman, that is all I have. Thank you 

very much. 

Chairman DODD. Thank you very much. 

Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. Thank you all for 

your testimony. Like the Chairman, I do not come to this with a 

preconceived view, so I appreciate the information flow that is 

going on here. But let me ask a couple questions. 

Mr. Iuppa, when you were the regulator in your State and 

NAIC’s—I think you were the president or one of the officers—were 

you advocating a Federal optional charter? 

Mr. IUPPA. I think to put the proper context on your question, 

you have to recall that I was a State official at that time representing within the context of the State of Maine the position in 

Maine. When I was speaking on behalf of the organization, I was 

doing just that—speaking on behalf of the organization. 

I made some reference in my testimony, in my comments, about 

the difficulty in deriving consensus amongst the commissioners. Of 

the 56 commissioners that we have here in the U.S., you have some 

significant egos, and I will leave it at that. And to try to get consensus around an issue like, for instance, an optional Federal charter, one, it would have been, I think, inconsistent for a State-based 

organization, an association of State-based officials to come forward 

and advocate for an optional Federal charter. 

Senator MENENDEZ. So you are saying—first of all, I assume the 

answer is no. And, second, before you eat up all my time, and, second, I also assume that what you are saying is that all of our national insurance commissioners would not do the right thing if they 

honestly thought that a Federal optional charter was the right 

thing, they would still promote their own narrow State-based interests? 

Mr. IUPPA. I think they have done the right thing; they will continue to do the right thing. But I think that they may not have 

fully the perspective that I have managed to gain over the last couple years dealing with a global insurer that has—— 

Senator MENENDEZ. I see. Let me ask you another question, both 

for you and Mr. Pearson. Wouldn’t this really be, at the end of the 

day, about profitability? Clearly, if you go to a Federal optional 

charter based upon all the things you feel that would be taken care 

of, your companies would be more profitable, would they not? 

Mr. IUPPA. Well, I think the ultimate consumer protection is to 

be able to purchase products from a company that is going to be 

profitable. 

Senator MENENDEZ. I have no problem with profit. My question 

is: Would it not increase your profitability? 

Mr. IUPPA. That remains to be seen. We could be confronting—— 

jbell on DSKDVH8Z91PROD with HEARING

26 

Senator MENENDEZ. You mean you would actually enter into a 

system where your profitability would be diminished as a result—— 

Mr. IUPPA. No. We are in the business that insures risks and indemnifies risk. We do not have the ability to know with certainty 

what that risk is ultimately going to be in any given year. 

Senator MENENDEZ. Mr. Pearson, do you believe your profitability would be raised? 

Mr. PEARSON. I think that it has the potential for increasing 

profitability. It also has the potential for increasing a better deal 

for the consumer from a price standpoint because of greater competition and greater efficiency in our companies that we can then 

pass along to the consumer, because we are—as I said earlier, it 

is a fairly intense price-competitive business. 

Senator MENENDEZ. Mr. Plunkett, on page 34 of your testimony—there is a lot of stuff in here, but it is—you say, ‘‘Notice 

that the insurance industry is very pragmatic in their selection of 

a preferred regulator. They always favor the least regulation. . . . 

But, rather than going for full Federal control, they have learned 

that there are ebbs and flows in regulatory oversight at the Federal 

and State levels, so they seek the ability to switch back and forth 

at will.’’ 

Is that switching back and forth that you suggest is the case or 

would be the case, is that because—is it about profitability or is it 

about something else? 

Mr. PLUNKETT. Well, first, it is about lower regulatory standards, 

which I think ensures—believe will lead to greater profitability. I 

am referencing there, you know, 150 years of history of jumping 

from approval for first Federal-based regulation to then, at the beginning of the last century, State-based regulation and now back. 

Senator MENENDEZ. Well, why would we presume that the lower 

regulatory standards—why would we not presume, as they suggest, 

the high watermark of high consumer protections? 

Mr. PLUNKETT. Well, I think what we have shown in our testimony and elsewhere is that high regulatory standards are not incompatible with competition and are certainly not incompatible 

with very strong returns. And we detail in the testimony the fact 

that the States now have what is considered to be the strongest 

form of regulation, prior approval, have very healthy rates of return, in some cases better than States that have other forms of 

rate regulation. 

So it is not incompatible. You asked me to speculate about what 

insurers might think, and that was my speculation. 

Senator MENENDEZ. All right. Commissioner, let me ask you a 

question. We have seen reports of a certain company—I will not 

name them—not renewing home insurance policies in New Jersey. 

It is not a new phenomenon, either in New Jersey or in different 

parts of the country. And there are a lot of families who are furious 

and frightened that after decades of paying coverage and paying 

premiums without ever making a claim, they have their coverage 

dropped. And this is happening as we see insurance industry profits continue to rise even during bad years. 

Can you give us a sense of what is happening out there and what 

are some of the challenges before us? 

jbell on DSKDVH8Z91PROD with HEARING

27 

Mr. GOLDMAN. A number of the companies, based on their catastrophe modeling, have made judgments that they want to lessen 

the potential risk to themselves in particular geographic areas, particularly along the coasts. As a consequence, they have undertaken 

a concerted effort in coastal areas around the country to reduce 

their exposure in order to reduce that risk. And that has been the 

challenge. 

In New Jersey in particular, we have been working with the companies by, frankly, persuading them that it might be the better 

judgment not to engage in the degree of nonrenewal that they 

might come in to discuss with us in the first instance. We have 

given them a couple of opportunities when reinsurance costs for 

them on coastal risks have increased to pass through some portion 

of that cost to consumers to persuade them to stay. We have actively engaged in bringing new coastal writers into the marketplace. We are engaged in doing that right now in order to bring 

more capacity to the market. And we have also seen an increase 

in surplus lines carriers in that market. 

So we have worked on a number of fronts to try to mitigate the 

problem in New Jersey. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Chairman DODD. Thank you very much, Senator. 

Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman, and thanks again 

for having a great hearing and to all our witnesses, thank you for 

your professionalism. 

I do come at this with a philosophical bent, and that is that I 

would like to see our insurance industry be able to operate in a 

streamlined way. I was in a business in my previous life, a construction business, where we were licensed in States across the 

country. It was, in my opinion, nothing but restraint of trade. It 

had nothing whatsoever to do with good qualifications, and it was 

just a way to keep contractors, if you will, out of States so that inState contractors could flourish. That was what it was all about. 

So I come with a bent. 

On the other hand, after being here in Washington and seeing 

the way things work here, for instance, Chuck Schumer and I have 

introduced a bill, a toll-free number for people who have issues 

with the banking system to be able to call one place. I mean, people 

have no idea which particular entity oversees whatever banking 

issue they might have. And after the offices around our States in 

Tennessee are pummeled with calls regarding people just wanting 

Government to do what Government has agreed to do, we have to 

assign caseworkers ad nauseam to deal with those issues. 

So it seems to me that there is the issue of streamlining that 

philosophically I agree with. I will say it does look like the insurance industry is flourishing right now. It looks like they are doing 

particularly well. But, on the other hand, I would like to have a 

place for constituents to be able to call the Attorney General or 

someplace else if they have had advantages taken of them. And I 

would like for each of you, if you would, to address, if you are for 

the optional Federal Charter, how we might ensure that constituents do not get taken advantage of and do not get caught up in this 

jbell on DSKDVH8Z91PROD with HEARING

28 

Federal abyss, if you will, that exists here; or if you are on the 

other side of that, explain how that can never happen. 

Mr. GOLDMAN. Senator, I can tell you that our office annually 

gets about 45,000 to 50,000 calls in a State with roughly 8.8 million 

people. Now, there are under this system 50 States plus the territories that are available to respond to those concerns. I can tell you 

under an optional Federal charter with six regional offices for 300 

million people, I do not think you are going to have very good consumer protection or a place for consumers to reach out and get 

help. This is an area—insurance—where people pay for a promise. 

The promise is that when they need it, it will be there for them. 

Oftentimes, they have difficulty having that promise fulfilled, and 

they need help. And I do not think six regional offices for 300 million people is going to help too many people get that promise fulfilled. 

So I have serious problems with the idea of changing an effective 

and healthy system in which consumers are more protected than 

they would be, I think—and are, frankly—anywhere else in the 

world. I think the U.S. regulatory system, with whatever warts it 

may have, is probably the gold standard in the world. To put an 

overlay on that that will reduce significantly the benefits to consumers would be a dramatic mistake. 

Mr. IUPPA. Well, with all due respect to my former colleague Mr. 

Goldman here, if the few companies that will be federally chartered 

have 300 million customers, we will be pretty pleased. 

The reality under the OFC, what we are talking about is an opportunity for a company, depending on their business, particular 

business model, to enter into whichever regulatory system they believe best fits that model. And at the same time, consumers, policyholders, existing policyholders or new consumers—and, again, I am 

talking about individuals, small businesses, large businesses—will 

have an opportunity—they will have an additional choice. They can 

choose to stay in the State system and only purchase insurance 

from State-chartered companies. Or their particular needs may 

have them gravitate toward a nationally chartered entity. 

Senator CORKER. Do you really think consumers ask those questions when they are buying a product? I mean, they buy a product, 

and at the end of the day, they have no—I guarantee you, I do not 

ask those questions. Maybe I should. But I do not think they are 

going to be asking whether they are chartered by Federal or State 

regulators. And so at the end of the day, they will have a product, 

they will not know who is overseeing those. Is that correct? 

Mr. IUPPA. Well, in my 20 years as a regulator, I think I have 

heard just about every question. But I think, too, you have to keep 

in mind that there are also producers and agents who work with 

their clients as well to provide them guidance as to whether or not 

a company perhaps is State-chartered or nationally chartered or, 

you know, is based somewhere else. I mean, the reality is most of 

us buy insurance from a company that is based somewhere else. 

