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INSURANCE OVERSIGHT AND 

LEGISLATIVE PROPOSALS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

INSURANCE, HOUSING AND 

COMMUNITY OPPORTUNITY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

NOVEMBER 16, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–84 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

SUBCOMMITTEE ON INSURANCE, HOUSING AND COMMUNITY OPPORTUNITY

JUDY BIGGERT, Illinois, Chairman 

ROBERT HURT, Virginia, Vice Chairman 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

PATRICK T. MCHENRY, North Carolina 

LYNN A. WESTMORELAND, Georgia 

SEAN P. DUFFY, Wisconsin 

ROBERT J. DOLD, Illinois 

STEVE STIVERS, Ohio 

LUIS V. GUTIERREZ, Illinois, Ranking 

Member 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

EMANUEL CLEAVER, Missouri 

WM. LACY CLAY, Missouri 

MELVIN L. WATT, North Carolina 

BRAD SHERMAN, California 

MICHAEL E. CAPUANO, Massachusetts 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

November 16, 2011 ........................................................................................... 1 

Appendix: 

November 16, 2011 ........................................................................................... 29 

WITNESSES 

WEDNESDAY, NOVEMBER 16, 2011 

Lanza, Michael H., Executive Vice President and General Counsel, Selective 

Insurance Group, Inc., on behalf of the Property Casualty Insurers Association of America (PCI) ........................................................................................... 10 

Monroe, Steven M., Chief Compliance Officer, U.S. & Canada, for Marsh, 

Inc., on behalf of the Council of Insurance Agents & Brokers ......................... 11 

Schwarcz, Daniel, Associate Professor, University of Minnesota Law School .... 13 

Torti, Joseph III, Deputy Director and Superintendent of Insurance and 

Banking, Rhode Island Department of Business Regulation, on behalf of 

the National Association of Insurance Commissioners (NAIC) ........................ 3 

APPENDIX 

Prepared statements: 

Lanza, Michael H. ............................................................................................ 30 

Monroe, Steven M. ............................................................................................ 37 

Schwarcz, Daniel .............................................................................................. 53 

Torti, Joseph III ................................................................................................ 63 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Biggert, Hon. Judy: 

Written statement of the Independent Insurance Agents & Brokers of 

America .......................................................................................................... 89 

Letter from the National Association of Mutual Insurance Companies ...... 91 

Letter from the National Association of Professional Surplus Lines Offices, Ltd. ....................................................................................................... 94 

Letter from Nationwide Mutual Insurance Company ................................... 95 

Written statement of the National Conference of Insurance Guaranty 

Funds ............................................................................................................. 96 

Letter from the National Conference of Insurance Legislators .................... 103 

Written statement of the National Organization of Life and Health Insurance Guaranty Association ........................................................................... 105 

Letter from the Risk and Insurance Management Society, Inc. ................... 123 

Dold, Hon. Robert: 

Written responses to questions submitted to Joseph Torti ........................... 125 

(1) 

INSURANCE OVERSIGHT AND 

LEGISLATIVE PROPOSALS 

Wednesday, November 16, 2011 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON INSURANCE, HOUSING

AND COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:04 a.m., in room 

2128, Rayburn House Office Building, Hon. Judy Biggert [chairwoman of the subcommittee] presiding. 

Members present: Representatives Biggert, Hurt, McHenry, 

Westmoreland, Duffy, Stivers; Velazquez, Sherman, and Capuano. 

Also present: Representatives Green and Moore. 

Chairwoman BIGGERT. The Subcommittee on Insurance, Housing 

and Community Opportunity will come to order. I hope that we will 

have some more Members. Maybe it is a rainy day, and it is taking 

some time to get here. Without objection, all Members’ opening 

statements will be made a part of the record, and I will begin. 

Good morning, everyone, and welcome to this hearing. This is the 

third in a series. I welcome today’s witnesses. Today, the subcommittee will examine insurance regulation and three discussion 

draft legislative proposals. These draft proposals amend provisions 

in the Dodd-Frank Act in Titles I, II, and V, and specifically address: one, the authority of Federal entities to collect data from insurers; two, the FDIC’s Orderly Liquidation Authority (OLA) as it 

relates to insurance companies; and three, the Federal Reserve’s 

authority to potentially subject some insurers to heightened prudential standards. 

Regulatory uncertainty created by the Dodd-Frank Act has unnecessarily extended into the U.S. insurance market in ways that 

will raise costs for consumers, harm businesses, and weaken job 

growth. I say ‘‘unnecessarily’’ because as I have said many times 

before, for over 150 years the State-based system of insurance regulation has worked and endured, even during turbulent economic 

times. It has allowed the U.S. insurance industry to become a 

growing and vibrant source of financial security for millions of 

Americans. It has allowed one sector of our economy to provide 2.3 

million wage and salary jobs. The McCarran-Ferguson Act of 1945 

maintained the States’ regulatory authority over insurance unless 

a Federal law expressly provides otherwise, such as flood and terrorism insurance. 

Unfortunately, certain provisions of the Dodd-Frank Act have intentionally or unintentionally upset this well-functioning, proven 

2 

system of regulation. This subcommittee has heard from many witnesses and stakeholders to that end. Insurers have said that they 

are not expanding their companies and creating jobs, consumer 

costs may rise, and they may become less competitive abroad. 

And finally, I would like to express my sincere disappointment 

that representatives from the Federal Reserve and the FDIC decided not to testify at today’s hearing, which is addressing significant provisions of the Dodd-Frank Act that their agencies are primarily responsible for implementing. 

With that, I welcome input from all members of the committee 

on these discussion drafts, and I would yield to someone on the 

other side, but they are not here. 

Mr. Westmoreland, would you like to give your opening statement now? You are recognized for 2 minutes. 

Mr. WESTMORELAND. Thank you, Chairwoman Biggert, for holding this hearing. 

Since Dodd-Frank passed, all we have seen is the uncertainty 

and the harm this law has brought to working Americans and 

small businesses. The proposals before the committee today are 

much needed to help insurance companies get out from under 

Uncle Sam and allow States to continue their long-standing insurance regulation. 

Like the chairwoman, I, too, have serious concerns that the FDIC 

and the Federal Reserve refused to testify at today’s hearing. When 

Congress asks an agency to testify, I think they should come, period. So my question to the FDIC and the Federal Reserve is, what 

are you hiding or what are you ashamed to testify to? 

I urge the chairwoman to hold another hearing and mandate the 

FDIC and the Federal Reserve to attend so that we can find out 

what they have to say about this issue, and with that, Madam 

Chairwoman, I yield back. 

Chairwoman BIGGERT. The gentleman yields back, and we will 

take that under advisement. Thank you. The gentleman from Virginia, the vice chair, is recognized for 1 minute. 

Mr. HURT. Thank you. Thank you, Madam Chairwoman. I want 

to thank you for your leadership on issues relating to the business 

of insurance. 

Today marks the third in a series of hearings that this subcommittee has held to assess the impact of the Dodd-Frank Act on 

insurers. As we have seen, Dodd-Frank contains a number of provisions that impose unnecessary duplicative regulatory burdens on 

insurers that have the potential to harm both the industry and consumers. We must be mindful of the cumulative effect of adding new 

Federal regulatory requirements to existing State insurance regulatory schemes. Witnesses at our previous hearings have demonstrated that excessive and unnecessary regulation of insurance 

will only restrict consumer choice, inhibit the growth of free and 

open insurance markets, and drive up costs on consumers in my 

district, Virginia’s Fifth District, and across the country. 

The discussion drafts we are examining today take steps to alleviate these regulatory burdens by proposing commonsense reforms that reduce duplication without sacrificing consumer protection or increasing systemic risk. 

3 

Again, I want to thank the Chair for holding this hearing. I look 

forward to our witnesses’ perspectives on the draft legislation, and 

I yield back my time. 

Chairwoman BIGGERT. Thank you. The gentleman from Texas, 

Mr. Green, do you have an opening statement? 

Mr. GREEN. Madam Chairwoman, thank you so very much. I will 

pass at this time, and I look forward to hearing the testimony. 

Thank you. 

Chairwoman BIGGERT. With that, we have two panels today. For 

our first panel, we are happy to have Mr. Joseph Torti, deputy director and superintendent of insurance and banking, Division of Insurance, Department of Business Regulation, State of Rhode Island, on behalf of the NAIC, the National Association of Insurance 

Commissioners. Thank you so much for being here. 

Without objection, your written statement will be made a part of 

the record, and you are now recognized for a 5-minute summary of 

your testimony. 

STATEMENT OF JOSEPH TORTI III, DEPUTY DIRECTOR AND 

SUPERINTENDENT OF INSURANCE AND BANKING, RHODE 

ISLAND DEPARTMENT OF BUSINESS REGULATION, ON BEHALF OF THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC) 

Mr. TORTI. Thank you for the opportunity to testify today. My 

name is Joseph Torti, and I am superintendent of insurance for 

Rhode Island. I present this testimony on behalf of the NAIC. To 

be clear, the NAIC has no position on the Dodd-Frank Act or any 

current legislative proposals to modify it. 

