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The House Financial Services Committee adopted legislation that aims to preserve the U.S. state-based system of insurance regulation and gives Congress greater oversight and transparency on international insurance standard negotiations.
The committee adopted H.R. 4537, the International Insurance Standards Act of 2017, on a 56-4 vote on Wednesday. The bill states that entities representing the United States may not agree to insurance-related international agreements unless they are consistent with and recognize existing federal and state law, particularly on the regulation of insurance. U.S. federal entities participating in negotiations would be required to coordinate and consult with state insurance commissioners, according to the bill.
In addition, Congress must be consulted on negotiations prior to negotiations taking place, as well as during and prior to entering into an agreement, according to the bill. Congress is granted the authority to conduct a “fast-tracked” disapproval process and would have similar disapproval authority on covered agreements.
The bill was introduced largely in response to concerns expressed about the covered agreement signed by the United States and the European Union to address the U.S. lack of equivalency related to the bloc’s Solvency II directive for the insurance industry. The National Association of Insurance Commissioners and some federal legislators objected to what they believe to be a lack of transparency that initially led to an agreement that favored the bloc.
On Tuesday, the Chicago-based Property Casualty Insurers Association of America strongly urged the committee to support the bill.
“This important legislation recognizes that our state-based system for insurance regulation has protected consumers and fostered competitive insurance markets for over 150 years and ensures that international insurance agreements recognize our standards as they evolve to meet new challenges,” Nat Wienecke, PCI’s senior vice president of federal government relations, said in the statement.
“This bill also provides for unified U.S. advocacy and addresses the fundamental lack of transparency and accountability in international insurance regulatory standard setting forums,” he added.
Some insurance industry stakeholders are urging Congress to limit the role of the federal government in regulating the sector, including eliminating or drastically reducing the scope of the Federal Insurance Office.