But the important thing is to—those companies who are Statechartered can still go to their respective States. For those that will 

be federally chartered, S. 40 provides a framework for those regional offices, and the Congress, as the policymakers, I believe will 

not shirk your responsibility to provide for a level of strong conjbell on DSKDVH8Z91PROD with HEARING

29 

sumer protection for those federally chartered companies and their 

customers. 

Mr. PEARSON. First of all, we believe it is less of an issue for our 

industry than for others. Our records say less than 10 percent of 

complaints are life insurance and life insurance-related. 

Having said that, however, we frankly think the current network 

does a very good job of handling consumer complaints. We would 

prefer for more uniformity across States with some of these model 

laws that have passed. But, frankly, we look at it as something 

that we could build upon as through the Federal bill that we would 

expect nothing less than an exemplar customer complaint and recourse. 

Mr. PLUNKETT. Senator, that is a very good question, and I 

would just say that if insurers would like uniformity and efficiency—and consumers do pay for a lack of efficiency—then they 

should propose, you know, uniformly high national standards, not 

allowing them to go back and forth between the States and the 

Federal regulators. Senator Hollings proposed a bill of that kind 

just before he retired in 2003 and got very little support. 

Regarding consumer assistance, some States do a good job and 

others do not, but the States do have a good argument when it 

comes to property/casualty insurance in particular because there 

are regional variations. There are variations in tort laws, no-fault 

versus tort, and the States have a pretty good argument that they 

have local expertise when it comes to particular property/casualty 

problems and claims that result in their areas—you know, hurricane, earthquake, hail damage, things like that. 

So I would be worried a little bit about eliminating that regional 

knowledge. Also, the Federal banking regulators who are often 

cited as the model for national insurance regulation have a poor 

track record of consumer assistance. They just do not have the cops 

on the beat that the States have the potential to have. 

Senator CORKER. May I ask one more brief question, Mr. Chairman? 

Chairman DODD. Certainly. 

Senator CORKER. Mr. Pearson, I understand that—something 

that I agree with, and that is that what we really want to have is 

a streamlined process for having products approved. And I understand there is an Interstate Compact that many States are a part 

of, but there are 20 States that are not a part of, and I wonder why 

the life insurance industry is not pursuing heavily getting those 

other 20 States to the table and moving on with that. 

Mr. PEARSON. We are. Frankly, we have been working with the 

NAIC and each State and other jurisdictions to get an OFC passed. 

I know in Maryland we have worked closely with our Insurance 

Department as well as the legislature to do so. So it is something 

that we are actively pursuing. We call it a dual track of regulatory 

modernization, so we are interested in a Federal charter, but also 

in improving State-based regulation because we believe even if 

there is a Federal charter that it will continue to be an option for 

insurers. 

Senator CORKER. Thank you. 

Chairman DODD. Thank you very much, Senator, and we will 

leave the record open here. I don’t think if there are additional 

jbell on DSKDVH8Z91PROD with HEARING

30 

questions. I was going to make the point, having been on this Committee for quite a while, even the notion not that many years ago 

of a Federal charter, it would have been met with total opposition 

from the industry and this subject matter. It was a third rail if you 

were talking about the insurance industry to be talking about a 

Federal charter. 

Again, I am very interested in the testimony and very interested 

in the proposals and the ideas and what may work. I think Senator 

Corker touched on sort of the heart of it, which is for many of us 

here—I have always sort of felt on the life area you could make a 

pretty case for it because of the very differences that have been 

raised in dealing with property and casualty, and Mr. Plunkett 

raised it, certainly Senator Corker did, too. There are distinctions 

in terms of local tort law and other matters that come up. And, of 

course, as you point out, Senator Corker points out, for the consumer this only becomes an issue when you have a claim. I mean, 

other than that you are buying the stuff, you are looking for price. 

But at the end of the day, when we get the calls—it is not because 

of the price you are paying for the policy. When a Senator gets a 

call about it, it is because I am not getting my claim answered. 

That is when it hits us. And so guaranteeing somehow at the Federal level on property and casualty particularly you are going to get 

that response is something that I am troubled by. How do you get 

that response? 

But I am very interested in this subject, and clearly we have got 

to do something. We have got to reform in these areas. So I appreciate immensely the testimony. We literally could just keep this 

one panel here for the day with the questions I have alone. I am 

sure my colleagues do as well. So we will leave the record open. 

But I want to get to the second panel, if we can. So thank you all 

very, very much for being with us this morning. Very, very helpful. 

Let me introduce our second panel as the first panel is stepping 

down. Our next panel consists of George Steadman, who is President and Chief Operating Officer of Rutherfoord Inc. Mr. Steadman 

was recently appointed the 2008 Chairman of the Council of Insurance Agents and Brokers. He is also a member of the Board of 

Managers of Assurex Global Reinsurance Company. 

Thomas Minkler is currently the President of the ClarkMortenson Agency. He also serves as Chairman of the Government 

Affairs Committee of the Independent Insurance Agents and Brokers of America. 

And, third, we have Frank Nutter, who is President of the Reinsurance Association of America, currently serves on the Board of 

the International Hurricane Research Center, the Advisory Board 

of the Center for Health and Global Environment, the Governing 

Council of the American Meteorological Association, the Board of 

the University Center for Atmospheric Research, and the Advisory 

Board of OECD’s International Network for Financial Management 

of Large-Scale Disasters. 

What’s the weather going to be like, Frank, tomorrow? 

Mr. NUTTER. I will let you know. 

[Laughter.] 

Chairman DODD. With all those, you have got to know whatever 

is going on with the weather. 

jbell on DSKDVH8Z91PROD with HEARING

31 

Richard Bouhan has been Executive Director of the National Association of Professional Surplus Lines Offices since 1987. Previously, Mr. Bouhan was NAPSLO’s Director of the Government 

and Industry Affairs Council. 

And we thank all four of you for being here. We heard the issues 

raised about surplus lines in the last panel, and obviously this 

panel I know has some particular expertise in that area as well, 

so we will come back and talk about those questions here. But let 

me thank all of you for being with us, and, again, I am going to 

ask you, if you can, to be relatively brief in your opening statements so we can get to some questions. 

We will begin with you, Mr. Steadman. 

STATEMENT OF GEORGE A. STEADMAN, PRESIDENT AND 

CHIEF OPERATING OFFICER, RUTHERFOORD INC., ON BEHALF OF THE COUNCIL OF INSURANCE AGENTS AND BROKERS 

Mr. STEADMAN. Thank you, Mr. Chairman, Senator Shelby, 

Members of the Committee. My name is Shad Steadman. I am 

President and Chief Operating Officer of Rutherfoord, Incorporated, 

a regional brokerage based in Roanoke, Virginia. Rutherfoord is the 

38th largest U.S. insurance brokerage firm, and we have offices 

from Philadelphia to Atlanta. My testimony is on behalf of The 

Council of Insurance Agents and Brokers, whose members sell 

more than 80 percent of all business insurance in the U.S. and a 

growing share of the international marketplace. I am currently 

chairman of the council. 

Like other witnesses here, we greatly appreciate this opportunity 

to speak to you today. This Committee has worked constructively 

and productively on a number of issues that are critical to our industry and to this country. We similarly hope that bipartisan consensus can be found on the complicated but critical issues of insurance regulatory reform. 

Let me say at the outset that our organization supports the National Insurance Act, which would create a truly optional insurance 

regulatory system for all industry players. We are grateful to Senators Johnson and Sununu for their efforts on this front. We believe the Act provides for comprehensive, rigorous oversight of the 

industry that protects insurers and policyholders in the case of insolvency and bolsters, rather than diminishes, current protections 

for insurance consumers. 

We believe that the current regulatory structure is simply not 

equipped to handle an insurance marketplace that today is not just 

national but international in scope and also is increasingly complex 

and sophisticated. My firm serves clients in 50 States and multiple 

countries, and our clients have risks and exposures that transcend 

State boundaries. Regulation of this business must move beyond 

those artificial State boundaries, and the optional Federal charter 

is the best ultimate framework for regulatory restructuring. 

Political reality dictates that the achievement of the OFC will 

not be an easy process, nor will it be quick. In order to better serve 

our policyholders and clients, we need practical solutions to real 

marketplace problems. That is why I respectfully implore the Committee to pass one measure this year that would address a fundajbell on DSKDVH8Z91PROD with HEARING

32 

mental flaw in the State-based system of insurance regulation and 

for which a solution is readily at hand. I am speaking about the 

Nonadmitted and Reinsurance Reform Act, so-called the surplus 

lines legislation, that has been introduced by Senators Martinez 

and Nelson of Florida. 

This legislation has been unanimously approved by the House, 

and its surplus lines provisions constitute the only piece of Federal 

insurance regulatory reform where all major stakeholders, commercial consumers who are represented solely by REMs, regulators, 

small insurers, large insurers, large brokers and independent 

agents agree. 

Let me describe very briefly what surplus lines products are and 

what this legislation would do. 

Surplus lines insurance provides coverage for unique, unusual, or 

very large risks for which insurance is unavailable in the admitted 

market. It is universally recognized as an important component of 

the commercial property and casualty marketplace. There are multiple sets of requirements in each State with regard to the steps 

that must be taken before the nonadmitted marketplace can be 

accessed, and there are different premium tax requirements in 

each jurisdiction. When surplus lines activity is limited to a single 

State, compliance issues are minimal because there is a single set 

of rules. 

