Last year, I wrote in The Iowa Torch about how Iowans can fight back against Biden Administration’s attack on retirees and families. That threat is still a problem for the people of Iowa. It is important for Governor Kim Reynolds and Insurance Commissioner Doug Ommen to protect Iowa families from this threat coming from the federal government.
The problem, as explained by Americans for Tax Reform, is that “the Biden Administration and unions are coercing the NAIC to deter financial companies from keeping life insurance and annuity products affordable for Americans.” The NAIC is the National Association of Insurance Commissioners is a multi-state organization that recommends standards for insurance and annuities for all states and D.C. The concern is that these de facto regulators are pushing ideas that will over-regulate the industry. More restrictions on insurance companies will deter these companies from investing in financial vehicles that keep costs of insurance low.
Although the NAIC is not a regulator per se, they act like one and they make recommendation that end up being law if states abide by the recommendations. These are decisions that Iowa legislators should make, not dictated by far away organizations at the behest of the Biden Administration. This group is known to have staff who have worked with state insurance commissioners, not industry representatives, therefore they have a bias towards regulation as a solution to every problem.
Regulators love to regulate, and in this case, they are trying to bully state insurance commissioners from deterring life insurance companies from investing in the things they find profitable. They are pushing states to deter insurance companies from investing in collateralized loan obligations, auto loan vehicles, student loans and credit cards. Bureaucrats and liberal activists want to make the decisions on investment rather than the people charged to make the insurance company profitable and an attractive investment for Iowans.
The last thing anybody wants to purchase is a life insurance policy, nor an annuity on a policy. People feel like they need them in case of a tragic event. An annuity is a contract with an insurance company that allows the insurer to make payments to a person after you buy one. The annuity allows people to pay bills when they are struggling.
This is an opportunity for Commissioner Ommen to stand up to liberals who want to second guess Iowa insurance companies and allow them to conduct business without a regulatory scheme that will end up making the insurance companies not profitable. If Iowa insurance companies go along with these new investment restrictions, they will have to cut off some Iowans from access to insurance and annuities. In the long run, these ideas coming from the Biden Administration will hurt the Iowans the most in need.
I am not the only one concerned about these new regulations. Oliver Wyman, a management consulting firm, put out a report indicating that one proposed change that would force equity capital increases from 30% to 45% is not consistent with the level of risk posed the industry. The insurance commissioner regulatory body is pushing hard for an increase in equity capital in a way that will end up making these companies less profitable causing even more Iowans to lose access to the products they want from insurance companies.
These are not new ideas. They have been tried and failed in Europe with similar regulations resulting in a restriction of products available to European consumers. With evidence available to federal regulators, they should stay away from ideas that will make them feel good for pushing a scheme they can say is protecting consumers when they end up making the products costlier for insurance companies resulting in future consumers being locked out of these products.
This is a great opportunity for Governor Reynolds and Commissioner Ommen to push back on the NAIC, who are doing the bidding of the Biden Administration, to protect Iowa families from limited choice and higher prices for insurance policies and annuities if the NAIC recommendations are followed.
