WASHINGTON—The U.S. House of Representatives voted Friday to pass a bill that would increase government regulation of the financial services industry, but it specifically excludes property/casualty insurers.

The Wall Street Reform and Consumer Protection Act of 2009, which the House passed on a 223-202 vote, also would establish a Federal Office of Insurance within the Treasury Department and ease requirements for buyers purchasing surplus lines coverage.

House passage of H.R. 4173 would provide federal regulators with broad authority to identify and respond to systemic risks, including breaking up firms that pose a financial threat to the industry. The plan is designed to hold businesses accountable and end taxpayer-funded bailouts, backers say.

No Republicans supported the House bill, while 27 Democrats voted against the measure that now moves to the Senate.

“House passage of this bill moves us an important step closer to meeting the president's objectives for reform,” Treasury Secretary Timothy Geithner said in a statement. “Comprehensive reform must establish clear rules of the road with strong enforcement for our nation's institutions and markets; end loopholes that allowed big Wall Street firms to escape supervision; make it clear that no firm is ‘too big to fail'; and provide strong consumer and investor protections for American families.”

The bill would establish two new agencies: a Federal Insurance Office and a Consumer Financial Protection Agency. While the Consumer Financial Protection Agency would address consumer protection issues with financial products, the legislation specifically excludes the property/casualty insurance industry from its jurisdiction.

Lauding the step, the National Assn. of Mutual Insurance Cos. said having the consumer agency overseeing P/C insurers would have disrupted the “soundness and solvency” of insurance regulation.

“It carries a potentially serious risk of regulatory conflict and confusion, particularly as it relates to the business of insurance,” Charles M. Chamness, president and chief executive officer of NAMIC, said in a statement. “We are pleased that the members of the Financial Services Committee recognized the problems this would cause and exempted the industry from this new agency.”

Joel Wood, senior vp of government affairs for the Council of Insurance Agents & Brokers, described establishing the Federal Insurance Office and exempting P/C insurers from the Consumer Financial Protection as “gratifying.”

The bill also states that surplus lines coverage would be governed by the tax policies, licensing and other requirements of the buyer's home state, a provision Mr. Wood said CIAB also would lobby for in the Senate.

Leigh Ann Pusey, president and CEO of the American Insurance Assn., said she was “encouraged” by the legislation that includes the Federal Insurance Office but added some remaining provisions are of concern to P/C insurers.

“AIA opposes legislation that subjects our industry to prefunding obligations for systemically important financial companies and assesses insurance companies to pay for the risks presented by the failure of noninsurance institutions,” Ms. Pusey said in statement. “Given the importance of these reforms, AIA stands ready to work with Congress to improve the bill as it the legislative process moves forward.”