When activity encompasses multiple States, which is normal, full 

regulatory compliance is difficult, if not impossible, because the 

laws of every State in which an exposure is located may technically 

apply to the transaction. This is a real problem. 

The surplus lines legislation would dictate that the rules and 

regulations only of the insured’s home State would apply to any 

multi-State surplus lines transaction. This would have an immediate positive impact on the marketplace and consumers and would 

complement the adoption of the regulatory reform envisioned by 

the National Insurance Act. 

Again, this is an issue on which we agree even with the NAIC, 

but the optional Federal charter supporters and opponents agree on 

this legislation. Obviously, we urge the Committee to seize the opportunity to enact it this year due to the extraordinary consensus 

that has emerged around the basic tenets. And looking toward next 

year, we believe that the National Insurance Act is the best and 

ultimate solution to the many competitiveness issues that impact 

our industry. 

Thank you very much. 

Chairman DODD. Thank you very much. 

Mr. Minkler. 

STATEMENT OF THOMAS MINKLER, PRESIDENT, CLARK– 

MORTENSON AGENCY, INC., ON BEHALF OF THE INDEPENDENT INSURANCE AGENTS AND BROKERS OF AMERICA 

Mr. MINKLER. Thank you and good morning, Chairman Dodd and 

Ranking Member Shelby, and Members of the Committee. My 

name is Tom Minkler, and I am pleased to be here today on behalf 

of the Independent Insurance Agents and Brokers of America and 

our 300,000 individuals to provide our perspective on insurance 

regulatory reform. I am the President of Clark Mortenson, a New 

jbell on DSKDVH8Z91PROD with HEARING

33 

Hampshire-based independent insurance agency with 51 employees 

that offers a broad array of insurance products to consumers and 

commercial clients. 

As you know, States carry out the essential task of regulating 

the insurance marketplace to protect consumers. State insurance 

regulators have done an excellent job in the area of financial solvency, thereby ensuring that insurance consumers receive the insurance coverage they need. However, there are some problems 

with the State-based system, and focused reform is warranted. 

When considering such limited reform, we must remember that 

during the recent turmoil in various sectors of the financial services industry, the insurance industry has remained healthy and 

stable. Unlike other financial services markets, there is no crisis in 

the insurance industry that requires a risky, massive overhaul of 

the current regulatory system. 

The State system has proven that it best protects consumers and 

can be modernized to work effectively and efficiently for the entire 

insurance marketplace with the right legislative pressures from 

Congress. Therefore, when considering any reform, we must recognize that the current system does have great strengths, particularly in the area of consumer protection and solvency regulation. 

Additionally, when considering reforms to the State regulatory 

system, we believe that two overarching principles should guide 

our efforts. First, Congress should attempt to fix only those components of the State system that are broken. Second, no actions 

should be taken that in any way jeopardize the protection of the 

insurance consumer. We believe that the effective solvency regulation and disciplined guaranty system that does not require the potential support of Federal tax dollars are essential to such protection. 

To speak from a personal perspective, the most serious regulatory challenges facing insurance agents today are the redundant 

and costly requirements that arise when seeking licenses on a 

multi-State basis. These requirements hinder the ability of insurance agents to effectively address the needs of consumers. The average independent insurance agent today operates in more than 

eight States, and many are licensed in 25 to 50 States. We strongly 

support targeted Federal legislation to streamline nonresident insurance agent licensing. This legislation would be deferential to 

States’ rights. Day-to-day State insurance laws, such as those regarding consumer protection, would not be preempted. By modernizing the NARAB framework passed as part of the Gramm-LeachBliley Act of 1999, Congress can help policyholders bring increasing 

marketplace competition and consumer choice. The NARAB Reform 

Act incorporates these principles and has had strong bipartisan 

congressional and industry support. This has led to quick action 

being taken on this reform measure in the House. 

Another area where targeted Federal legislation is necessary is 

in the nonadmitted market, and we support legislation that would 

apply single-State regulation and uniform standards to the surplus 

lines industry. 

I also want to mention briefly our strong opposition to another 

suggested method to achieve insurance regulatory reform—the proposed creation of an optional Federal charter. We are very conjbell on DSKDVH8Z91PROD with HEARING

34 

cerned about this risky proposal for full-blown Federal regulation 

of the insurance industry and believe that it would not reform the 

current system but would supplant it. The best characteristics of 

the current State system from the consumer perspective would be 

lost if some insurers were able to escape State regulation completely in favor of wholesale regulation from the Federal level. Current Federal legislative proposals to allow for such a Federal insurance charter would not be optional for our members. Independent 

agents represent multiple insurance companies, and we would be 

forced to deal with the Federal Government irrespective of any licensing reform that may be accompanying it. Even more importantly, optional Federal charter would not be optional for the consumer. The insurance company, not the insurance consumer, would 

make that decision. 

Current OFC proposals would also create a confusing patchwork 

of solvency and guaranty regulations. It would not replicate the significant structural improvements that were made in the banking 

model in the aftermath of the S&L failures and the banking crises 

of the 1980s and 1990s. The dual structure proposed under the current OFC measures could have disastrous implications for solvency 

regulation by dividing this key regulatory function from guaranty 

fund provisions. 

Proponents of OFC assert that a Federal regulator is important 

if the U.S. is to remain a global financial services leader. We believe that the purported decline of U.S. capital markets’ competitiveness for insurance does not stem from State-based regulation 

but from other concerns such as different tax treatment and the 

costs of excessive litigation. In the end, we feel that a massive overhaul of the insurance regulatory system along the lines of an OFC 

carries great risk and is unnecessary as there is no crisis in the 

insurance market. 

There is a more practical alternative. We believe that targeted 

Federal legislation to improve the State-based system is a pragmatic, middle-ground approach, and the solution is achievable. We 

encourage the Senate Banking Committee to consider this approach specifically in the area of agent licensing reciprocity. It is 

the only approach that can bring the marketplace together to 

achieve reform. 

Thank you. 

Chairman DODD. Thank you very much. 

Mr. Nutter, thank you. 

STATEMENT OF FRANKLIN W. NUTTER, PRESIDENT, 

REINSURANCE ASSOCIATION OF AMERICA 

Mr. NUTTER. Thank you, Mr. Chairman. My name is Frank Nutter, and I am President of the Reinsurance Association of America. 

The association represents property and casualty insurance companies that specialize in assuming reinsurance. 

I am pleased to appear before the Committee today to provide 

the reinsurance industry’s perspective on regulatory reform and 

welcome this opportunity. 

Reinsurance is critical to the insurance marketplace, as has been 

mentioned by several witnesses. It reduces the volatility experijbell on DSKDVH8Z91PROD with HEARING

35 

enced by insurers and improves insurers’ financial performance 

and security. It is the insurance of insurance companies. 

Reinsurers have assisted in the recovery from every major catastrophe over the past century in this country. By way of example, 

60 percent of the losses related to the events of September 11th 

were absorbed by the global reinsurance industry, and 61 percent 

of the 2005 hurricanes Katrina, Rita and Wilma were ultimately 

borne by reinsurers. 

Reinsurance is a global business. Encouraging the participation 

of reinsurers worldwide is essential to providing the much needed 

capacity in the U.S. for property and casualty risks. While nearly 

70 foreign jurisdictions are reflected among the ceding companies’ 

preferences for reinsurers, the majority of U.S. premiums ceded offshore are assumed by reinsurers domiciled in about a dozen countries. Foreign reinsurers now account for 56 percent of the U.S. 

premium ceded directly to unaffiliated reinsurers—a figure that 

has grown steadily from 38 percent in just 1997. 

While the current State-based insurance regulatory system is 

primarily focused on regulating market conduct, contract terms, 

rates and consumer protection, as has been discussed before the 

Committee today, reinsurance regulation focuses on ensuring the 

reinsurer’s financial solvency and to see that reinsurers meet their 

financial obligations. 

The fundamental concept underlying the U.S. regulatory system 

is that a reinsurer must either be licensed here in the United 

States and subject to the full spectrum of regulation as insurance 

companies are or provide collateral through trust funds, letters of 

credit, and other forms of security to see that their obligations are 

met. 

In recent years, capital providers to the reinsurance market have 

opted for establishing a platform outside the United States and 

conducting business through a U.S. subsidiary or by providing financial security through a trust or collateral. My testimony notes 

that since 1992, after Hurricane Andrew, there have been 38 new 

reinsurance companies formed, providing nearly $35 billion of new 

capital serving this market. Nearly all of this capital came from 

U.S. capital markets, yet no new reinsurer was formed in the 

United States. Other than the U.S. subsidiaries of some of these 

new companies, the last reinsurance company formed in the United 

States was in 1989. For these startups, the ease of establishment, 

capital formation, and regulatory approvals in non-U.S. jurisdictions contrasts with the cumbersome and protracted nature of obtaining licenses in the United States. 

The RAA advocates a modified optional Federal charter for reinsurance to allow reinsurers to choose a Federal regulator or remain 

in the current 50-State system. Alternatively, the RAA seeks Federal legislation that streamlines the State-based system. We reference in the statement the Treasury Blueprint as providing examples of why the State-based system does not serve well a global 

marketplace like reinsurance. 

As the rest of the world seeks to work toward regulatory harmonization and international standards, the U.S. is disadvantaged by 

the lack of a Federal entity with authority to make decisions for 

the country and to negotiate international insurance agreements or 

jbell on DSKDVH8Z91PROD with HEARING

36 

federally enabling legislation which empowers a single state regulator to do so. 

It has been long recognized that the level of reinsurance regulation varies throughout the world. A system of mutual recognition 

whereby the U.S. or a State could recognize the regulatory system 

in another non-U.S.-based jurisdiction is one which we support, 

and we are pleased to see that it has been incorporated in S. 40, 

the National Insurance Act of 2008. 

