GAO report praises insurance regulators during financial crisis

{mosads}The National Association of Insurance Commissioners, a coalition of state regulators, required detailed reports from insurers, altered reporting rules and changed the way it determined the riskiness of securities during the financial panic.

State regulators provide most of the oversight for the insurance market, and since the crisis peaked they have kept up their efforts to strengthen oversight.

Among the state-led efforts include a still-in-the-works review of the framework for regulating insurance companies’ solvency and a survey of international efforts to better develop new rules and practices.

Federal regulators have also increased focus on the insurance sector, largely through reforms mandated by the Dodd-Frank Act.

That law created an office to monitor aspects of the insurance industry as well as the Financial Stability Oversight Council, which is tasked with identifying risks to the financial sector, and the Consumer Financial Protection Bureau, which aims to protect Americans from predatory practices.

Since the law has not yet been fully implemented, the GAO noted “its impacts have not fully materialized.”

The insurers that were most affected during the 2008 crisis were those that offered life insurance with variable annuities and guaranteed benefits as well as insurers of the financial and mortgage industries.

The report was prepared for the chairman of the House Financial Services subcommittee on Housing and Insurance, Rep. Randy Neugebauer (R-Texas), as well as subcommittee member Rep. Steve Stivers (R-Ohio).

It looked at the strength of insurance market regulators in light of the 2008 federal efforts to save AIG, a troubled insurer kept afloat by taxpayer dollars.