Today, I will cover the unique characteristics of insurance, an 

overview of the key aspects of insurance regulation, and the NAIC’s 

efforts in working with Federal agencies as they implement DoddFrank. 

Insurance products are fundamentally different from other financial products. The very nature of insurance significantly reduces 

the potential of a run-on-the-bank scenario. Importantly, insurance 

products do not transform short-term liabilities into longer term assets. A key reason many other financial firms suffered during the 

financial crisis was that the duration of their assets and liabilities 

were not matched. 

The insurance regulatory framework’s fundamental tenet is to 

protect an insurer’s ability to pay policyholder claims. Regulators 

have broad authority to identify and address issues before they become a threat to solvency. The foundation of this system is the detailed and transparent reporting requirements. Insurers are required to prepare comprehensive financial statements using the 

NAIC’s statutory accounting principles, or SAP. SAP utilizes the 

framework established by GAAP, but unlike GAAP, which is primarily designed to provide key information to investors of public 

companies, SAP is designed to assist regulators in monitoring the 

solvency of an insurer. 

Financial statements are filed with the NAIC on a quarterly and 

an annual basis. The NAIC serves as the regulators’ centralized repository for this data, and this capability has been cited by the IMF 

as world leading. We utilize this information as part of our intenVerDate Nov 24 2008 16:27 May 31, 2012 Jkt 072625 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\72625.TXT TERRIE
4 

sive financial analysis. The NAIC also compiles the information to 

advise us of trends in the insurance sector and the impact of external events. The information is also used in our risk-based capital 

framework. This framework requires an insurer to hold at least a 

minimum amount of capital based on the risks on its balance sheet. 

The framework also includes authority for successive levels of regulatory intervention. 

In the unlikely event that an insurer becomes troubled, State receivership laws provide regulators authorities to prevent insolvencies and to provide protection to policyholders. In 2004, we utilized 

our broad authority in Rhode Island to place a troubled insurer 

into rehabilitation, preventing its insolvency while ensuring full 

payment to policyholders. 

In an insolvency, State laws give policyholders priority over most 

creditors. In cases where the assets of an insurer are insufficient 

to pay claims, the States have guaranty funds to serve as a backstop for most insurance products. Together, receivership laws and 

the guarantee funds ensure that policyholders are protected and 

troubled insurance companies are resolved in an orderly manner. 

The NAIC has a long history of working closely with the Federal 

agencies, and this has continued during Dodd-Frank implementation. State insurance regulators are represented on FSOC through 

John Huff, the Missouri director of insurance. In the recently released FSOC guidance, we were pleased to see a commitment to involve regulators of any insurance companies under consideration 

early in the process. We are currently reviewing the guidance and 

will provide our comments through Director Huff. We also continue 

to encourage the FSOC to enable Director Huff to consult with us 

regarding other aspects of its work that could impact insurance. 

The NAIC has also been engaged in the implementation of the 

FDIC’s new resolution authority. We have met with the FDIC and 

commented on proposals regarding the circumstances in which the 

FDIC can take a lien on insurance company assets. We also requested that the FDIC allow for the resolution of any mutual insurance holding companies pursuant to State laws. The NAIC’s coordination with the FDIC will be critical to ensuring that policyholders are protected. 

Our strong relationship with the Federal Reserve has grown 

since the passage of Dodd-Frank. Insurance regulators are meeting 

with Federal Reserve representatives to exchange information and 

to discuss how we will work together as it implements its new authorities. 

The NAIC also continues to engage directly with the FIO as it 

takes shape. FIO has a critical role to play in international matters. The NAIC will continue to serve as the voice of insurance regulators on these key issues, but the voice of the U.S. Government 

is essential, so we look forward to partnering with the FIO in demonstrating a united front whenever possible. Dodd-Frank requires 

the FIO to issue a report on insurance regulation by January 2012. 

State insurance regulation has been subject to Federal scrutiny 

many times before, focusing primarily on the perceived costs and 

redundancy of the system. Rarely have these issues been weighed 

against the strength of our system’s checks and balances that help 

the insurance sector weather the financial crisis far better than 

5 

others. We look forward to meeting directly with the FIO to encourage a balanced view as it finalizes its study. 

In conclusion, the NAIC continues to advocate that the unique 

nature of insurance and its strong system of regulation be recognized. We look forward to continuing to work with you and our fellow financial regulators. Thank you, and I look forward to your 

questions. 

[The prepared statement of Superintendent Torti can be found on 

page 63 of the appendix.] 

Chairwoman BIGGERT. Thank you so much, and with that we are 

going to move to the questions. Members will have 5 minutes each 

to ask questions, and I will begin with myself and yield myself 5 

minutes. 

Mr. Torti, during the subcommittee’s October 25th hearing with 

regard to the Federal Insurance Office (FIO) authority under the 

Dodd-Frank Act to issue a subpoena to collect data directly from 

an insurance company, FIO Director McRaith said that the possibility of actually issuing a subpoena to collect information is extremely unlikely. 

Can you envision any scenario where the FIO or the Office of Financial Research would need to issue a subpoena to collect data directly from an insurance company aside from the data that can be 

secured from State regulators, public sources, or any other entity? 

What kind of data would the FIO or the OFR need to collect? 

Mr. TORTI. What I can say about that is that we, as State regulators, collect an extensive amount of data on insurance companies. 

We have every piece of financial data that is necessary to regulate 

these companies, and I can’t really envision a scenario where the 

Federal regulators may need something regarding the financial 

condition of an insurance company that we don’t already have, and 

we are very happy to share any of that information. Anytime we 

have been requested to provide information to any of the Federal 

agencies, we have done so without hesitation. 

Chairwoman BIGGERT. Thank you. And then on page 8 of your 

written testimony, you state that regulators have requested that 

the FDIC allow for the resolution of any mutual insurance holding 

company pursuant to State insurance receivership laws as the statute is unclear in this regard. The discussion draft number 2 under 

consideration by the subcommittee today aims to provide this clarity with regard to mutual insurance holding companies. 

Do you think that the Dodd-Frank Act lacks clarity about whether they are covered by the insurance company definition for purposes of the FDIC’s Orderly Liquidation Authority? 

Mr. TORTI. We do think that the intent of the legislation is clear 

and that it is not intended that mutual insurance holding companies be subject to the resolution authority of the FDIC, and we 

have been working with the FDIC, we have had several conference 

calls with the FDIC, and we met with them as recently as early 

November, just before the recent NAIC meeting in National Harbor, Maryland. So we have worked very closely with them, and we 

are hopeful that any rule that comes out will clarify that mutual 

insurance holding companies— 

6 

Chairwoman BIGGERT. Can you elaborate on why State regulators have requested that the States resolve a failed mutual insurance holding company? 

Mr. TORTI. Right now, under the State laws regarding receivership, mutual insurance holding companies are included in the receivership estate, so the assets of the mutual insurance holding 

company are available for the policyholders and claimants of that 

insurance company in that receivership. So it is important that 

that holding company be resolved in accordance with the State insurance receivership laws in order to protect those policyholders. 

Chairwoman BIGGERT. Okay. So you would say that the States 

are better equipped and experienced to be able to resolve the matter? 

Mr. TORTI. I would say that the States are well equipped to resolve insurance company matters. 

Chairwoman BIGGERT. Okay. Then, thirdly, why can’t a bank 

model for regulation work for insurance companies? Is there a difference in the way that State insurance regulators establish leverage and risk-based capital requirements for insurance companies 

as compared to the way that the Federal bank regulators establish 

leverage and risk? 

Mr. TORTI. Banking products and insurance products are very 

different. Insurance policyholders pay a premium, and insurers 

make a promise to pay in the future. It is much different, especially in the property and casualty area, than a financial product 

that might be offered by a banking institution. The chance of a 

run-on-the-bank type scenario with an insurance entity is much 

less than with a banking entity. The liabilities and assets are appropriately matched in insurers. If a company is selling long-term 

type insurance, they match their assets with that long-term insurance. That is one of the key things that insurance companies do 

and that regulators ensure is done appropriately, especially in the 

area of life insurance. 

So, they are very different products. There is a very different regulatory standard, and we believe that we appropriately regulate insurers. 

Chairwoman BIGGERT. Thank you. My time has expired. The 

gentleman from Texas is recognized for 5 minutes. 

Mr. GREEN. Thank you, Madam Chairwoman, and I thank the 

witness for testifying. As you know, we had great difficulty with 

some of the ‘‘too-big-to-fail’’ institutions when we were going 

through the financial crisis. One such institution was AIG. It had 

financial components, but there were also many other things that 

were contained within the network that AIG had. In fact, there are 

some who contend that AIG may have been the glue that was holding everything together simply because they were so vast and so 

pervasive in the institutions that they covered. 

My question to you has to do with Orderly Liquidation Authority. 

The Orderly Liquidation Authority that we have in Dodd-Frank allows the FDIC to intervene and to do what is necessary under exigent circumstances, I would consider it exigent circumstances. I 

think what happened with AIG was under exigent circumstances. 

