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Following the collapse of insurance industry giant American International Group (AIG), the National Association of Insurance Commissioners issued a statement—quoting NAIC president Sandy Praeger—urging that the “conversation should stay focused on the facts.” This is a laudable purpose. CEI, in forwarding its educational mission, would like to help clarify these facts.
In its released statement, NAIC takes two major insurance trade associations to task for bringing forward the idea that the AIG collapse justifies the idea of an Optional Federal Charter (OFC). NAIC makes a valid point: AIG’s collapse does not prove that the United States needs federal oversight of insurance and there’s no way to know for certain if a federal charter would have done anything to prevent the insurance company’s collapse. (The insurance trade associations, however, have never definitively said that it would have.) Nonetheless, remaining focused on the facts requires an appreciation of those facts. And NAIC, in many cases, tells only part of the story. An analysis of many of NAIC’s key statements follows.