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WASHINGTON—The Obama administration called Wednesday for establishing an Office of National Insurance within the U.S. Treasury Department.
The proposal came in the administration's financial regulatory reform white paper released Wednesday. According to the paper, the office would “gather information, develop expertise, negotiate international agreements and coordinate policy in the insurance sector.”
A bill to establish an Office of Insurance Information that would perform similar functions has already been introduced by Rep. Paul Kanjorski, D-Pa.
Rep. Kanjorski issued a statement shortly after the white paper’s release saying that he was “particularly pleased” with the calls for establishing the Office of National Insurance. “For several years, I have advanced legislation and strongly advocated for creating such an entity. With the administration’s support, I now expect that this common-sense idea will become law,” he said in his statement.
“For over 135 years, insurance has primarily been regulated by the states, which has led to a lack of uniformity and reduced competition across state and international boundaries resulting in inefficiency, reduced product innovation and higher costs to consumers,” according to the white paper. “Given the importance of a healthy insurance industry to the well-functioning of our economy, it is important that we establish a federal Office of National Insurance within Treasury, and that we develop a modern regulatory framework for insurance.”
The document said that in addition to “monitoring all aspects of the insurance industry,” the office also would “carry out the government's existing responsibilities under the Terrorism Risk Insurance Act.” The office would also be empowered to work with other nations to represent U.S. interests and “have the authority to enter into international agreements, and increase international cooperation on insurance regulation.”
The administration stopped short of endorsing a federal charter for insurers, but it also did not rule out the idea. Instead, the document spells out six principles for insurance regulation that could include federal charters:
Citing American International Group Inc.'s near-collapse, the paper said, “the problems of associated affiliates outside of a consolidated insurance company's traditional insurance business can grow to threaten the solvency of the underlying company and the economy. Any new regulatory regime must address the current gaps in insurance holding company regulation.”
In another section of the paper, the administration again cited AIG in calling for heightened, consolidated supervision and regulation of all large, interconnected financial firms. The paper advocated giving the Federal Reserve Board the authority to supervise and regulate such firms, which it designates as Tier 1 financial holding companies.
A link to the white paper can be found at www.financialstability.gov/docs.