How would this occur differently today if we had—God forbid, and 

I would never want it—another AIG to contend with? 

7 

Mr. TORTI. I hope I understand your question. Are you saying as 

a result of the Dodd-Frank changes that have been made, what 

would be done differently? 

Mr. GREEN. How would the States respond to the FDIC handling 

exigent circumstances comparable to AIG during the financial crisis? 

Mr. TORTI. The traditional way that we would handle that type 

of thing is we try to create a wall around the insurance entity to 

protect the insurance entity and the insurance entity’s policyholders from those circumstances so that the insurance policyholders and claimants aren’t made to pay for the problems outside 

the insurance entity. That is normally the way that we protect an 

insurance entity in a receivership situation. So if there were a 

holding company issue or a significant affiliate outside of the insurance entity that had financial difficulties, we would protect the insurer from those financial difficulties through the current receivership laws that we have in all the States. 

Mr. GREEN. In essence, are you saying that you would be able 

to work within the confines of Dodd-Frank and with the FDIC so 

as to perfect an orderly liquidation? 

Mr. TORTI. We really hope we don’t end up in that situation 

again. 

Mr. GREEN. Obviously, yes, I concur. 

Mr. TORTI. But, yes, we believe we should be able to work with 

the FDIC. We are hopeful that we will be able to work with the 

FDIC. We have a very good relationship with the FDIC. The FDIC 

has acknowledged that protection of the policyholders and claimants of the insurance entity is of utmost importance to us, and we 

believe that we should be able to work with them on that type of 

circumstance. 

Mr. GREEN. Are there any technical changes to the draft we have 

that you would recommend to help to facilitate this? 

Mr. TORTI. I can’t think of any technical changes that I would 

offer to the current draft that you have, no. 

Mr. GREEN. Thank you, Madam Chairwoman. I will yield back. 

Chairwoman BIGGERT. The gentleman from Virginia, Mr. Hurt, 

is recognized for 5 minutes. 

Mr. HURT. Thank you for your testimony today. We have heard 

from the FIO Director, as you know, and certainly some of the concerns that come to my mind as we look at the defining role that 

office will play, clearly having more information is a good thing, it 

seems to me, to help the regulators have a ‘‘big picture’’ view of 

systemic risk and how that ultimately affects the taxpayer. I do 

have some concerns, though, about the proverbial ‘‘camel’s nose 

under the tent,’’ and I was wondering if you could speak to that. 

Obviously, I think of it from two standpoints. One is what is the 

worst case scenario if we have this authority and suddenly it grows 

and grows and grows, and the next thing you know you have Federal regulations competing, Federal regulatory structure competing 

with the State regulatory structure. It seems by all accounts to be 

very successful. I think you have spoken to that. But it is hard for 

me to look at the examples we have here in Washington where 

Washington has restrained itself. It is very hard to see any examples of that, and so I guess that is a concern for me. I was wonVerDate Nov 24 2008 16:27 May 31, 2012 Jkt 072625 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\72625.TXT TERRIE
8 

dering if you could speak to that, and then also maybe speak to the 

issue of the data collection because clearly the State regulators will 

cooperate fully, and I don’t have any concern about that, but I can 

see how if there is an additional burden for data collection put on 

the insurers that suddenly, the cumulative effect makes it more 

and more expensive to do business, and those costs get passed on 

to the consumer. 

So I was wondering if you could just speak generally to those two 

things, and I again thank you for your testimony. 

Mr. TORTI. Sure, and I thank you all for your support of the 

State system and your kind remarks on how well the State system 

does work. We are very proud of the system, and we think it does 

work well to protect policyholders and claimants. 

With respect to the FIO and the ‘‘nose under the tent’’ issue, I 

think Dodd-Frank is very clear that the FIO is not an insurance 

regulator, and I think Director McRaith has acknowledged that the 

FIO is not an insurance regulator, so I can’t say that I am not worried that eventually someone might try to, I guess, compete with 

the State system of regulation, but I don’t—we have not had any 

indication from the FIO or any of the other Federal agencies that 

they would do anything inconsistent with the State system of regulation or anything that would in any way interfere with the current 

regulatory system the way it is now. 

With respect to data collection, we do have very robust data collection, and we do extensive analysis of that data. It allows our examiners to do constant financial analysis of every insurance company out there. The statements are hundreds of pages. You can get 

details of any securities that are on the statements of any insurance company that files an NAIC statutory blank. There are details 

on reinsurance that are extensive. There are details on loss reserves that are extremely extensive. I cannot think of any information regarding the individual insurance entities or financial information that we don’t have in our world class database, so I would 

hope that it would not be necessary to request any information at 

all directly from insurers that we don’t have. It is very clear that 

we have anything that—over the 150 or so years that we have regulated insurance, I think we have developed a system that captures 

everything you could possibly need to regulate these entities. 

Mr. HURT. Thank you, and thank you, Madam Chairwoman, I 

yield back my time. 

Chairwoman BIGGERT. The Chair recognizes the gentlelady from 

New York, Ms. Velazquez, for 5 minutes. 

Ms. VELAZQUEZ. Thank you, Madam Chairwoman. Mr. Torti, regulation of the insurance industry takes place primarily at the State 

level, but as we learned from the collapse of AIG, large firms can 

become systematically important and accelerate the collapse of the 

financial system. 

In your opinion, does any one State have the resources to monitor and protect the whole country from systematically important 

insurance companies? 

Mr. TORTI. Let me just answer that by saying it is hard to imagine the insurance enterprise, the insurance company itself posing 

a systemic risk. Just the way that insurance— 

Ms. VELAZQUEZ. It is hard to imagine? 

9 

Mr. TORTI. The insurance business itself. There could be entities, 

as we saw in AIG, outside the insurance enterprise that may pose 

a systemic risk, but the business of insurance is a little different 

than that. It is very hard to imagine that a single insurance company could pose a systemic risk. What happens at one insurance 

company usually does not carry over to the next insurance company. There is a promise to pay in the future that an insurer 

makes, and it is very difficult to imagine something that could 

occur. 

Ms. VELAZQUEZ. So you are telling me that the collapse of AIG 

didn’t send shock waves throughout the— 

Mr. TORTI. It absolutely did send shock waves, but that was the 

financial services division of AIG that did collapse. 

Ms. VELAZQUEZ. So you don’t see any role for the Federal Government at all in terms of having to deal again with a collapse like 

AIG to prevent a direct effect across-the-board throughout the insurance system? 

Mr. TORTI. I did not mean to imply that there was no role for 

the Federal Government. 

Ms. VELAZQUEZ. Okay. 

Mr. TORTI. What I did mean to say is that insurance regulators, 

State insurance regulators are fully capable of regulating insurance 

enterprises. There may be—I am sorry. 

Ms. VELAZQUEZ. Okay, thank you. Mr. Torti, discussion draft 

number 2 will prohibit the FDIC from obtaining a lien on a failed 

insurance company’s assets without the written consent of the company’s State regulator. How are taxpayers and the public better 

protected by forcing the FDIC to seek permission from State regulators during the orderly dissolution of a failed firm? 

Mr. TORTI. First of all, I want to make clear the NAIC does not 

take a position on any of the pieces of legislation. However, the job 

of the State regulator is to ensure that the policyholders and claimants of that insurance enterprise are protected, and if we are not 

able to have any type of say in what happens to those policyholders 

and claimants of the insurance enterprise, and the State scheme of 

regulation includes receivership laws that are intended to protect 

policyholders of that insurance enterprise, we just need to preserve 

that role as the regulator of insurers in order to protect those policyholders. 

Ms. VELAZQUEZ. Okay. Thank you, Madam Chairwoman. 

Chairwoman BIGGERT. Thank you. Just for the record, Mr. Torti, 

wasn’t AIG’s holding company a thrift? 

Mr. TORTI. It was, and it was actually regulated by the Office of 

Thrift Supervision, yes. It was not an insurance entity. 

Chairwoman BIGGERT. Thank you. I see no further questions, 

and so we would thank you for your testimony, and thank you for 

being here. The Chair notes that some Members may have additional questions for you which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to you and to place your 

responses in the record. Thank you so much. 

Mr. TORTI. Thank you very much. 

Chairwoman BIGGERT. And with that, I will call up the next 

panel. Thank you all for being here. 

10 

I would like to welcome the second panel. We have today: Mr. 

Michael Lanza, EVP and general counsel, Selective Insurance 

Group, on behalf of the Property Casualty Insurers Association of 

America; Mr. Daniel Schwarcz, associate professor, University of 

Minnesota Law School; and Mr. Steven Monroe, chief compliance 

officer, U.S. and Canada, for Marsh, Incorporated, on behalf of the 

Council of Insurance Agents and Brokers. 

I seem to have mixed up the names, but we will proceed with Mr. 

Michael Lanza. You are recognized for 5 minutes for your testimony. 

