Modernizing Insurance Regulation

PRAISE FOR MODERNIZING INSURANCE REGULATION In Modernizing Insurance Regulation , John Biggs, Matthew Richardson, and their colleagues have provided an extensive analysis of the proper regulatory approach toward insurance companies. It is an important contribution to the needed debate about the unfinished business of the reform of the structure of financial regulation. Paul Volcker, former Chairman of the Federal Reserve Board Expertise on bank regulation seems to be everywhere, but when you seek out expertise on insurance regulation, you get mostly blank stares. With Glass–Steagall barriers down and AIG still a vivid memory, this is a serious gap. Which is why Modernizing Insurance Regulation is such an important volume. At last, we have somewhere to turn for a serious and readable treatment of the subject by people who know. Alan S. Blinder, Professor of Economics at Princeton University and the author of After the Music Stopped This book identifies the key hard issues in modernizing insurance regulationsystemic concerns, federal vs. state roles, the guarantee associations, and market conduct. Well qualified authorities and practitioners give a balance between significant change versus reliance on the successes of the current structure. Roy Woodall, a former state insurance commissioner and a well–known expert on insurance with more than 50 years of experience in various aspects of insurance regulation and policy The GAO has done over the years a number of studies of insurance regulation, responding to problems perceived by Congress. No consensus has developed on what should be done. This book gives a balanced and thoughtful assessment of the core difficult issues. Charles A. Bowsher, Comptroller General of the U.S., 1981 to 1996, led the General Accounting Office (GAO)

Preface Acknowledgments Chapter 2:  Life Insurance’s Importance to American Families and Industry’s Concern about Regulation (Dirk Kempthorne) Chapter 3:  Why Insurance Needs a Federal Regulator Option (Roger W. Ferguson, Jr.) Chapter 4:  Observations on Insurance Regulation – Uniformity, Efficiency, and Financial Stability (Therese M. Vaughan) Chapter 5:  Lessons Learned from AIG for Modernizing Insurance Regulation (Eric R. Dinallo) Chapter 6:  Assessing the Vulnerability of the U.S. Life Insurance Industry (Anna Paulson, Thanases Plestis, Richard Rosen, Robert McMenamin and Zain Mohey–Dean) Appendix 6A: Details on Estimating Asset Risk Chapter 7:  Systemic Risk and Regulation of the U.S. Insurance Industry (J. David Cummins and Mary A. Weiss) Chapter 8:  Designation and Supervision of Insurance SIFIs (Scott E. Harrington and Alan B. Miller) Chapter 9:  Is the Insurance Industry Systemically Risky? (Viral V Acharya and Matthew Richardson 1) Chapter 10:  Modernizing the Safety Net for Insurance Companies (John H. Biggs) Chapter 11:  Policyholder Protection in the Wake of the Financial Crisis (Peter G. Gallanis) Appendix 11A:  The Critical Role of “Prompt Corrective Action” Appendix 11B: Table of Relevant Guaranty Association Coverage Levels by State As of September 19, 2013 (Subject to Change) Chapter 12:  Comparative Regulation of Market Intermediaries: Insights from the Indian Life Insurance Market (Santosh Anagol (Wharton), Shawn Cole (Harvard Business School), and Shayak Sarkar (Harvard University)) About the Authors About the Website Index

JOHN H. BIGGS is the former Chair and CEO of TIAA–CREF, one of the largest national insurance companies in the U.S., and an Executive in Residence at New York University. MATTHEW P. RICHARDSON is the Charles E. Simon Professor of Applied Financial Economics at New York University Stern School of Business. He is the co–editor of Restoring Financial Stability and Regulating Wall Street.