The Bush administration is looking into the idea that the federal government should participate in regulation of the insurance industry.
The Internal Revenue Service and its parent, the U.S. Treasury Department, have published a notice in the Federal Register that asks for comments about U.S. regulation of financial institutions.
The notice, part of a broad Treasury Department review of the financial institution “regulatory structure,” includes questions about insurance along with questions about depository institutions, securities firms and the futures industry.
IRS questions in the insurance section include the following:
–What are the costs and benefits of state-based regulation of the insurance industry?
–What are the key federal interests for establishing a presence or greater involvement in insurance regulation? What regulatory structure would best achieve these goals/interests?
–Should the states continue to have a role (or the sole role) in insurance regulation? Insurance regulation is already somewhat bifurcated between retail and wholesale companies (e.g., surplus lines carriers). Does the current structure work? How could that structure be improved?
–States have taken an active role in some aspects of the insurance marketplace (e.g., workers’ compensation and residual markets for hard to place risks) for various policy reasons. Are these policy reasons still valid? Are these necessarily met through state (as opposed to federal) regulation?