STATEMENT OF MICHAEL H. LANZA, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, SELECTIVE INSURANCE 

GROUP, INC., ON BEHALF OF THE PROPERTY CASUALTY INSURERS ASSOCIATION OF AMERICA (PCI) 

Mr. LANZA. Thank you. Chairwoman Biggert, and subcommittee 

members, thank you for the invitation to testify. I am Michael 

Lanza, executive vice president and general counsel of Selective Insurance Group. Selective is an insurance holding company with 

seven property and casualty insurance subsidiaries. I am also testifying on behalf of the Property Casualty Insurers Association of 

America, which has over a thousand members and the broadest 

membership of any national insurance trade association. 

Selective and PCI strongly support the discussion drafts you are 

considering to clarify the treatment of insurers under various provisions of the Dodd-Frank Act. Home, auto, and business insurers 

did not cause the financial crisis and are not systemically important to the financial markets. 

There are five key reasons why P/C insurers are not systemically 

risky: one, they have low financial leverage; two, they are not highly connected with other financial firms; three, they are in a highly 

competitive market with low individual company market penetration; four, they have low failure rates and, through State guaranty 

funds, have their own effective resolution authority; and five, and 

most importantly, P/C insurers do not sell products that can result 

in a run on the bank. 

In Dodd-Frank, Congress generally recognized the distinctions 

between non-risky P/C insurers and other types of financial firms 

that can pose systemic risk. Some fine tuning needs to be done to 

make those distinctions even clearer. That is why Selective and 

PCI support the proposed amendments. We do not believe that the 

proposals in any way scale back any powers that Dodd-Frank 

granted Federal agencies to regulate the types of risky activities 

that gave rise to the financial crisis. 

The discussion drafts propose technical amendments that clarify 

Dodd-Frank’s application to insurers. These changes will reduce 

the potential for unintended intrusions on State regulatory authority and other unintended consequences. 

I want to comment in particular on four areas that the discussion 

drafts address. First, we are concerned that Dodd-Frank’s provisions ensure the confidentiality of nonpublic information provided 

to the Federal Insurance Office, but they may not protect that information when the FIO shares it with other agencies such as the 

Office of Financial Research or the Financial Stability Oversight 

11 

Council. The discussion drafts tightens those provisions so information will not lose its confidentiality when it is shared with various 

agencies and regulators. 

Second, Dodd-Frank gave the FIO subpoena powers that are 

much broader than those of other Treasury agencies. Typically, 

Federal agencies have subpoena power to further their primary 

regulatory role in conducting formal administrative proceedings or 

civil, criminal or Inspector General investigations. FIO, however, 

does not have a primary regulatory role. That remains with the 

States. FIO does not need subpoena power when State regulators 

already have that power. 

Moreover, Dodd-Frank requires the FIO to get information from 

State regulators. We believe State regulators and the FIO can and 

will work together cooperatively and successfully to obtain needed 

information. By giving FIO, a non-regulator, subpoena powers duplicating the principal State regulators, there is a significant likelihood of redundant, costly, and burdensome data calls, and those 

costs will ultimately be borne by consumers. 

Third, Dodd-Frank gives Federal regulators the power to resolve 

failing financial companies. P/C insurers, however, are already subject to State insolvency mechanisms, including guaranty funds that 

protect the consumers. Dodd-Frank permits the FDIC to take a lien 

on the assets of financial companies, but it does not exempt insurance companies. The discussion drafts requires the written consent 

of the insurer’s domiciliary regulator before the FDIC can place a 

lien on insurer assets. This ensures that insurer assets cannot be 

used to shore up non-insurance affiliates, only policyholders. DoddFrank also gives the FDIC the ability to assess insurers for the resolution costs of non-insurance financial firms. This provision creates inequity between insurers and non-insurers and leads to the 

possibility that insurers could be doubly assessed. The discussion 

draft addresses this inequity. 

Finally, Dodd-Frank gives the Federal Reserve the power to impose heightened prudential standards on firms that are found to be 

systemically important. The discussion draft requires the Federal 

Reserve to take into account State insurance regulatory and accounting procedures, including risk-based capital, and prevents regulatory conflicts between the Fed and the States. 

For these reasons, we strongly urge that these discussion drafts 

be introduced and adopted. Thank you. 

[The prepared statement of Mr. Lanza can be found on page 30 

of the appendix.] 

Chairwoman BIGGERT. Thank you, Mr. Lanza. Mr. Monroe, you 

are recognized for 5 minutes. 

STATEMENT OF STEVEN M. MONROE, CHIEF COMPLIANCE OFFICER, U.S. & CANADA, FOR MARSH, INC., ON BEHALF OF 

THE COUNCIL OF INSURANCE AGENTS & BROKERS 

Mr. MONROE. Good morning. I am Steve Monroe, chief compliance officer for Marsh in the U.S. and Canada, on behalf of the 

Council of Insurance Agents and Brokers, which represents the Nation’s leading insurance agencies and brokers, including Marsh. I 

would like to thank you for the opportunity to address the implementation of the insurance provisions of Dodd-Frank. 

12 

Council members employ more than 120,000 people and annually 

place more than 80 percent, over $200 billion, of all U.S. products 

and services. Marsh, a unit of Marsh & McLennan Companies, is 

the world’s leading insurance broker and risk adviser, with over 

25,000 employees in over 100 countries. My written statement has 

addressed why the Council supports the legislation that will clarify 

the intent of Congress in enacting Dodd-Frank, but excluding the 

insurance sector from the FDIC resolution authority and from the 

so-called Volcker Rule. 

I will focus the remainder of my statement on the States’ implementation of the Dodd-Frank reforms known as the Nonadmitted 

and Reinsurance Reform Act, or NRRA, and address three issues 

that are most problematic right now. 

The first major concern is the vastly different approaches States 

have taken to tax surplus lines transactions. The NRRA’s taxation 

provisions are based on the concept of home State rule. Only the 

home State of the insured has the ability to tax surplus lines premiums. The Federal law permits but does not require States to allocate taxes amongst themselves in accordance with a multi-State 

agreement or compact. 

The States are currently taking five different approaches. A 

number of States are taxing and keeping 100 percent of the taxes 

based on their own tax rate. This is the preferred approach of 

Council members. Some States are taxing a surplus lines transaction based on proportion of the insured exposure in each State, 

based on each State’s tax rates, but they keep 100 percent of the 

tax. Other States have taken no action at all, which means they 

are only taxing that portion of the risk in their State. Other States 

have chosen to allocate, using one of the two methods, either NIMA 

or SLIMPACT. However, neither agreement is operational yet, 

leaving it to the brokers to figure out how to calculate, collect, and 

pay the taxes applicable in those States. 

The second major concern is that on January 1, 2012, at least 11 

States will require brokers to use the unworkable NIMA allocation 

formula. It requires allocation of all casualty lines, including lines 

for which brokers have no information regarding the location of the 

risk. However, there is an alternative that was adopted by the 

SLIMPACT States which takes a more rational approach for casualty and property lines. 

The third cause of concern is the potential for double taxation of 

international risks under the surplus lines policy. Since the enactment of the NRRA, a number of States are considering taxing nonU.S. risks. And at least two jurisdictions have already enacted 

practices to do just that. This goes against the letter and the spirit 

of the NRRA and could subject policyholders to double taxation, 

which may violate the Due Process Clause of the U.S. Constitution. 

Moreover, the collection of taxes on non-U.S. risks has the potential 

to unfairly expose insurance producers and professionals to liability 

claims from insureds who, after being told by the producer to pay 

premium taxes to their home State based on 100 percent of the exposure anywhere in the world, are informed by a foreign jurisdiction that such payments are insufficient to satisfy their tax liabilities. 

13 

In conclusion, despite congressional intent, the States have not 

devised a single uniform approach to the collection and allocation 

of premium taxes for non-admitted insurance. Instead, the States 

have gone beyond and devised multiple approaches that are confusing and cause compliance headaches. We hope the situation will 

improve, but once again the States have demonstrated they will not 

modernize insurance regulation without Federal pressure, and even 

then they will not do it easily. 

Thank you for taking my testimony and thank you for your continued interest in our industry. 

[The prepared statement of Mr. Monroe can be found on page 37 

of the appendix.] 

Chairwoman BIGGERT. Thank you, Mr. Monroe. 

Mr. Schwarcz, you are recognized for 5 minutes. 

STATEMENT OF DANIEL SCHWARCZ, ASSOCIATE PROFESSOR, 

UNIVERSITY OF MINNESOTA LAW SCHOOL 

Mr. SCHWARCZ. Thank you very much for the opportunity to testify to this subcommittee. I want to make four points in my oral 

testimony today that are based on my written comments. 

The first point I want to make is that one of the core lessons I 

think we learned from the global financial crisis is that we don’t 

always know what we don’t know. We have heard lots of stories 

today about why it is that insurance is not systemically risky, and 

I will be the first to admit that it is certainly true that insurance 

is less systemically risky than banking and that there are fewer 

concerns. That being said, we should all be skeptical of people who 

claim to have a complete understanding of insurance, who say 

things like, it is hard to imagine that. It was hard to imagine 2008 

before it was 2008. 

So one of the lessons I think we take from the global financial 

crisis, then, is that we need an adaptive regulatory regime that focuses on systemic risk. We need a regime that has all of the information at its fingertips and that can assess risk across holding 

company structures, across legal entities quickly and efficiently. 

