Rep. John J. LaFalce, D-N.Y., the ranking Democrat on the House Financial Services Committee, is widely expected to introduce shortly an optional federal chartering bill that could impose community reinvestment requirements on federally chartered insurers.
The legislation, which is tentatively entitled the “Insurance Industry Modernization Act,” appears to closely resemble a similar bill that was introduced in the Senate by Sen. Charles Schumer, D-N.Y.
It would establish an Office of National Insurers (ONI) within the Treasury Department to issue federal charters to insurance companies, which would be exempt from most state insurance regulation.
What Your Peers Are Reading
The ONI would be empowered to issue regulations affecting nationally-chartered insurers, examine their solvency and enforce solvency standards, enforce market conduct standards and investigate insurance fraud.
In addition, nationally-chartered insurers would lose their antitrust immunity under the McCarran-Ferguson Act.
However, according to a draft obtained by the National Underwriter, nationally-chartered insurers would still have to pay state premium taxes.
Also like the Schumer bill, the LaFalce bill would require nationally-chartered insurers to participate in “qualified” state guaranty associations. A “qualified” association is one that follows guidelines established by the National Association of Insurance Commissioners, Kansas City, Mo.
The bill would establish separate national guaranty corporations for property-casualty insurance and life insurance that would cover non-qualified states.
However, according to a preliminary analysis of the draft by one industry attorney, who asked not to be identified, the LaFalce bill would impose community reinvestment requirements on federally-chartered insurers, which is in contrast to the Schumer bill, which has no CRA language.
This means that insurance companies would be required to invest a portion of their assets in certain designated areas.
It is unclear whether the CRA language will be in the final draft that Rep. LaFalce formally introduces.
Meanwhile, most of the other news of the week focused on health care and the new initiatives to expand access to health care that are expected to be in President Bushs budget, scheduled for release this week.
Specifically, Health and Human Services Secretary Tommy G. Thompson says that the Bush administration will take a multifaceted approach to expand coverage.
For example, Thompson says, the administration will propose $89 billion in new tax credits to allow those without employer-provided coverage to purchase private health insurance.
Families with two or more children and incomes under $25,000 per year could receive up to $3,000 in credits to cover 90% of the cost of private health insurance.
The credit would phase out for families with $60,000 or more in income.