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This morning’s WSJ report that Robert Benmosche, recently appointed CEO of AIG, is unhappy with government pay restrictions, has elicited predictable, less than sympathetic responses. “Tiny Violins” is the headline from the Daily Beast.  New York Magazine’s Daily Intel responded with sarcasm:

Apparently, someone told Robert Benmosche that running the world’s largest and most [expletive withheld] insurer was going to be a cakewalk, because three months into the job and two months after returning from a vacation at his Croatian villa, the CEO is considering throwing in the towel, owing to the restrictions placed on him by the company’s new owners, the good old United States government.

Continue Reading Predictable Responses to Benmosche Leak

On June 17, 2009, the Department of the Treasury released its “white paper” detailing proposals for comprehensive reform of financial industry regulation, entitled “Financial Regulatory Reform, A New Foundation: Rebuilding Financial Supervision and Regulation.” The entire report can be found here. Among the reforms advocated by the Treasury Department is the creation of an Office of National Insurance within the Department. Treasury, which would “gather information, develop expertise, negotiate international agreements, and coordinate policy in the insurance sector.”
Continue Reading What Obama’s Proposed Financial Regulatory Reforms Mean for Insurance — The New Office of National Insurance

For those of you interested in the role of regulators in the implosion of AIG [see prior posts Here and Here,] Planet Money (an award-winning joint project of NPR News and This American Life) had a fascinating program this past weekend: “The Watchmen”. Although it has already aired, it is available to listen to…

On May 28, Eric Dinallo, New York’s high-profile Superintendent of Insurance, resigned effective July 3.

Dinallo presided over the Department’s response to the AIG catastrophe and advocated far more regulation of the industry than previously seen. Dinallo was also instrumental in the rescue of the municipal bond business in New York, approving segregating it from…

On May 20th, the NY Times ran an editorial titled “Regulatory Shopping”. The very valid point of the editorial is that if you give the regulated the option to choose their regulator, no good can come of it:

And yet, legislation recently introduced in the House would allow insurance companies, currently regulated by the states, to opt for federal regulation instead — and, in general, if they don’t like that, to switch back after a spell. If the bill were enacted, the race to the regulatory depths would continue, and the nation would be headed in exactly the wrong regulatory direction.

Agreed, no argument. I take issue, however, with the assumption of the NYT that state insurance regulators have covered themselves in glory. Robust defenders of the rights of policyholders? Not exactly. In the pocket of the insurance industry? Sometimes. Opaque?  Always. And that’s without addressing the quagmire/insanity that is insurance insolvency regulation and the guaranty fund system.Continue Reading State Insurance Regulation: The Lessons of History (AIG Edition)