That is not what this legislation does. What this legislation does 

is it ensconces a particular view of systemic risk based on what we 

now think and even based upon the fact and even ignoring the fact 

that there are real systemic risks within insurance companies. 

We have heard that insurers do not threaten the risk of a runon-the-bank scenario, but that is not true. In fact, a run-on-thebank scenario in life insurance is perfectly possible because many 

life insurance products allow policyholders to withdraw funds, to 

borrow against their policies. So, you certainly could have a runon-the-bank scenario in life insurance. 

We heard that with the AIG crisis, it was only the non-insurance 

entities that were problematic. Not true. There was a lot of instability within the insurance companies of AIG, particularly with respect to their securities lending program, and there was, in particular, a substantial amount of risk created by the interaction of 

the insurance companies and the non-insurance companies. The 

reason the insurance companies of AIG got into so much trouble 

with their securities lending program is because of the fact that 

their financial products unit jeopardized their liquidity. We have 

14 

heard that guaranty funds provide a fail-safe. Not necessarily true. 

Guaranty funds at the State level are not prefunded. There is not 

a single dollar in a guaranty fund. They rely on the assumption 

that large insurers will be able to cover the risk if other insurers 

fail. That is fine and good until you have some sort of systemic 

event. 

So the assumptions upon which this legislation rests, I think, are 

problematic. 

The second point I would like to make is actually a point that 

Mr. Monroe made himself, that the States will not modernize until 

and unless there is Federal pressure. That is exactly true. If you 

look at the history of State insurance regulation, virtually every 

single thing that they do well, they do well because there was a 

threat at the Federal level to take over. This legislation ignores 

that lesson. It creates a domain in which State regulators are exempt from scrutiny, where they can give as much information as 

they want, where they don’t have anyone looking over the threat 

of systemic risk that they create. 

The third point I want to make is we have heard State regulators 

have all the information that is necessary for the FIO and the OFR 

to do their job. I would submit: one, that is not true; and two, even 

if I didn’t know one way or another that it wasn’t true, you couldn’t 

either. We don’t know what the future will demand in terms of the 

necessity to gather information. What I can tell you, for instance, 

is that State regulators did not have information about the contracts and pooling relationships between AIG’s insurance subsidiaries and its non-insurance subsidiaries. That was obviously crucial 

information at the time. If we were to think that State regulators 

had all of the information that could ever be wanted by a systemic 

risk regulator, that should not have occurred. In fact, recently I 

learned that State regulators don’t even have copies of the products 

of the contracts that insurers sell to their policyholders, so to say 

that they have all of the information is simply not right. 

Finally, I am sympathetic to the view that regulatory uncertainty 

is problematic and we need to balance the risk and harms of regulatory uncertainty against the necessity of regulation. That is clearly true. But I would submit to you that this legislation targets 

areas that really don’t create very much uncertainty. The subpoena 

power is very limited. Why is it then valuable? It is valuable as a 

threat. It is valuable because it will allow States and the FIO and 

the OFR to leverage that threat to collect data that they need. 

So with that I will conclude, and I will be happy to answer any 

questions. 

[The prepared statement of Professor Schwarcz can be found on 

page 53 of the appendix.] 

Chairwoman BIGGERT. Thank you, Mr. Schwarcz, and for all of 

you, your entire written statements will be made a part of the 

record. With that, I will turn to Member questions, and I will recognize myself first. 

I almost hate to ask this question, but I would like the three of 

you just to briefly tell me what are the primary differences between 

banks and insurance companies? We will start with you, Mr. 

Lanza. 

15 

Mr. LANZA. Madam Chairwoman, I am not an expert on banks. 

I know insurance companies and how they are regulated, and I 

couldn’t really explain the banking industry to you. 

With regard to the financial products, P and C companies sell 

property, casualty, and policies, and we do not sell products that 

are tied to other financial events or models. 

Chairwoman BIGGERT. Okay, thank you. Mr. Monroe? 

Mr. MONROE. I will keep this simple. I think there are several 

key differences between banks and insurance companies. In the insurance industry, I don’t think there is really a risk of a contagion. 

If there is a problem in one insurance company, it really doesn’t 

spread to another insurance company, there isn’t going to be a run 

on the bank, and despite what Mr. Schwarcz said, with the hundreds of years we have had life insurance, there has never been a 

run on life insurance, and I don’t see one happening, and it didn’t 

happen during the financial crisis. Traditional P and C companies 

are very heavily regulated at the State level. The quality of their 

investments are very high, and the call on an insurance policy is 

based on an occurrence that happens. If there is an auto accident 

in California, it does not impact my ability to call on my auto policy 

in New York, so there are a lot of differences between insurance 

and banking, and there are liquidity issues, and the ability for the 

States to actually do an orderly runoff of insurance companies has 

been proven to be very successful. 

Take Reliance, for example, that failed in the 1990s. They didn’t 

have an impact upon other companies. In fact, it is so competitive 

in the insurance industry that other companies are very ready, 

willing, and able to step in and absorb those customers. 

Chairwoman BIGGERT. Thank you. And then briefly, Mr. 

Schwarcz, since you did speak of this before? 

Mr. SCHWARCZ. Thank you. There are obviously a lot of differences. I will highlight just a few. The first is that there is group 

supervision of banks. There is not group supervision of insurance 

companies under State law right now, so that is a major difference. 

Another difference is that it is true that banks are certainly more 

susceptible to runs than insurers, but particularly with life insurers, it is also very true that the obligations can be called. Most life 

insurance products do allow for borrowing against the policy, do 

allow for surrenders of policies, and we have seen runs of individual insurers. Now, we have not seen a run on the life insurance 

industry generally, but I think it is hard to say whether or not that 

would or would not have happened if we didn’t have the Federal 

intervention we had in the global financial crisis. 

The third point I would make is that they are not backed by the 

Federal Government in terms of guarantees. It is a State guaranty 

system. That State guaranty system is much, much less reliable 

than a Federal guaranty system. 

Chairwoman BIGGERT. Has that guarantee ever failed? 

Mr. SCHWARCZ. That guaranty system has not failed, but we 

have not had multiple concurrent insolvencies of large companies, 

so I think it is true that it has worked, and it is true that historically the system has worked, but I think that it is not true that 

we can be assured that it will always work in the future. 

16 

Chairwoman BIGGERT. Okay, thank you. Mr. Lanza, under the 

draft legislation number one which is under consideration today, 

and that is to protect confidential insurance data as it is shared 

among Federal and State regulators, why do they need exclusive 

language in the law to protect confidential insurance data? 

Mr. LANZA. Under the Model Holding Company Act, where we 

provide State regulators a lot of detailed information about our 

business plans and other things, we are sure that the information 

is confidential. The concern here is that, if we are providing that 

same kind of information to the Federal Insurance Office, the way 

the language is written, we are not sure that confidentiality is retained, so this is just to clarify that anything we submit retains its 

confidentiality. 

Chairwoman BIGGERT. Thank you. And then Mr. Monroe, is a 

mutual insurance holding company an insurance company? 

Mr. MONROE. I am not familiar with each State’s regulations of 

mutual insurance holding companies. If a mutual insurance holding company actually holds risk, it would be an insurance company, 

and very often they do hold risk, and then to the extent that they 

do hold risk, I think they should be subjected to the State regulation. 

Chairwoman BIGGERT. Okay. Then in your opinion, does the law 

need clarification to exclude mutual insurance holding companies 

like other insurance companies from the FDIC’s Orderly Liquidation Authority? 

Mr. MONROE. Again, to the extent that they hold risk like a normal insurance company would, I think that clarification would be 

needed. 

Chairwoman BIGGERT. Thank you. My time has expired. The 

gentleman from Massachusetts, Mr. Capuano, is recognized for 5 

minutes. 

Mr. CAPUANO. Thank you, Madam Chairwoman. Mr. Monroe, I 

am just curious, has your group taken a position on an optional 

Federal charter for insurance companies? 

Mr. MONROE. I think we would like to have an optional Federal 

charter for insurance companies. 

Mr. CAPUANO. Honestly, as I was listening to your testimony and 

reading it this morning, it certainly seems to be heading that way. 

Mr. MONROE. Yes. 

Mr. CAPUANO. Okay. That would obviously address your concerns. Is that a fair statement? 

Mr. MONROE. Yes, it is. 

Mr. CAPUANO. That is fair enough. Thank you. Mr. Lanza, reading your testimony, and listening, you make several points on why 

property casualty companies are different, but I am just curious. 

You have one here that is a highly competitive market with low individual company market penetration, I agree that is a statement 

of fact. Is there any law that you know of, Federal or State, that 

would prohibit consolidation within the industry? 

Mr. LANZA. Only with regard to the process of acquiring insurance companies. Under State law, there is a process generally 

known as a Form A, and the States require information regarding 

market penetration and other items under something known as a 

Form E, but that is the only— 

17 

Mr. CAPUANO. Right. But there is no prohibition on it, they just 

want to oversee it? 

Mr. LANZA. That is correct. 

