State and federal officials to share insurance complaints, financial data
Iowa and Kentucky insurance regulators will share with federal regulators financial information about companies, consumer insurance complaints, and other data as part of a "historic" agreement. The federal Office of Thrift Supervision (OTS) expects to negotiate a similar agreement with all other states.
In April, the OTS and the National Association of Insurance Commissioners (NAIC) approved a model for sharing information about the companies they regulate. Iowa and Kentucky were the first two states to sign an agreement based on the model.
"Strong, effective regulation is very good for consumers."
The agreement outlines guidelines for sharing information on the financial solvency, the insurance activities, and the thrift activities of a regulated company, in addition to the sharing of complaint and consumer-inquiry information. It does not allow the OTS to regulate insurance companies that affiliate with thrifts, but gives the federal agency access to information. The OTS regulates all federal and many state-chartered thrift institutions. The NAIC approved the model for an agreement with the OTS at its spring national meeting in March.
The agreement was spurred by legislation allowing insurance companies to enter the banking business by forming thrifts.
NAIC president and Kentucky Insurance Commissioner George Nichols calls the agreement "a historic milestone in the relationship between state and federal regulators that will strengthen our relationship in the new arena of financial-services modernization."
OTS Director Ellen Seidman says exchanging information with states improves regulation for both the OTC and NAIC. "[The agreements with the states] enhance our ability to supervise the safety and soundness of thrifts owned by or affiliated with insurance companies and their compliance with consumer protection statutes and regulations," Seidman says.
A win for consumers
Iowa Commissioner of Insurance Terri Vaughan says consumers will benefit as a result of the information sharing. "It's going to improve the ability of these different regulators to work together to make sure that companies are regulated effectively," Vaughan says. "Strong, effective regulation is very good for consumers."
Regulators limit who has access to the confidential information, according to the model agreement.
Roughly half of the states have reached a separate, more limited complaint-sharing agreement with the federal Office of the Comptroller, which regulates nationally chartered banks and sets policy on what products those banks can offer to consumers, including insurance. That agreement allows state and federal officials to share consumer complaints about insurance policies sold by banks.