Congressional Road Map In Flux
The chairman of the key subcommittee of the House Financial Services Committee has in hand a draft of the so-called insurance regulation “road map” legislation, and plans to provide an exposure draft to interested parties sometime this month, according to some panel officials, who add that no final plans have been made.
According to these officials, Rep. Richard Baker, R-La., chairman of the Capital Markets Subcommittee, and Rep. Mike Oxley, R-Ohio, chairman of the full committee, have been presented a staff draft of the proposed legislation, but may decide to make some changes in it before releasing an exposure draft.
However, an early September hearing, and a markup later that month, remains the plan, the officials say.
Under the exposure draft, domiciliary states would be given broader authority to regulate the activities of life insurance companies and agents in their own states. Sources following the progress of the bill say the unveiling was delayed because some Democratic members of the committee and industry representatives are objecting to language that would effectively end rate regulation for property-casualty companies without a phase-in period. A key decision for Baker and Oxley is whether to modify that part of the plan.
As to life issues, sources say the current version of the bill includes the following:
–An interstate compact that would create a single point of entry for filing new life products. If the compact approved a product, the approval would be good in every state in the compact.
–A “Federal Partnership Office” that would have authority to preempt state regulation. If a state joined an interstate product filing compact, then failed to comply with compact provisions, the FPO or an insurer might be able to sue the state in federal court in Washington, D.C.
–Deference to the agent licensing procedures in an agents state of domicile or an insurance companys state of domicile. Although at least 32 states already recognize the licensing authority of other states, “the remainder have add-on requirements that are redundant, duplicative, unnecessary and have nothing to do with standards of professionalism,” says Joel Wood, chief lobbyist for the Council of Insurance Agents and Brokers, Washington.
–State licensing authority access to federal criminal databases. However, the Treasury Department has complained in the past about the cost of giving states secured access to the databases, and industry and congressional representatives say it is unclear whether Treasury has signed on to the current proposal.
–Rules limiting states to conducting 1 market conduct compliance examination every 5 years, unless a state were responding to complaints against a company or agent. Agents and other personnel of a particular company would be subject to the rules of the domiciliary regulator, although other states could participate in such an exam. Congressional staffers and industry officials familiar with the current road map draft are calling this provision a “procedural reform.”
Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, has promised to hold a hearing on insurance issues in September, but some say the road map bill might not get very far in the Senate because of time constraints.
If the bill wins overwhelming support in the House, that could set the stage for quick action on the bill early in the next Congress, observers say.
Reproduced from National Underwriter Edition, July 29, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.