Mr. CAPUANO. So the consolidation could happen like it has happened in a thousand other industries before; there is no prohibition? 

Mr. LANZA. Yes, subject to standard antitrust review. 

Mr. CAPUANO. They are not highly interconnected with other financial firms. Again, is there any law that prohibits them from 

being interconnected with other firms, like AIG was? 

Mr. LANZA. Not that I am aware of. 

Mr. CAPUANO. So it is an industry practice, not a requirement or 

a limitation? 

Mr. LANZA. Correct. 

Mr. CAPUANO. The last one is the low financial leverage. Again, 

all these statements I agree with as of today, I think they are all 

factually accurate, I am not arguing at all, but again, is there any 

law that prohibits or limits the amount of leverage an insurance 

company might have? 

Mr. LANZA. Yes, there is, related to—not only from a regulated 

side but from a ratings standpoint in terms of the amount of debt 

and other things you have, you are governed by the rating agencies 

in addition to the regulators who are concerned about various— 

Mr. CAPUANO. I wouldn’t associate myself too much with the rating agencies after what they did the last couple of years. They have 

gotten better, but my faith is not restored just yet. 

I would like to see anything it limits, because I am not aware 

of any Federal law that limits the leverage. Again, I agree that it 

is an industry practice at the moment, that you are not a highly 

levered industry, but I don’t know of anything that prohibits you 

from being that. If there is one, I would like to see it and I would 

appreciate your forwarding it to us as you go along. 

But I have to say, and I also agree with the statement that you 

made that says, ‘‘there is little likelihood that one failed PCA insurer requires other financial institutions to fail.’’ I agree with 

that. I think that is a fair statement. My concern is that everything 

else after this, including that, is all what it is now, not what it 

could be tomorrow. 

And, you made some good points on confidentiality. I totally 

agree with you if there are holes. I would like to work with you 

in filling those holes. There is no sense there. 

But everything else is—you are concerned with yes, they may not 

coordinate with States. And if they don’t, I agree with you that we 

should work on that. That was the whole idea, that they would coordinate with States. But, again, something that may happen, my 

concern is that what may happen is that we end up with one big 

huge P/C company that is overleveraged and unregulated. 

I don’t expect that is going to happen tomorrow, but it is my concern that it may happen. And the whole concept of what we did in 

the insurance industry was simply to gather information so that we 

could hopefully be ahead of the curve the next time in case this situation starts setting itself up. And, again, I am not arguing one 

iota that under today’s situation, property casualty companies are 

18 

anything other than safe and secure. From everything I know, I 

agree with you. 

I am not concerned about today; I am concerned about tomorrow 

and the idea being that if we don’t have information gathered with 

someone, some neutral people looking and asking questions confidentially, I totally agree with that, that we put ourselves at risk. 

Again, not for the good players, it is never the good players I am 

worried about. Regulations are not there for people who want to 

live by the rules and the standards of the industry. 

Regulations are always there for the outliers, for the people who 

drag an entire industry down or drag an entire economy down. So 

I will argue very clearly that, again, the details of confidentiality— 

I am happy to work with you—but exempting, pretending that because we have a situation today, it will never change, I think is 

really shortsighted, and I think it really opens the door to true 

problems tomorrow. 

And I say that only because I have absolute total faith that the 

insurance industry is a lot smarter than government. You will 

come up with ways around anything we do, as you should. That is 

the nature of private industry. 

My concern is not that, and I am not trying to take anybody 

down, not call anybody a bad player. I agree with you on the comments you make about current and past history on property casualty. But to pretend that a major industry or player, a major financial player, will never, ever put us in a difficult situation I 

think ignores the facts of 2008 and pretends that nothing will ever 

change. And, again, for the details of what is going on, especially 

since even you agreeing to testimony that FSOC basically said you 

are not a risky player. 

That is pretty much what they said. That is what you said in 

your testimony, and I agree with that. That is pretty much what 

they said. But to then say that because I have already done it, that 

they will never be allowed to do it, simply says we want to go back 

on the same footing as we had before. And I apologize, I guess my 

time is over. I didn’t think I would take the whole 5 minutes, but 

I apologize. So I will represent details as far as making sure that 

the rules that we have are right, but I think it is a mistake to pretend that what is will always be. 

Chairwoman BIGGERT. The gentleman’s time has expired. 

Mr. CAPUANO. I apologize. 

Chairwoman BIGGERT. That is fine. 

The gentleman from Virginia, Mr. Hurt, is recognized for 5 minutes. 

Mr. HURT. I thank each of you for your testimony. And, Mr. 

Schwarcz, I was interested in your testimony and I appreciate the 

fact that you seem to recognize that there should be a cost-benefit 

analysis that goes with every regulatory structure. And you spoke 

of balance, and I appreciate that. 

But I guess I have two questions. One deals with the State regulatory structure and what I think everybody agrees, it seems like 

even you agree that we have evidence of successful regulation by 

the States of these companies. And I guess my question for you is, 

if you have that evidence, you can say we don’t know what we don’t 

know, but I am not sure how that guides us as policymakers in tryVerDate Nov 24 2008 16:27 May 31, 2012 Jkt 072625 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\72625.TXT TERRIE
19 

ing to game out every possibility despite the overwhelming evidence to the contrary. 

I think that when the legislature does that, when we try to base 

policy on what we think could possibly happen in the future, I 

think that you will always wind up with unintended consequences. 

The answer to every problem here in Washington seems to be, we 

will just regulate it, and I think that at least as I travel across the 

Fifth District of Virginia where I represent people who recognize 

that is not a good formula for encouraging job growth and prosperity and freedom, and maybe you could speak to that. 

Mr. SCHWARCZ. Absolutely, thank you for the question. Let me 

just first address your point of how do we, as policymakers, respond to the fact that we don’t know what we don’t know. To me, 

this is really a fundamental point, and I think it goes to what systemic risk regulators need to do, because we all have to admit that 

this is complex stuff that none of us fully understand, and we are 

learning about it as we go. 

The answer is, you build regulatory systems that are adaptive, 

that are flexible, that can learn and that limit uncertainty, but at 

the same time, you don’t hamstring them by precommitting them 

to visions about what is and is not systemically risky. 

So my concern with this legislation is it is based—and it encapsulates this view about what systemic risk is and is not that we 

can’t be sure is right. 

And so I admit we need to make that balancing, but to me the 

costs of uncertainty that are being addressed here are just so limited. Subpoena power? Why is that valuable? It is valuable because 

it allows for the threat to get information quickly, and it allows for 

the FIO to be able to criticize the States without worrying that 

States are going to say, then, I am not going to give you information. 

Mr. HURT. Thank you, because that was my next question, and 

that deals with the data collection. It seems to me that a prudent 

policy to come from Congress would be that we will rely on the 

State regulators who demonstrated that they can regulate successfully and that they have the data necessary for the FIO to be able 

to make the judgments that it needs to make, so then why don’t 

we allow that system to work. Let’s try that, and then if it doesn’t 

work, if the FIO comes back to this committee and comes back to 

Congress and says, hey, we are not getting your information we 

need from the States, then let’s fix it. It seems to me that is a more 

prudent approach consistent with what you just said. 

Mr. SCHWARCZ. It is very hard—as I am sure you know much 

better than me—to change the law, right, it is very hard to say, 

have the FIO come and change the law and it is very hard to get, 

so I think what you need is you need a system that can adapt more 

quickly than that. 

And the other point I would make is we keep saying, State regulations work reasonably well. I would say that State regulations 

did not work particularly well in the case of AIG. I think that there 

was a real failure to appreciate among State regulators the fact 

that non-insurance companies within holding companies can have 

real risks for the insurance companies. There was a lack of an appreciation at the interconnectedness among the different entities 

20 

and there was the lack of information about the nature of that 

interconnectiveness. 

We keep saying AIG didn’t fail and insurance companies are 

safe. What was bailed out? We don’t know what would have happened to the insurance companies if there hadn’t been a bailout. 

So my claim is not that State regulation isn’t working at all; it 

is that we need to be cognizant to the fact that there are limitations, that there is not a proven track record on group regulation 

and respond accordingly. 

Mr. HURT. Thank you, Mr. Schwarcz. Thank you, Madam Chairwoman, I yield back my time. 

Chairwoman BIGGERT. The gentleman from Ohio, Mr. Stivers, is 

recognized for 5 minutes. 

Mr. STIVERS. Thank you, Madam Chairwoman. I appreciate the 

hearing on this matter. 

And the first question I have is for Mr. Lanza. Do you believe 

we have an effective State-based regulation system in America? 

Mr. LANZA. Yes. 

Mr. STIVERS. Great answer, quick answer. 

The second question I have is for Mr. Schwarcz. I am just curious 

what you think is wrong with the Federal Office of Insurance being 

required to work with existing regulators, and I want to quote from 

the actual discussion draft and help you explain to me what you 

have a problem with on page 3 where it says, ‘‘before data collection from a nonbank financial company that is an insurer or their 

affiliate of an insurer pursuant to title II, a financial regulator 

shall coordinate with each relevant Federal agency, State insurance regulator or other relevant State and Federal regulator, agency, in the case of an affiliate or insurer, and any publicly available 

sources that determine if the information can be collected is available and may be obtained in a timely manner by that State or Federal agency or through publicly available sources.’’ 