It is also noted in our statement that while non-U.S. reinsurers 

have the option of being licensed in the U.S., State regulation has 

attempted to strike a balance between creating and maintaining an 

open marketplace, while ensuring the financial security of ceding 

insurers and their policyholders. As the world’s largest insurance 

marketplace, the U.S. is dependent on non-U.S. and U.S. reinsurance capacity. On the other hand, it is difficult to see how 50 State 

regulators can be expected to know, or to learn, the intricacies of 

the accounting systems and regulatory schemes used throughout 

the world to determine the financial strength of non-U.S. reinsurers. 

The RAA commends the sponsors of S. 40, the National Insurance Act, for proposing an optional Federal charter for insurers, 

and in large part, we think that would address this concern about 

uniformity. Frankly, we are also encouraged by the ongoing efforts 

of the NAIC, under Steve Goldman’s leadership, to develop a 

framework for reinsurance regulation which seeks to streamline 

regulation through a national system for U.S. reinsurers, a port of 

entry for non-U.S. reinsurers, and a system of trans-border regulatory recognition. We have encouraged the NAIC to seek Federal 

legislation to achieve this system rather than hope that all 50 

States’ laws will be amended on a uniform basis. Our 50-State system of regulation has significant differences among the States with 

regard to their requirements. We believe that any structure that is 

adopted by the Congress or Federal legislation which addresses 

State streamlining should eliminate duplicative and inconsistent 

regulation. Again, we applaud the sponsors of S. 929, the Nonadmitted and Reinsurance Reform Act, for proposing legislation 

that will eliminate extraterritorial application of laws. 

Finally, Mr. Chairman, we believe that changes in the current 

regulatory system are necessary. We believe the options include an 

optional Federal charter, as proposed in S. 40, or a modified optional Federal charter which allows a reinsurer to choose among a 

single Federal regulator or a single State regulator or Federal legislation that streamlines the current system. 

I would like to commend the NAIC for its progressive efforts to 

adopt a framework that seeks to achieve many of the goals that we 

have set forth, but we have recommended to the NAIC that they 

work with us and with the Congress to pass legislation that would 

enable them to achieve the uniformity that they seek. 

Thank you, Mr. Chairman and Senator Johnson, for your attention and support in this area. 

Chairman DODD. Thank you very much, Mr. Nutter. 

Mr. Bouhan. 

jbell on DSKDVH8Z91PROD with HEARING

37 

STATEMENT OF RICHARD BOUHAN, EXECUTIVE DIRECTOR, 

NATIONAL ASSOCIATION OF PROFESSIONAL SURPLUS 

LINES OFFICES 

Mr. BOUHAN. Chairman Dodd, Senator Johnson, I want to thank 

you and Ranking Member Shelby for holding this hearing on some 

very, very important insurance reform issues. My name is Richard 

Bouhan, Executive Director of the NAPSLO, the National Association of Professional Surplus Lines Offices. I am pleased to be here 

today to testify on the state of the insurance industry with a focus 

on its current regulatory structure and oversight. As my association’s name implies, the surplus lines marketplace will be the focus 

of my comments. 

The surplus lines market is an indispensable and fast-growing 

sector of our Nation’s insurance industry, a marketplace established to serve consumers by providing coverage when the traditional markets fail to do so. Unlike other components of the insurance sector, surplus lines is not simply a type of coverage; instead, 

it is an entire insurance marketplace that provides virtually all 

types of coverage to both commercial and personal customers. Our 

customers include doctors, lawyers, architects, and other professionals; manufacturing concerns; public infrastructure, like hospitals and airports. Ultimately, perhaps the market is best known 

as the ‘‘safety net’’ that provides coverage when crises like 9/11 or 

Hurricane Katrina restrict the capacity of the standard market. 

Given this wide range of service, there is simply no one in this 

room who is not in some way impacted by the surplus lines market. With $40 billion in annual premiums, the surplus lines industry 

represents nearly 15 percent of the commercial insurance marketplace. This is a fourfold increase from just a decade ago. The primary reason for this rapid growth is the transition of our economy 

from a manufacturing and industrial base to a complex and diverse 

array of industries that require a flexible and dynamic insurance 

marketplace. 

Unfortunately, while our sector has evolved to meet ever changing consumer demand, our regulatory system is outdated, inefficient, and in dire need of reform to better serve market participants and consumers. Our major problems are caused by a patchwork of inconsistent and, at times, conflicting State-based regulations. These problems have been further exacerbated by the dramatic expansion of multi-State surplus lines coverage in recent 

years. Currently, about a third of all surplus lines policies have 

multi-State exposure, creating a regulatory compliance challenge 

that is costly and burdensome to all. 

While attempts have been made to harmonize these laws, history 

has proven that the States are unable to create an efficient, uniform, and rational regulatory system for this unique market. Consequently, NAPSLO believes the only solution is Federal legislation 

that clearly resolves the problems I will now review. 

As a result of this patchwork system, licensed surplus lines brokers have no way to determine how much tax would be paid to the 

States on a multi-State risk and face multiple compliance requirements. This is because the States have inconsistent and sometimes 

conflicting rules to allocate exposure and calculate taxes. The result 

is a marketplace replete with confusion and acrimony between 

jbell on DSKDVH8Z91PROD with HEARING

38 

States and brokers as to whether the correct amount of tax has 

been paid, with consumers at times facing double taxation and, 

thus, bearing the brunt of these regulatory and financial burdens. 

Another significant problem lies in the licensing of nonresident 

brokers. Nearly a decade ago, Congress attempted to resolve this 

problem when it created a reciprocal nonresident licensing program 

as part of Gramm-Leach-Bliley. Despite these efforts, we remain to 

this day without an efficient system for multi-State licensing contrary to the intent of the law. 

While the challenges before us are significant, thankfully solutions are well within reach. The Nonadmitted and Reinsurance Reform Act is now before the Senate. This legislation has twice been 

unanimously agreed to by the House and has earned the support 

of the industry stakeholders. Furthermore, the bill recognizes the 

dramatic changes and the growth in the surplus lines market and 

puts forth common-sense solutions to streamline the regulatory 

system to benefit all affected parties. We are most grateful to Senators Bill Nelson and Mel Martinez for introducing S. 929, the Senate version of the Nonadmitted and Reinsurance Act. 

Given the broad range of support behind this bill, NAPSLO urges 

the Senate to promptly pass S. 929 because it will provide consumers with more efficient access to the marketplace, harmonize 

today’s costly patchwork of inconsistent State laws and regulations, 

and repeal the inefficiencies of duplicative broker licensing requirements. 

Again, I want to thank Chairman Dodd and Ranking Member 

Shelby and the rest of the Committee for holding these important 

hearings and for giving NAPSLO, on behalf of our Nation’s insurance safety net, the opportunity to voice our concerns. 

Chairman DODD. Well, thank you very, very much, and we thank 

all of you for being with us and being patient this morning, having 

to listen to the first panel. That is an advantage if you look at it 

in those terms. Let me pick up on the surplus lines issue, if I can, 

and to you, Mr. Steadman or Mr. Bouhan, if you can. One of the 

arguments advanced for streamlining surplus lines regulation is 

that it will enhance access to the surplus lines market for consumers. And I am interested in gaining a better understanding of 

what that would mean for consumers. Surplus lines, as all of you 

know, is generally a less regulated marketplace than the admitted 

market. And as I understand it, surplus lines companies do not 

participate in State insurance guaranty funds, meaning that consumers would not be protected if a surplus line company were to 

become insolvent. 

What would be the benefits for consumers of expanding the surplus lines market, Mr. Steadman? 

Mr. STEADMAN. Mr. Chairman, I think that the problems with 

the admitted marketplace oftentimes is that there is a lack of product available to consumers, and I think that if we encourage nonadmitted carriers to practice in States and ease regulation on 

them, it actually provides more creative solutions coming in, additional capacity flowing in. I think it was mentioned earlier in the 

previous panel that some of the solutions that are coming to the 

coastal areas now, where there is a lack of product available to insurers, is being taken care of by the nonadmitted market. And I 

jbell on DSKDVH8Z91PROD with HEARING

39 

think that we need to provide access to all those areas with these 

types of products to these consumers, these types of products that 

will solve a market need. 

Chairman DODD. Mr. Bouhan, you kind of addressed this, but let 

me give you another chance to. 

Mr. BOUHAN. I would agree with Mr. Steadman’s comments. 

Chairman DODD. Put your microphone on there. 

Mr. BOUHAN. I would agree with Mr. Steadman’s comments. The 

surplus lines market offers the consumer the opportunity to get the 

products that are not available in the licensed marketplace by creating a more efficient system of taxation. By creating a system of 

compliance with the regulatory rules, you gain the opportunity for 

the system to be overall more efficient, which gives better opportunity for consumers to access the marketplace and brokers to access the marketplace on their behalf. So I think that would be one 

thing that would happen. 

I want to comment on the guaranty fund question. Surplus lines 

companies are not guaranty funds. But the vast majority of surplus 

lines business is commercial business, and the guaranty funds have 

limits. I think $300,000 is the more common limit. Some are as low 

as $150,000 in terms of caps on the claims payments. And most insurance commercial policies far exceed that. So I am not sure the 

guaranty fund issue is a significant one, at least in the context of 

the commercial business that the surplus lines mostly writes. 

Chairman DODD. I think you addressed this, or Mr. Minkler did, 

but on the surplus lines issue, where the bill has gone to the 

House, the one that is pending here, have you taken a position on 

that? Are you in favor of it? You indicated in your comments you 

were, but I want to give both of you a chance to comment on this. 

