WASHINGTON, October 3, 2008 — America’s insurance consumers have been well protected and insurance companies remain stable and sound in the current financial turmoil thanks to fiscally prudent regulatory oversight by state insurance regulators, according to the National Association of Professional Insurance Agents (PIA).

“State regulation of insurance is a success story in the current financial crisis,” said PIA National President Kenneth R. Auerbach, Esq. “Our state insurance regulators got it right at the same time that federal regulators’ experiments with ‘self-regulation’ failed to properly supervise the most fundamental activities of banks and securities firms.”

“State legislators and commissioners of insurance pursued a conservative course by prudently regulating to ensure financial stability and soundness,” Auerbach said. “The result is that insurance policyholders are protected.”

“Regrettably, Treasury Secretary Henry Paulson and others have used the AIG rescue to argue for federal regulation of insurance,” Auerbach added. “Doing so fosters an incorrect perception that the insurance operations of AIG had failed when, in fact, they have not. To use AIG as an example to argue that federal officials should be granted regulatory authority over the insurance sector is to twist the facts.”

New York Insurance Superintendent Eric Dinallo, who helped broker a Federal Reserve Board-backed $85 billion rescue of AIG, said that state-level insurance regulation helped catch financial problems far earlier than if the federal government had been in charge. Speaking at a conference of mutual insurance companies Wednesday September 30 in Philadelphia, Dinallo said the federal government could engage in the transaction because of the solvency of the underlying insurance companies.

“AIG is Exhibit A for how well the [state] system worked, not how poorly it worked,” Dinallo said, adding that the rescue of AIG presents a case against an optional federal charter for insurance regulation. The head of the National Association of Insurance Commissioners along with commissioners from Pennsylvania, Florida, Maine, West Virginia and other states have all in the past week expressed their agreement with Dinallo’s observations.

PIA believes that proposals to transfer insurance regulation from the states to the federal government are unwise. PIA opposes federal insurance regulation and supports state insurance regulation.

“The success of state insurance regulation during our nation’s current financial crisis should put an end to the argument that federal insurance regulation would be more efficient or effective,” Auerbach said. “We are now seeing the results of prudent, effective and efficient state regulation which has ensured the soundness and stability of our industry. This is in stark contrast to the consequences of failed federal ‘voluntary’ or ‘global-objectives’ regulation.”

“PIA is not alone in this assessment,” Auerbach said. “Even Securities and Exchange Commission Chairman Christopher Cox issued a statement on Monday September 29 as the SEC terminated its voluntary program for supervising capital and liquidity at the five large, independent investment banks that once dominated Wall Street, saying that, as he put it, it is ‘abundantly clear that voluntary regulation does not work.’”

“As the debate about the future shape of financial services regulation begins, not only should lawmakers not federalize insurance regulation, they should realize that the successful state insurance regulatory system is the gold standard for prudent supervision that protects markets, businesses and consumers,” Auerbach said.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America (SM). PIA’s web address is www.pianet.com.