What is the problem with that? 

Mr. SCHWARCZ. I don’t have any particular problem with that 

language. That language actually is already basically in DoddFrank. That is one thing that I don’t really understand. You are 

changing Dodd-Frank to do what Dodd-Frank already does. 

But the problem I have with respect to that draft bill is the lack 

of subpoena power, because then, if that information is not available, you have no capacity to go out and get it. And, moreover, it 

is not that I think subpoenas are going to be issued all the time 

so, as I said, the threat of a subpoena changes the dynamic. It allows you to get information, and it allows the FIO to do so without 

having to be completely beholden to State regulators. 

Mr. STIVERS. Right. Mr. Schwarcz, you are a law professor, correct? 

Mr. SCHWARCZ. That is correct. 

Mr. STIVERS. So isn’t there essentially a regulatory unwritten 

rule that those that get subpoena power are also those that regulate? Isn’t that historically the way we have regulated? 

Mr. SCHWARCZ. I would think that unwritten rules are not a good 

way to operate. 

Mr. STIVERS. But isn’t that a good system? Shouldn’t people only 

have subpoena power when they can regulate? 

21 

Mr. SCHWARCZ. No. The entire point of the FIO is to—the mission of the FIO is to monitor the insurance market, and to potentially recommend changes. So you are going to task an agency to 

monitor a market and to potentially suggest changes to a Statebased system, but then to have it beholden to the State-based system in getting information? 

That means that the only information they have is the information that regulators have, and it might be that the reason you need 

to modernize regulation is because regulators aren’t capturing all 

the relevant information. 

Mr. STIVERS. Did you take a look at the discussion draft on page 

4 where it basically covers how the regulators can request information if they feel that information is either not publicly available or 

not, will not be available in a timely way, Mr. Schwarcz? 

Mr. SCHWARCZ. Yes, and I continue to believe that is not sufficient because, again, one of the potential roles of the FIO is to suggest how State regulations are insufficient, the problems that exist 

there. Now, if I am going to be the person who is going to sit there 

and be critical of, and you say here are the ways in which you need 

to change, the best way of making sure that I don’t do that very 

effectively is to say in this—and you can ask the person who you 

are criticizing for information—and there is an unwritten rule that 

they might have to give it to you but no actual rule and no subpoena authority. 

And then what you are going to say is, sure, I will give you this 

information, but only so long as you make me look good. And if you 

don’t make me look good, I am not sure if I am going to give it to 

you or not, so you need that threat. 

Mr. STIVERS. Are you familiar with the costs related to data collection in some cases that have been particularly burdensome, and 

would you favor some type of system to ensure that there is a costbenefit analysis on the cost of the data collected versus the actual 

benefit of the data, because I think that is the concern that led to 

this draft. So can you maybe help us with your thoughts on that? 

Mr. SCHWARCZ. Yes. Absolutely, I think the FIO needs to think 

about the costs of any data call versus the benefits. And so does 

the Office of Financial Research and, again, I am certainly not completely unsympathetic to the view that regulation is costly and getting data is costly; we just need to balance it. So I agree with that 

principle, but to me, that is not what is encapsulated here because 

the legislation sort of is predetermined about how that cost benefit 

analysis— 

Mr. STIVERS. Sure. I do want to quickly, because I have about 30 

seconds left, it seems to me that it is hard to construct a circumstance where there would be some mass run on people borrowing on their life insurance accounts. Can you help us, as a committee, understand your thought process there and what you were 

trying to build, because it really seems like the banking system 

would have to have collapsed or something out of that, and it just 

seems difficult to imagine. 

Mr. SCHWARCZ. Sure. No, people wouldn’t be doing that because 

they didn’t have money from banks. What would happen is that 

there would be a massive loss of confidence in a particular life insurer say, several life insurers. All of a sudden, big news stories 

22 

broke about how they weren’t, they didn’t have money to pay 

claims. People would then worry, I am not going to get anything, 

I better start going and taking out my cash to the extent I can from 

this life insurer, and then that would be exacerbated by the fact— 

again, this is a potential calamitous scenario, but we need to think 

about it—that State guarantee funds wouldn’t potentially cover all 

of the exposure out there. So that is how it could occur. 

Mr. STIVERS. My time has expired, Madam Chairwoman. Thank 

you. 

Chairwoman BIGGERT. Thank you, Mr. Stivers. The gentlelady 

from Wisconsin, Ms. Moore, is recognized for 5 minutes, and thank 

you for joining our subcommittee today. 

Ms. MOORE. Thank you so much, Chairwoman Biggert, for allowing me to come discuss your discussion drafts. I am specifically interested in discussion draft number 2, which is to exclude insurance companies from the FDIC’s Orderly Liquidation Authority 

and, Madam Chairwoman, I guess I would like to yield to you before I address our distinguished panel, because I am just seeking 

clarification. 

In the original Dodd-Frank bill, there was an amendment offered 

by me and Ms. Speier which, in fact, excluded—let me see, I have 

the amendment here, it amended section 203, and we inserted part 

E, which an insurance company that is covered, if it is a covered 

financial company or a subsidiary or affiliate of a covered financial 

company, the liquidation or rehabilitation of such insurance company and any subsidiary or affiliate of such insurance company 

that is not accepted under paragraph 2 shall be conducted as provided under applicable State law. 

Our intent with this amendment was to distinguish that insurance companies and, indeed, mutual insurance companies, were not 

subject to FDIC resolution because they didn’t provide systemic 

risk. 

So I want to yield to you, Madam Chairwoman, because my question is, do you think that perhaps discussion draft bill 2 may be 

duplicative? I understand and I agree with what you are trying to 

do, but I believe we have already done this through Dodd-Frank. 

Chairwoman BIGGERT. Actually, this part of the legislation is 

based on your amendment to the Dodd-Frank bill. So I think it was 

to make explicit clarification of that amendment. 

Ms. MOORE. Okay, because the thing that I think that—the extent to which there was any exposure—maybe I can ask you gentlemen now—to the extent that there was any discussion of bringing 

the insurance industry into it was because AIG was systemically 

risky in terms of it being a threat and being an insurance company 

and having all of these various activities. I guess I want you all to 

respond of what your understanding of discussion draft 2 is. 

This would not—we are not talking about limiting the FDIC’s 

ability to resolve or interfere with a systemically risky firm that 

has—insurance company that has a financial institution connected 

with it. Is that your understanding of this draft as well? 

Mr. LANZA. Yes. The concern we have is the fact that an insurance company, which is governed by statutory accounting rules, 

which is the liquidation value, would have assets go to areas other 

than the policyholders. So the concern is that we would like the inVerDate Nov 24 2008 16:27 May 31, 2012 Jkt 072625 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\72625.TXT TERRIE
23 

surance regulator to approve any assets going for anyone other 

than the policyholder. 

Ms. MOORE. So you think that this discussion draft is necessary 

because you are concerned that assets may go to someone other 

than the policyholder. Are these investors? What are the other entities that you anticipate? 

Mr. LANZA. The purpose of the State regulatory system is to have 

the assets of the insurance company available to pay just the policyholders. And if you can put a lien on those assets to resolve another organization other than the insurance company, that is problematic if there were policyholders at risk. So we believe that the 

discussion draft solves the problem of having any assets go anywhere beyond the policyholder. 

Ms. MOORE. Would anyone else like to respond to that? 

Mr. Schwarcz? 

Mr. SCHWARCZ. Actually, my understanding was the draft bill 

didn’t change very much in Dodd-Frank. 

Ms. MOORE. It did? 

Mr. SCHWARCZ. It did not change very much. Dodd-Frank already 

reflected the fact that insurers would be resolved by State entities, 

and it allowed the FDIC to intervene if the State regulators were 

not, in fact, operating. And I am not—I would need to study this 

a little bit further to understand whether that authority is removed 

or not. I would think that authority is important, again, to create 

the leverage the State regulators are not acting, but I do think it 

is a matter of sort of—it makes sense at first to have State regulators resolving insurance companies. 

Ms. MOORE. Thank you so much. And thank you, again, Mrs. 

Biggert for allowing me to attend this meeting. 

Chairwoman BIGGERT. Thank you. 

Ms. MOORE. I just wanted to seek that clarification. Thank you. 

I yield back. 

Chairwoman BIGGERT. The gentleman from Wisconsin, Mr. 

Duffy, is recognized for 5 minutes. 

Mr. DUFFY. Thank you, Madam Chairwoman. It appears there is 

somewhat of a disagreement on the panel as to how we should 

move forward. And I don’t know, Mr. Lanza or Mr. Monroe, if you 

had a chance to read over Mr. Schwarcz’s statement before you 

came here, but you have had a chance to hear it. Now that you 

have heard his position or his take on the drafts, do you agree with 

them? 