Mr. NUTTER. Mr. Chairman, we would strongly prefer an optional Federal charter legislation. But to your question, and if the 

Committee and the Senate were to address the more narrow approach to the excess surplus lines and reinsurance bill, we are supportive of the bill, but it does fall somewhat short of what we think 

would be appropriate. 

Chairman DODD. I understand you would like more. I am just 

trying to get—— 

Mr. NUTTER. Well, let me comment on something you raised earlier. The legislation that is reflected in the Treasury Blueprint as 

in Mr. Kanjorski’s legislation in the House does create a Federal 

advocate, an Office of Insurance Information, and also addresses 

this question of the constitutional authority of the Federal Government to enter into trade agreements with foreign countries. That 

would address the question of recognition of companies doing business in the United States. 

Those two provisions added to the excess surplus lines and reinsurance bill would make it a much stronger piece of legislation and, 

frankly, address most of our concerns. 

Chairman DODD. OK. Mr. Minkler. 

Mr. MINKLER. Mr. Chairman, we are in favor of the surplus lines 

bill, and as you indicate, there is a lot of traction right now for the 

bill, as there is for the NARAB bill that has come out with broad 

bipartisan support. So we would support this bill. 

Chairman DODD. Thank you very much. 

jbell on DSKDVH8Z91PROD with HEARING

40 

As has been discussed, since Gramm-Leach-Bliley a large majority of States have adopted reciprocity laws with regard to agent 

and broker licensing. Mr. Minkler, let me start with you and ask 

Mr. Steadman as well. Could you explain specifically why you believe those reciprocity laws are insufficient? And let me anticipate. 

If you say it is the fault of the NAIC, which some are apt to, if the 

problem lies there, how they made their certifications, what efforts 

have you made to address the issue at the NAIC? 

Mr. MINKLER. Thank you, Mr. Chairman. The tenets of GrammLeach-Bliley to introduce across-State-border licensing reciprocity 

were noble goals. They have fallen short. The new NARAB bill, reform act, takes it a next step and introduces Federal tools to be 

able to coax those States that may not have the reciprocity now. 

We have worked closely with the NAIC over the months and 

years preceding this to come up with an agreement as to a model 

that would work, both at the regulatory level and at the practitioner level, which is my level. We believe that NARAB II is the 

answer to that, and we look forward to its passage. 

Chairman DODD. Mr. Steadman. 

Mr. STEADMAN. Our organization was one of the earliest supporters of licensing reform, and we were big supporters of GrammLeach-Bliley when it came about, and we think it did do quite a 

bit to improve the licensing environment. 

However, I have to tell you, it needs a lot more work. There are 

still 20-odd States that do not have reciprocity. 

I can tell you just as an example, my firm—not that large—we 

have 300 employees, but we maintain in our firm—we actually 

have full-time people doing nothing more than tracking licenses. 

And we maintain thousands of licenses and appointments in our 

organization, and I personally have hundreds. 

So it is a very, very difficult, time-consuming, burdensome task 

for agents and brokers. 

Chairman DODD. I did not get a chance to ask Mr. Goldman, because there were obviously a lot of Members here and a lot of questions, but is there any likelihood those remaining States are going 

to join in this? Or are you optimistic or not optimistic about it? I 

heard one of my colleagues, I think, or at least someone suggest 

there are a couple of large States that will never join. At least, that 

is the impression. 

Enlighten Senator Johnson and me as to the possibility of a significant majority of those extra 20 States joining in this effort, or 

all of them. What is your assessment of that? 

Mr. STEADMAN. Mr. Chairman, I think that, absent some type of 

Federal pressure, I don’t think that there will be complete compliance. I think that when we were looking for reforms around 

counter-signature, yes, we were able to get most States to come 

into compliance. But ultimately we were forced to file suit in many 

States in order to get all States to drop these protectionist policies 

they had in place regarding counter-signature. 

So if that is any example of what we could expect as far as licensing reciprocity, I think that there will be some States that 

never will come into compliance without some sort of Federal pressure. 

Chairman DODD. What is your view on that, Mr. Minkler? 

jbell on DSKDVH8Z91PROD with HEARING

41 

Mr. MINKLER. Mr. Chairman, I think it is probably accurate that 

there are a couple States that will be tough to come into the fold. 

But the fact that the NAIC has endorsed this proposal I think 

speaks volumes to its chances of success. 

Chairman DODD. Tim. Senator Johnson. 

Senator JOHNSON. Mr. Steadman and Mr. Bouhan, you have already discussed the surplus lines marketplace to ensure against 

risk like terrorism and extreme weather. But I would call to the 

Chairman’s attention, over 20 percent of all property and casualty 

placements are accounted for by surplus lines. 

Mr. Nutter, you talk about many problems the U.S. reinsurance 

industry and fund reinsurers face with 50 different U.S. insurance 

regulators and sets of State laws. You mentioned that this patchwork of regulation has caused tensions with foreign officials, and 

these result in U.S. reinsurers being disadvantaged overseas. Can 

you elaborate? Is there anything that this Congress can do to make 

sure that the U.S. reinsurers are not discriminated against because 

of our regulatory system? 

Mr. NUTTER. Certainly, Senator Johnson. The global reinsurance 

market is, in fact, a very international one. I cited statistics largely 

to demonstrate that this is in many ways an offshore market serving U.S. capacity needs through U.S. subsidiaries and collateral. 

The 50-State system is an awkward and cumbersome system to 

deal with which is why I endorsed the idea of a Federal insurance 

office as well as constitutional legal authority for that office to 

enter into international trade agreements. Such agreements would 

provide reciprocal recognition for U.S. insurers and reinsurers 

doing business in foreign countries and for their insurers doing 

business in the United States. 

That feature, together with the excess surplus lines and reinsurance bill’s features, would go a long way toward moderating this 

conflict and tension between the capacity needs being served by 

non-U.S. entities in the U.S. and U.S. insurers and reinsurers 

being able to do business on a global basis based upon a system 

here. 

Senator JOHNSON. Currently, what is done? Is there a negotiation required by all 50 States? 

Mr. NUTTER. Well, currently it is not done, I think is the answer 

to that. The NAIC itself is struggling with that issue. Just last 

week, Commissioner Goldman chaired a meeting where a legal 

opinion was reviewed about the problems of States or the NAIC, 

which is really a trade association, entering into global negotiations 

that are, in fact, trade matters. Federal legislation, as is incorporated in the optional Federal charter bill, and is addressed in the 

Kanjorski bill in the House would provide the legal authority to 

deal with that. 

It is really a matter of dialog at this point without the legal authority to enter into binding agreements to secure the capacity, but 

also to make certain that the obligations are met by U.S. and nonU.S. companies. 

Senator JOHNSON. Mr. Minkler, recognizing that licensing reform 

is a top priority for insurance agents, do you agree with the licensing reform initiative contained in my legislation, the National Injbell on DSKDVH8Z91PROD with HEARING

42 

surance Act, which streamlines the process so that an agent only 

needs one instead of multiple licenses? 

Mr. MINKLER. We do endorse agent licensing reform through 

NARAB II, Senator. I may have missed your question in there. 

Senator JOHNSON. The question was, Do you endorse the provision which is contained in my legislation, the National Insurance 

Act, which streamlines the process so that an agent only needs one 

instead of multiple licenses? 

Mr. MINKLER. If you are referring to the NARAB portion—— 

Senator JOHNSON. Yes. 

Mr. MINKLER [continuing]. We are in favor of that. We think 

NARAB II will greatly streamline the process. Today, I have to 

apply in multiple States, and it is very burdensome. And we think 

the targeted reform that we are talking about is the best way to 

accomplish that. 

Senator JOHNSON. Thank you. 

Chairman DODD. Well, thank you very much. 

Let me ask just one—I am going to ask you just quickly, if you 

will, the second question I asked the first panel involving whether 

or not different lines of insurance should be treated differently, the 

issue. And, again, pointing out that the fact we have had eight witnesses and a multiple of issues that are on the table, I wonder if 

you just might, each one of you, quickly share just some quick 

thoughts on this. You have generally already in your comments, 

but I wonder if you would just comment on that. Mr. Steadman. 

Mr. STEADMAN. Mr. Chairman, it is a little difficult for me to address the question as far as multiple lines of insurance. I principally deal in the property/casualty arena, and I am very, very 

supportive of that, of an optional Federal charter, and also for the 

reinsurance and surplus lines reform. It is, again, extremely burdensome for us, and we are very supportive. 

Mr. MINKLER. Mr. Chairman, while there are certainly differences between the property and casualty side of the aisle and 

the life side of the aisle, our position on regulatory intervention at 

the Federal level is just that: just targeted. There are certain lines 

that obviously need immediate attention. Flood insurance comes to 

mind. 

Chairman DODD. Right. 

Mr. MINKLER. That needs attention post haste. 

Chairman DODD. We are going to deal with, by the way, Senator 

Shelby—we have passed it out of here. We need to work out the 

differences with the House. My hope is we are going to get that 

done. But we are going to get it done, in fact, in my view, before 

we adjourn. 

Mr. MINKLER. Excellent. Excellent. But as far as a distinction between lines of business for the type of reform we are talking about, 

yes, there is a difference between life and P&C, but our overall proposal is that a Federal regulator is not going to solve the issues 

that are involved in the differences between the lines of business. 

Chairman DODD. Frank, your thoughts. 

Mr. NUTTER. Very briefly, Mr. Chairman. We certainly have endorsed an integrated approach as is contained in the optional Federal charter legislation. However, I think the fact that the excess 

surplus lines and reinsurance bill passed unanimously in the 

jbell on DSKDVH8Z91PROD with HEARING

43 

House twice and is being actively considered here does suggest that 

at least those two lines of insurance, as distinguishable from the 

consumer-based issues that you often deal with, says a lot about 

the value of moving on that legislation. 

