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House committee backs Federal Insurance Office

Posted On: Dec. 2, 2009 12:00 AM CST

WASHINGTON—The House Financial Services Committee on Wednesday approved a bill that would establish a Federal Insurance Office.

The Federal Insurance Office Act of 2009, introduced by Rep. Paul Kanjorski, D-Pa., would set up the Federal Insurance Office as part of the treasury department to attempt to prevent future financial crises by mitigating systemic risk and identifying potential gaps in regulation. The House committee approved H.R. 2609 by a unanimous voice vote Wednesday.

The bill will now move before the full House for a vote.

“Today’s vote by the House Financial Services Committee is a good first step in ensuring that the property/casualty insurance industry will finally have a voice at the national level,” Leigh Ann Pusey, president and chief executive officer of the American Insurance Assn., said in a statement. “The current state-based insurance regulatory system is not well-suited to bridge information or regulatory gaps that may arise in today’s complex global economy.”

The bill as amended contains specific language that does not grant supervisory or regulatory authority over the business of insurance and prohibits the Federal Insurance Office from pre-empting state insurance laws governing rates, premiums, coverage requirements, antitrust laws, underwriting or sales practices.

The National Assn. of Mutual Insurance Cos. agrees with the changes to the bill, which otherwise would have granted “extremely broad powers to the office and increased the likelihood that it could ultimately become a de facto federal regulator,” NAMIC said in a statement.

“This clear prohibition of regulatory activity respects the primacy of the state-based insurance regulatory system while still providing a nationwide view of the insurance industry to federal policymakers,” Jimi Grande, NAMIC’s senior vp of federal and political affairs, said in the statement.

The legislation would allow the Federal Insurance Office to request data from an insurer only after first checking with state regulators and the National Assn. of Insurance Commissioners that the required information is not already publicly available. The bill also would give the office broad authority to enter into international trade agreements and require cooperation from the U.S. trade representative and consultation with Congress.

“A necessary element of this legislation is the authority to negotiate international agreements on prudential insurance matters,” the AIA’s Ms. Pusey said. “While we remain supportive of the creation of this office, we still have concerns that the language contained in the current version of this legislation will not provide the office with the adequate authority it needs.”