Mr. LANZA. No. In particular, on the subpoena power, my company has seven subsidiaries in addition to all of the quarterly and 

annual statements we have to file, we average about 840 data calls 

a year. Now those data calls, some of them are very easy for us to 

respond to because it is financial information that we track in evaluating the profitability and other performance factors of our business, but some of those data calls are information we may not 

have. And the cost of finding that information in some cases can 

get complicated because we don’t have the systems in place in 

order to capture it. 

So the issue we have around the whole thing is that if the FIO 

was to study the industry as a whole, it makes sense for them to 

24 

go to the State regulators to study the industry as a whole before 

they come to the individual companies. 

Mr. DUFFY. Mr. Monroe? 

Mr. MONROE. I didn’t get a chance to read Mr. Schwarcz’s testimony before I got here, and the counsel always supports efforts to 

improve insurance regulations. We supported the NRRA because of 

the disparate treatment of surplus lines taxes across the United 

States. So to the extent that there are gaps in State regulation that 

the Federal regulation can help improve, we would certainly be 

willing to look at that and support it to the extent that it will improve the insurance industry. 

Mr. DUFFY. Okay. And Mr. Schwarcz, quickly, how many of our 

property and casualty insurers currently pose a systemic risk? If 

you know? 

Mr. SCHWARCZ. I am not sure. I think that we can’t be perfectly 

sure. My understanding is that based on the recently proposed regulations by FSOC, essentially zero. I think it is pretty clear zero 

property casualty insurers are going to fall under that. I think my 

point would be that we need to plan for the future and sort of allow 

for that flexibility. 

Mr. DUFFY. What kind of risk do they pose today? 

Mr. SCHWARCZ. What type of risk do property—today? 

Mr. DUFFY. Yes. 

Mr. SCHWARCZ. I think that today, as far as we know, they pose 

little systemic risk. 

Mr. DUFFY. And if we look at the potential of a systemic risk that 

you are trying to be a visionary here and look into the future, if 

we give a little more authority for oversight on the Federal side, 

will that very much lessen the systemic risk for the future? 

Mr. SCHWARCZ. So, two things. First, I am not trying to be a visionary; what I am trying to do is actually say that you are not visionaries either. We don’t know. 

And that is why we need to adjust the system, take into account 

that none of us are visionaries, none of us predicted 2008, and that 

is why we need a flexible regime that is not hamstrung by preordained conclusions. 

Mr. DUFFY. But I would say that with property and casualty insurance you are saying, listen, there is a potential for systemic risk 

in the future and, therefore, you want to head that off at the pass 

today. So in a way, I would say you are acting as a visionary. 

Mr. SCHWARCZ. I will leave it to others to decide whether or not 

I am either a visionary or attempting to be one. But what I would 

say is that I don’t perceive much systemic risk in the property casualty realm right now right now. I perceive it more in the life 

realm, but I think that we don’t want regulatory assistance that 

ensconces that viewpoint and doesn’t consider the possibility that 

it might be wrong. 

Mr. DUFFY. Thank you. And I wanted to take the remainder of 

my time and yield it to Mr. Stivers. 

Mr. STIVERS. Thank you to the gentleman from Wisconsin. I have 

a quick question for Mr. Monroe and Mr. Lanza. 

In the scenario that Mr. Schwarcz gave earlier about a run on 

life insurance companies, wouldn’t the State regulatory scheme 

25 

under McCarran-Ferguson have to essentially completely collapse 

and fail and the State regulators not do their jobs? 

Mr. LANZA. I believe so. 

Mr. MONROE. I would have to agree with that. I can’t imagine 

a scenario where it would be a contagion from life insurance company to life insurance company. In fact, given the competitiveness 

of the insurance market, I think if there was a run on one, others 

would quickly step in. 

Mr. STIVERS. And the last question, I guess, for Mr. Schwarcz, 

given our discussion earlier about subpoena power, is there any requirement now for the FIO to do any cost-benefit analysis before 

they would issue a subpoena? 

Mr. SCHWARCZ. I don’t have Dodd-Frank before me right now, 

but I think the answer is no. 

Mr. STIVERS. I yield back—or to the gentleman from Wisconsin. 

Mr. DUFFY. No, I yield back. 

Chairwoman BIGGERT. I thank the gentleman. The gentleman 

from California, Mr. Sherman, is recognized for 5 minutes. 

Mr. SHERMAN. Thank you. Mr. Lanza, you said the confidentiality provisions of Dodd-Frank are insufficient to protect insured 

data. Perhaps you could enlighten us on that a bit. 

Mr. LANZA. Our concern is over the transfer of that information 

from the FIO to the other agencies, and we just want to make sure 

that it is clear that any information we submit, wherever it goes, 

is confidential so that we don’t lose that. Some of the information 

we submit is highly proprietary, and that is the concern. 

Mr. SHERMAN. Could the relevant agency simply adopt confidentiality policies? Would they need to be formal regulations? Do we 

need a statute? What do we need to do to protect the confidentiality? 

Mr. LANZA. Our suggestion is that you do it through the discussion draft. And that is what we support. We think it is the cleanest 

way to ensure it because of the nature of the data and its competitiveness. 

Mr. SHERMAN. Mr. Schwarcz, one of the concerns of my constituents is that they are going to outlive their savings. The life insurance and annuity industry has created a product called longevity 

insurance. They might have called it life insurance, but that name 

had already been taken. And this is an annuity that starts paying 

you when you reach age 70, 80, 90, whatever it is, but none of 

them have been able to find it inflation adjusted. 

I have talked to the insurance folks, and they have said, we don’t 

want to take the risk of inflation, and I wondered why we have insurance companies if risk taking is not pretty much the job they 

are supposed to do. 

What policy changes do we make so that in addition to Social Security, which is an inflation-adjusted longevity insurance that 

starts at age 65, what do we do to cause the annuity and life insurance industry to offer what people want, indeed, they may not 

focus on it with the technical terms, but an inflation-adjusted annuity that begins at an advanced stage? 

Mr. SCHWARCZ. Thank you. This is something I can’t offer definitive thoughts on right now. I would need to think about it. 

26 

Frankly, I am a little cautious about the idea of trying to say, 

people want this, therefore, we should try to sort of adopt some policy to encourage carriers to provide it. I think if people wanted it 

enough, carriers will provide it. They just probably don’t want it 

enough and that people won’t pay for it. 

Mr. SHERMAN. They speak somewhat vaguely about it. 

Mr. SCHWARCZ. Right. There are— 

Mr. SHERMAN. I had a career in the financial world and one in 

politics and kind of focused on trying to take what people are saying about finance and translate it in a language that you would 

speak. 

Mr. SCHWARCZ. Right. 

Mr. SHERMAN. They are afraid of outliving their savings. 

Mr. SCHWARCZ. Sure. 

Mr. SHERMAN. They might buy a longevity policy. They would be 

making a mistake in that they would be fully insured except for inflation. 

Mr. SCHWARCZ. Right. 

Mr. SHERMAN. So maybe you could add to the record anything 

that you think could help people know that they need an inflationadjusted longevity policy and/or let the companies know that they 

ought to be offering it. 

Let me return to Mr. Lanza. 

I am intrigued with your suggestion that Dodd-Frank asks insurers to help pay the resolution costs for other failing financial companies, but the other companies don’t help to pay for insurance resolution costs, chiefly because there are State funds that do that. 

This doesn’t exactly seem fair. 

Can you tell us more about the State resolution system and why 

Dodd-Frank seems to recreate this inequity? 

Mr. LANZA. The State resolution systems, through the guarantee 

funds, have the ability to only assess the industry, and that is the 

specific insurance industry, so it is property and casualty related, 

property and casualty failures. And so if you have the FDIC involved in any related company, the concern is that we would wind 

up paying guaranteed fund assessments and also be assessed for 

whatever additional amounts the FDIC wants to assess. 

Mr. SHERMAN. I thank you for your answer, and some will remember I fought in this room successfully to leave companies 

under, I believe it is $75 billion, out of the main assessment program in Dodd-Frank. And I think my time has expired. 

Chairwoman BIGGERT. I thank the gentleman for his questions. 

I would now ask unanimous consent to insert the following material into the record: a November 15, 2011, letter from the National 

Association of Professional Surplus Lines Offices, Ltd.; November 

15, 2011, testimony from the National Organization of Life and 

Health Insurance Guaranty Associations; November 15, 2011, testimony from the National Conference of Insurance Guaranty Funds; 

November 15, 2011, testimony from the Independent Insurance 

Agents & Brokers of America; a November 14, 2011, letter from the 

National Association of Mutual Insurance Companies; a November 

14, 2011, letter from the Risk and Insurance Management Society; 

a November 13, 2011, letter from the Nationwide Mutual Insurance 

27 

Company; and a November 9, 2011, letter from the National Conference of Insurance Legislators. 

Without objection, it is so ordered. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for Members to submit written questions to these witnesses and to 

place their responses in the record. 

And I would like to thank the panel so much for being here and 

for your testimony. I really appreciate all the important information that you have given us today. Again, thank you so much. 

With that, this hearing is adjourned. 

[Whereupon, at 11:30 a.m., the hearing was adjourned.] 

(29) 

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