Mr. BOUHAN. Surplus lines is exclusively really property/casualty, and we have not given a lot of thought to the life issues in 

comparison to the property/casualty business. But I want to agree 

with my colleague Mr. Nutter that I think the surplus lines reinsurance bill, the NRRA, is a bill that could move forward and solve 

some problems in those marketplaces directly today, and I would 

like to see that happen. 

Chairman DODD. Well, I thank you for that, and this has been 

very, very helpful, both panels on the surplus lines issue, because 

I had—we are running out of time around here. We have only got 

a few days left. We end up either this week or next week, and then 

back for a few days in September before we adjourn for the election, and whether we come back for a lame-duck session or not is 

completely up in the air. And my hope would be, I want to talk to 

my colleagues here as well about this, but I am concerned, obviously, that we try and bite off more than we can chew. And I know 

that people see something moving around here they want to get 

onto it if they can, put everything onto it. And I would just say 

with a roomful of people here who have a lot of interest in what 

may move forward, I would be very interested in moving something 

along the lines here that would be narrower, that may not—because once I get into a larger picture here, I could end up with just 

nothing moves. As you can see, it does not take much to stop things 

in the Senate. And with a limited amount of time left, that 101st 

Senator begins to emerge, and that is the clock. And once that 

101st Senator shows up, things get very, very difficult to move forward on. 

But I appreciate the importance of a couple of these issues that 

I think there is some consensus on, and, again, I cannot speak for 

the Committee, obviously, but I would like to do a survey of my colleagues here to find out what they are interested in moving. My 

sense is they may be willing to move on some of this that we have 

talked about here this morning. 

So I will have to get back to you all on that as I ask my staff 

to review their colleagues, the possibility of trying to get something 

done here before we adjourn in September. So I thank all of you. 

Let me also point out, we have got—it does not always happen 

here, but we have—there is a wonderful member of the staff who 

is going to be moving on. Sarah Kline today staffs the Committee 

mostly on transit issues, and she is going to be moving to another 

call of public service and working for the Washington Mass Transit—is that the WMATA, is that how you pronounce it? Metro. And 

the transit riders of the D.C. metropolitan area are going to be advanced substantially when Sarah moves over here. But for 9 years 

she has served on this Committee and done just a remarkable job 

for all of us—the SAFETEA Act, the Terrorism Risk Insurance, National Transit System Security Act, the recent housing bill passed 

on Sunday. It is not an overstatement at all. People do not often 

get the credit here. There are people who sit behind the dais here 

and who most of you probably never get to know and wonder who 

jbell on DSKDVH8Z91PROD with HEARING

44 

they are. But one of them is named Sarah Kline, and America is 

a safer and a better place because of her. We thank you. 

[Applause.] 

Chairman DODD. The Committee will stand adjourned. 

[Whereupon, at 12:25 p.m., the hearing was adjourned.] 

[Prepared statements, responses to written questions, and additional material supplied for the record follow:] 

jbell on DSKDVH8Z91PROD with HEARING

45 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 123 here 50411A.416
46 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 124 here 50411A.417
47 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 125 here 50411A.001
48 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 126 here 50411A.002
49 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 127 here 50411A.003
50 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 128 here 50411A.004
51 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 129 here 50411A.005
52 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 130 here 50411A.006
53 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 131 here 50411A.007
54 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 132 here 50411A.008
55 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 133 here 50411A.009
56 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 134 here 50411A.010
57 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 135 here 50411A.011
58 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 136 here 50411A.012
59 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 137 here 50411A.013
60 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 138 here 50411A.014
61 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 139 here 50411A.015
62 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 140 here 50411A.016
63 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 141 here 50411A.017
64 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 142 here 50411A.018
65 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 143 here 50411A.019
66 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 144 here 50411A.020
67 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 145 here 50411A.021
68 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 146 here 50411A.022
69 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 147 here 50411A.023
70 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 148 here 50411A.024
71 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 149 here 50411A.025
72 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 150 here 50411A.026
73 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 151 here 50411A.027
74 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 152 here 50411A.028
75 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 153 here 50411A.029
76 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 154 here 50411A.030
77 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 155 here 50411A.031
78 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 156 here 50411A.032
79 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 157 here 50411A.033
80 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 158 here 50411A.034
81 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 159 here 50411A.035
82 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 160 here 50411A.036
83 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 161 here 50411A.037
84 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 162 here 50411A.038
85 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 163 here 50411A.039
86 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 164 here 50411A.040
87 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 165 here 50411A.041
88 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 166 here 50411A.042
89 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 167 here 50411A.043
90 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 168 here 50411A.044
91 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 169 here 50411A.045
92 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 170 here 50411A.046
93 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 171 here 50411A.047
94 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 172 here 50411A.048
95 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 173 here 50411A.049
96 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 174 here 50411A.050
97 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 175 here 50411A.051
98 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 176 here 50411A.052
99 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 177 here 50411A.053
100 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 178 here 50411A.054
101 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 179 here 50411A.055
102 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 180 here 50411A.056
103 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 181 here 50411A.057
104 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 182 here 50411A.058
105 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 183 here 50411A.059
106 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 184 here 50411A.060
107 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 185 here 50411A.061
108 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 186 here 50411A.062
109 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 187 here 50411A.063
110 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 188 here 50411A.064
111 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 189 here 50411A.065
112 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 190 here 50411A.066
113 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 191 here 50411A.067
114 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 192 here 50411A.068
115 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 193 here 50411A.069
116 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 194 here 50411A.070
117 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 195 here 50411A.071
118 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 196 here 50411A.072
119 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 197 here 50411A.073
120 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 198 here 50411A.074
121 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 199 here 50411A.075
122 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 200 here 50411A.076
123 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 201 here 50411A.077
124 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 202 here 50411A.078
125 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 203 here 50411A.079
126 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 204 here 50411A.080
127 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 205 here 50411A.081
128 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 206 here 50411A.082
129 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 207 here 50411A.083
130 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 208 here 50411A.084
131 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 209 here 50411A.085
132 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 210 here 50411A.086
133 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 211 here 50411A.087
134 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 212 here 50411A.088
135 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 213 here 50411A.089
136 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 214 here 50411A.090
137 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 215 here 50411A.091
138 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 216 here 50411A.092
139 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 217 here 50411A.093
140 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 218 here 50411A.094
141 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 219 here 50411A.095
142 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 220 here 50411A.096
143 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 221 here 50411A.097
144 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 222 here 50411A.098
145 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 223 here 50411A.099
146 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 224 here 50411A.100
147 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 225 here 50411A.101
148 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 226 here 50411A.102
149 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 227 here 50411A.103
150 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 228 here 50411A.104
151 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 229 here 50411A.105
152 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 230 here 50411A.106
153 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 231 here 50411A.107
154 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 232 here 50411A.108
155 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 233 here 50411A.109
156 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 234 here 50411A.110
157 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 235 here 50411A.111
158 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 236 here 50411A.112
159 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 237 here 50411A.113
160 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 238 here 50411A.114
161 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 239 here 50411A.115
162 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 240 here 50411A.116
163 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 241 here 50411A.117
164 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 242 here 50411A.118
165 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 243 here 50411A.119
166 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 244 here 50411A.120
167 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 245 here 50411A.121
168 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 246 here 50411A.122
169 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 247 here 50411A.123
170 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 248 here 50411A.124
171 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 249 here 50411A.125
172 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 250 here 50411A.126
173 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 251 here 50411A.127
174 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 252 here 50411A.128
175 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 253 here 50411A.129
176 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 254 here 50411A.130
177 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 255 here 50411A.131
178 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 256 here 50411A.132
179 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 257 here 50411A.133
180 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 258 here 50411A.134
181 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 259 here 50411A.135
182 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 260 here 50411A.136
183 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 261 here 50411A.137
184 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 262 here 50411A.138
185 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 263 here 50411A.139
186 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 264 here 50411A.140
187 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 265 here 50411A.141
188 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 266 here 50411A.142
189 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 267 here 50411A.143
190 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 268 here 50411A.144
191 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 269 here 50411A.145
192 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 270 here 50411A.146
193 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 271 here 50411A.147
194 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 272 here 50411A.148
195 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 273 here 50411A.149
196 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 274 here 50411A.150
197 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 275 here 50411A.151
198 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 276 here 50411A.152
199 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 277 here 50411A.153
200 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 278 here 50411A.154
201 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 279 here 50411A.155
202 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 280 here 50411A.156
203 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 281 here 50411A.157
204 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 282 here 50411A.158
205 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 283 here 50411A.159
206 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 284 here 50411A.160
207 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 285 here 50411A.161
208 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 286 here 50411A.162
209 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 287 here 50411A.163
210 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 288 here 50411A.164
211 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 289 here 50411A.165
212 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 290 here 50411A.166
213 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 291 here 50411A.167
214 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 292 here 50411A.168
215 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 293 here 50411A.169
216 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 294 here 50411A.170
217 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 295 here 50411A.171
218 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 296 here 50411A.172
219 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 297 here 50411A.173
220 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 298 here 50411A.174
221 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 299 here 50411A.175
222 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 300 here 50411A.176
223 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 301 here 50411A.177
224 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 302 here 50411A.178
225 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 303 here 50411A.179
226 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 304 here 50411A.180
227 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 305 here 50411A.181
228 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 306 here 50411A.182
229 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 307 here 50411A.183
230 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 308 here 50411A.184
231 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 309 here 50411A.185
232 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 310 here 50411A.186
233 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 311 here 50411A.187
234 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 312 here 50411A.188
235 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 313 here 50411A.189
236 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 314 here 50411A.190
237 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 315 here 50411A.191
238 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 316 here 50411A.192
239 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 317 here 50411A.193
240 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 318 here 50411A.194
241 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 319 here 50411A.195
242 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 320 here 50411A.196
243 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 321 here 50411A.197
244 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 322 here 50411A.198
245 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 323 here 50411A.199
246 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 324 here 50411A.200
247 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 325 here 50411A.201
248 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 326 here 50411A.202
249 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 327 here 50411A.203
250 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 328 here 50411A.204
251 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 329 here 50411A.205
252 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 330 here 50411A.206
253 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 331 here 50411A.207
254 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 332 here 50411A.208
255 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 333 here 50411A.209
256 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 334 here 50411A.210
257 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 335 here 50411A.211
258 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 336 here 50411A.212
259 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 337 here 50411A.213
260 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 338 here 50411A.214
261 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 339 here 50411A.215
262 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 340 here 50411A.216
263 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 341 here 50411A.217
264 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 342 here 50411A.218
265 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 343 here 50411A.219
266 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 344 here 50411A.220
267 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 345 here 50411A.221
268 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 346 here 50411A.222
269 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 347 here 50411A.223
270 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 348 here 50411A.224
271 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 349 here 50411A.225
272 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 350 here 50411A.226
273 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 351 here 50411A.227
274 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 352 here 50411A.228
275 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 353 here 50411A.229
276 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 354 here 50411A.230
277 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 355 here 50411A.231
278 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 356 here 50411A.232
279 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 357 here 50411A.233
280 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 358 here 50411A.234
281 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 359 here 50411A.235
282 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 360 here 50411A.236
283 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 361 here 50411A.237
284 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 362 here 50411A.238
285 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 363 here 50411A.239
286 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 364 here 50411A.240
287 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 365 here 50411A.241
288 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 366 here 50411A.242
289 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 367 here 50411A.243
290 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 368 here 50411A.244
291 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 369 here 50411A.245
292 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 370 here 50411A.246
293 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 371 here 50411A.247
294 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 372 here 50411A.248
295 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 373 here 50411A.249
296 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 374 here 50411A.250
297 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 375 here 50411A.251
298 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 376 here 50411A.252
299 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 377 here 50411A.253
300 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 378 here 50411A.254
301 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 379 here 50411A.255
302 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 380 here 50411A.256
303 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 381 here 50411A.257
304 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 382 here 50411A.258
305 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 383 here 50411A.259
306 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 384 here 50411A.260
307 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 385 here 50411A.261
308 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 386 here 50411A.262
309 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 387 here 50411A.263
310 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 388 here 50411A.264
311 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 389 here 50411A.265
312 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 390 here 50411A.266
313 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 391 here 50411A.267
314 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 392 here 50411A.268
315 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 393 here 50411A.269
316 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 394 here 50411A.270
317 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 395 here 50411A.271
318 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 396 here 50411A.272
319 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 397 here 50411A.273
320 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 398 here 50411A.274
321 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 399 here 50411A.275
322 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 400 here 50411A.276
323 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 401 here 50411A.277
324 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 402 here 50411A.278
325 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 403 here 50411A.279
326 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 404 here 50411A.280
327 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 405 here 50411A.281
328 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY 

FROM GEORGE A. STEADMAN 

Q.1. Does the Council favor Congress moving forward with the 

NARAB II legislation before it adopts more comprehensive reforms, 

such as the establishment of an optional federal charter? 

A.1. Yes, the Council does support the immediate enactment of the 

proposed NARAB II legislation. The Council also supports the enactment of a comprehensive optional federal charter but we do not 

believe that the two efforts are duplicative or mutually exclusive in 

any way. The NARAB II legislation would establish a national licensure clearinghouse for the licensing of insurance agents and 

brokers by the states. Agents and brokers licensed through the 

NARAB II facility would still be required to obtain a license from 

each state in which they would like to engage in the business of 

insurance and they would still be required to comply with all of 

those states’ post-licensure requirements. 

In contrast, under the optional federal chartering proposals that 

have been introduced to date, a comprehensive federal regulator 

would be established and would function as the sole regulator for 

the carriers, agencies, agents and brokers that opt to be chartered 

at the federal level. Individuals and firms licensed by the federal 

regulator would be subject only to the rules and requirements established by the federal regulator and would be completely exempt 

from oversight by the state insurance regulators. This model is 

based closely on the national bank and federal thrift regulatory regimes. 

The Council’s expectation is that some of its members undoubtedly will opt for the federal regime and some will opt to remain 

state regulated. NARAB II is a broadly supported, simple piece of 

legislation that would resolve a current problem that would remain 

a problem even after the enactment of optional federal chartering 

legislation. All of the insurance producer trade associations as well 

as the National Association of Insurance Commissioners have 

voiced their support for NARAB II. In contrast, the optional federal 

chartering legislative debate is just getting started and there are 

numerous issues that must be resolved and overcome before that 

legislation will be enacted. The Council can identify no benefit of 

delaying action on NARAB II until the optional federal chartering 

issues can be resolved. 

Q.2a. How would the Surplus Lines and Reinsurance legislation affect the amount of premium taxes States presently collect on surplus lines transactions? 

Q.2b. Can you give assurances that no State would see a reduction 

in the amount of premium taxes they collect if the legislation is enacted? 

A.2a. It is very difficult to determine with any specificity how the 

legislation ultimately would affect the premium taxes collected by 

any single State. The legislation would prohibit any State except 

the ‘‘home state’’ of the insured from requiring the payment of premium taxes on surplus lines products. The legislation also, however, is designed to encourage the States to enter into a premium 

tax sharing compact under which they each would share the premium taxes on a pro rata basis based on the premium exposure in 

jbell on DSKDVH8Z91PROD with HEARING

329 

each State. If all of the States participated in the sharing compact, 

it appears inevitable that surplus lines premium tax collection 

would rise in the aggregate. 

Two factors explain this. First, it does not appear that States 

currently are collecting all of the surplus lines premium taxes to 

which they may be entitled. Many states impose the premium tax 

payment obligation directly on the insureds but the morass of complicated and overlapping tax payment obligations sometimes elude 

insureds and the insureds may then opt to not comply. We have attached a study conducted by Mackin & Company for the Excess 

Line Association of New York that purports to demonstrate that 

surplus lines premium taxes would likely rise overall under the 

proposed tax sharing system because of the current level of noncompliance. 

Second, if the transactional costs of accessing the surplus lines 

markets are reduced, then insureds—and their insurance brokers— 

should be more likely to want to access those markets. Much of this 

expanded capacity most likely would be used to replace self-insurance and off-shore coverage mechanisms, neither of which generate 

any premium tax revenue at all for the States. 

A.2b. If a State would opt to not participate in the premium tax 

sharing mechanism, it is difficult to estimate the effect that it 

would have on its premium tax collections. That State would be 

permitted to collect 100 percent of the surplus lines premium taxes 

for insureds that are based in that State but that State would not 

be able to collect any tax related to insured exposures from insureds located elsewhere. No one really knows how any individual 

state would be affected by the imposition of this rule both because 

it is difficult to determine—today—which insureds would be subject 

to the tax payment obligation and how that would compare to current collections and because of the non-compliance issue noted 

above. We also must note, as an aside, that a rule dictating that 

only the ‘‘home state’’ of the insured may impose a surplus lines 

premium tax actually is the constitutionally mandated rule announced by the Supreme Court over 40 years ago, and the primary 

function of the legislation at some level is to ensure that this constitutional mandate actually is followed. Several States also use 

this rule now, which leads to the conflicts and duplicative tax payment obligations for insureds that also have covered exposures in 

States that use a pro rata approach. 

jbell on DSKDVH8Z91PROD with HEARING

330 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 409 here 50411A.282
331 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 410 here 50411A.283
332 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 411 here 50411A.284
333 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 412 here 50411A.285
334 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 413 here 50411A.286
335 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 414 here 50411A.287
336 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 415 here 50411A.288
337 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 416 here 50411A.289
338 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 417 here 50411A.290
339 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 418 here 50411A.291
340 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 419 here 50411A.292
341 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 420 here 50411A.293
342 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 421 here 50411A.294
343 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 422 here 50411A.295
344 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 423 here 50411A.296
345 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 424 here 50411A.297
346 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 425 here 50411A.298
347 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 426 here 50411A.299
348 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 427 here 50411A.300
349 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 428 here 50411A.301
350 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 429 here 50411A.302
351 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 430 here 50411A.303
352 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 431 here 50411A.304
353 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 432 here 50411A.305
354 

jbell on DSKDVH8Z91PROD with HEARING


Insert offset folio 433 here 50411A.306
355 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY 

FROM THOMAS MINKLER 

Q.1. Mr. Minkler, in your testimony you discussed at length the 

benefits of state regulation and your opposition to an optional federal charter. Yet, you support the enactment of Federal legislation 

to establish a national system for agent licensing. 

Since you support state regulation, why not have the States, 

rather than the Federal government, address the problems you 

identified with agent licensing? 

A.1. IIABA supports federal legislation, the NARAB Reform Act, to 

provide for national licensing reciprocity and not a national licensing system. As I mentioned in my testimony, while IIABA continues to support the state system, we do not believe that the 

states will be able to resolve all of their problems on their own. 

Therefore, we believe that focused congressional action is necessary 

to help reform the state regulatory system, but only on an as-needed basis to overcome the structural impediments to reform at the 

state level. The NARAB Reform Act is such legislation, because it 

improves the state-based system of insurance regulation by providing licensing reciprocity through a board of state commissioners 

and industry representatives instead of creating a massive new federal bureaucracy. 

Q.2. Do you believe that the NAIC provides an effective mechanism 

for streamlining and harmonizing state regulation? 

A.2. We believe that the NAIC is effective in moving the states towards reform and helping to streamline the system. However, 

while the NAIC can help encourage harmonization of state laws, it 

cannot compel all states to adopt such laws. We therefore believe 

that there are areas where the state-based system needs to be 

streamlined and modernized through the use of targeted federal 

legislation such as the NARAB Reform Act and the Nonadmitted 

and Reinsurance Reform Act. 

RESPONSE TO WRITTEN QUESTIONS OF SENATOR SHELBY 

FROM RICHARD BOUHAN 

Q.1. Will you please explain why you believe Federal legislation is 

needed to streamline the regulation of surplus lines insurance? 

A.1. Federal legislation is the only way to ensure that uniform 

rules and procedures are created and implemented among all the 

states to overcome and rationalize the current inconsistencies and 

conflicts in state regulatory requirements in the placement and 

taxation of surplus lines business, particularly when the surplus 

lines transaction involves multi-state exposures. The inconsistencies and conflicts in state laws and regulations governing surplus 

lines transactions are a result of these laws being ‘‘state-centric’’ 

(unique to each state) and are state specific to a much greater extent than the rules governing the admitted or standard market 

transactions. 

While an interstate compact (or some type of interstate agreement) has been offered as a vehicle to solve these inefficiencies and 

conflicts in order to streamline surplus lines regulation, these proposed solutions require that each state, individually, agree and join 

jbell on DSKDVH8Z91PROD with HEARING

356 

the accord. Such a ‘‘patchwork’’ solution would still require the surplus lines industry to maintain an infrastructure to operate under 

the current system of inconsistent, conflicting and inefficient rules 

and regulations, as well as those under the new agreement. Federal legislation is the only method by which these problems can be 

solved immediately and universally among the states. 

NAPSLO is aware that the Committee is considering legislation 

to broadly or ‘‘globally’’ reform the current insurance regulatory 

system. But such legislation, if enacted, would not eliminate the 

state based system of insurers and insurance regulation. Surplus 

lines is part of the state based system. The reform enacted through 

S. 929 would continue and benefit the surplus lines market and 

those buyers that use the surplus lines market even after a broad 

insurance regulatory reform is enacted. 

Q.2. Why should we not leave it to the NAIC to accomplish this 

task? 

A.2. The simple answer is that the NAIC cannot solve the problem. 

It neither has the history nor is it, as a trade association representing state insurance regulators, structured to do so. Moreover, 

the NAIC has no regulatory or enforcement authority that would 

allow it to accomplish this task. 

The NAIC has been aware of the premium tax allocation and remittance problems regarding surplus lines for decades and various 

NAIC committees, sub-groups and task forces have addressed these 

problems over time. Yet, none of this effort has resulted in any solution to the problem. 

Even if a solution had been forthcoming from the NAIC, it is 

doubtful that one would have been enacted in the states. The history of the enactment of NAIC model laws in the states, much less 

enacted by all states, is dismal. Few of the over 260 NAIC model 

bills have been adopted in all fifty states. In fact, the track record 

of the enactment of NAIC model laws has been so poor that the 

last year the NAIC announced a moratorium on working on model 

bills and compacts since so few were actually passed. 

As was noted at the July 29, 2009 hearing, the NAIC is generally 

supportive of S. 929/H.R. 1065 and has indicated that the surplus 

lines tax question, in particular, is an area where Federal legislation could be helpful. In their August 2007 issue paper on this legislation, the NAIC stated: Conflicting state oversight and licensing 

rules governing surplus lines insurance and surplus lines brokers, 

particularly for premium tax collection and allocation, should be resolved through a state compact or through federal legislation. Subsequently, the NAIC abandoned work on developing model state 

compacts. 

Q.3. Mr. Bouhan, how do you respond to the concerns Mr. Plunkett 

raised in his testimony about the Surplus Lines and Reinsurance 

bill? Please specifically address Mr. Plunket’s concern that the bill 

would exempt certain personal lines of insurance from state consumer protection laws. 

A.3. S. 929 does not impact any consumer protections laws or regulations. The legislation only affects the surplus lines placement and 

tax payment requirements on multi-state risks by directing the 

placing broker to comply with the placement and tax remittance 

jbell on DSKDVH8Z91PROD with HEARING

357 

laws of only the insured’s ‘‘Home State.’’ This eliminates duplicative, overlapping and costly multiple compliance and remittance 

procedures on multi-state surplus lines transactions. No other 

laws, in any state including the ‘‘Home State’’ of the insured, are 

affected by the legislation. Each state’s consumer protection laws 

remain in effect. 

While the above addresses the impact S. 929 would have on consumer protections related to surplus lines insurance purchases, including personal lines transactions, the relationship between personal lines—personal auto and homeowners—and the surplus lines 

market that Mr. Plunkett’s question raises needs to be addressed. 

To the extent that homeowners coverage and dwelling policies 

are found in the surplus lines market, they are written on structures located in earthquake and hurricane areas that the standard 

companies don’t want to write. In recent years that segment of the 

surplus lines market, particularly in states with coastal exposures, 

has increased as the incidence of natural disasters has grown. 

Based upon recent surplus lines stamping office statistics, 

NASPLO estimates that somewhere between 2.5 and 3.0 percent of 

the almost $40 billion dollars in annual surplus lines premium 

comes from personal lines products. However, personal lines transactions are overwhelmingly ‘‘single state’’ in nature and since S. 

929 is directed at multi-state surplus lines transactions, the legislation would have minimal impact on the limited number of personal 

lines transactions written in the surplus lines market. 

jbell on DSKDVH8Z91PROD with HEARING

358 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 437 here 50411A.307
359 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 438 here 50411A.308
360 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 439 here 50411A.309
361 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 440 here 50411A.310
362 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 441 here 50411A.311
363 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 442 here 50411A.312
364 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 443 here 50411A.313
365 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 444 here 50411A.314
366 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 445 here 50411A.315
367 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 446 here 50411A.316
368 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 447 here 50411A.317
369 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 448 here 50411A.318
370 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 449 here 50411A.319
371 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 450 here 50411A.320
372 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 451 here 50411A.321
373 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 452 here 50411A.322
374 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 453 here 50411A.323
375 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 454 here 50411A.324
376 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 455 here 50411A.325
377 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 456 here 50411A.326
378 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 457 here 50411A.327
379 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 458 here 50411A.328
380 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 459 here 50411A.329
381 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 460 here 50411A.330
382 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 461 here 50411A.331
383 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 462 here 50411A.332
384 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 463 here 50411A.333
385 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 464 here 50411A.334
386 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 465 here 50411A.335
387 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 466 here 50411A.336
388 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 467 here 50411A.337
389 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 468 here 50411A.338
390 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 469 here 50411A.339
391 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 470 here 50411A.340
392 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 471 here 50411A.341
393 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 472 here 50411A.342
394 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 473 here 50411A.343
395 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 474 here 50411A.344
396 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 475 here 50411A.345
397 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 476 here 50411A.346
398 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 477 here 50411A.347
399 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 478 here 50411A.348
400 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 479 here 50411A.349
401 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 480 here 50411A.350
402 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 481 here 50411A.351
403 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 482 here 50411A.352
404 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 483 here 50411A.353
405 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 484 here 50411A.354
406 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 485 here 50411A.355
407 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 486 here 50411A.356
408 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 487 here 50411A.357
409 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 488 here 50411A.358
410 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 489 here 50411A.359
411 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 490 here 50411A.360
412 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 491 here 50411A.361
413 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 492 here 50411A.362
414 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 493 here 50411A.363
415 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 494 here 50411A.364
416 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 495 here 50411A.365
417 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 496 here 50411A.366
418 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 497 here 50411A.367
419 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 498 here 50411A.368
420 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 499 here 50411A.369
421 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 500 here 50411A.370
422 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 501 here 50411A.371
423 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 502 here 50411A.372
424 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 503 here 50411A.373
425 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 504 here 50411A.374
426 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 505 here 50411A.375
427 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 506 here 50411A.376
428 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 507 here 50411A.377
429 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 508 here 50411A.378
430 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 509 here 50411A.379
431 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 510 here 50411A.380
432 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 511 here 50411A.381
433 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 512 here 50411A.382
434 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 513 here 50411A.383
435 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 514 here 50411A.384
436 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 515 here 50411A.385
437 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 516 here 50411A.386
438 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 517 here 50411A.387
439 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 518 here 50411A.388
440 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 519 here 50411A.389
441 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 520 here 50411A.390
442 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 521 here 50411A.391
443 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 522 here 50411A.392
444 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 523 here 50411A.393
445 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 524 here 50411A.394
446 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 525 here 50411A.395
447 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 526 here 50411A.396
448 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 527 here 50411A.397
449 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 528 here 50411A.398
450 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 529 here 50411A.399
451 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 530 here 50411A.400
452 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 531 here 50411A.401
453 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 532 here 50411A.402
454 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 533 here 50411A.403
455 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 534 here 50411A.404
456 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 535 here 50411A.405
457 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 536 here 50411A.406
458 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 537 here 50411A.407
459 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 538 here 50411A.408
460 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 539 here 50411A.409
461 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 540 here 50411A.410
462 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 541 here 50411A.411
463 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 542 here 50411A.412
464 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 543 here 50411A.413
465 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 544 here 50411A.414
466 

jbell on DSKDVH8Z91PROD with HEARING


Insert graphic folio 545/700 here 50411A.415