A key House lawmaker last week, introduced legislation that would create an interim federal insurance office within the Treasury Department, signaling his intention to quicken the pace of federal scrutiny into the future of insurance oversight.
The legislator, Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House Financial Services Committee, introduced a bill creating an Office of Insurance Information within Treasury a day after holding a hearing on “Examining Proposals to Reform Insurance Regulation.”
In his opening statement at the hearing, Kanjorski also said he is prepared to give opponents of federal insurance regulation, especially agents, what they want in the form of legislation streamlining agent and broker licensing in exchange for their support for his bill creating the new Treasury agency.
The agents are seeking legislation creating a National Association of Registered Agents and Brokers (NARAB) designed to streamline nonresident insurance agent and broker licensing. The legislation is H.R. 5611. Supporters include the Independent Insurance Agents and Brokers of America and the National Association of Insurance and Financial Advisors.
“As we proceed today, the members of the Capital Markets Subcommittee should remain open to considering all reform ideas,” Kanjorski said.
“The status quo on insurance regulation, however, no longer works,” he added. “We live in an increasingly global marketplace, and insurance policy must keep pace. We have lost many manufacturing jobs overseas. We must ensure that jobs in the insurance industry do not suffer a similar fate.
“We must move swiftly, but we also need to be smart about it,” Kanjorski said, adding, “we will need the help of experts from the states, and I urge those here today to work cooperatively with us.”
The idea for an interim insurance office within Treasury came from the financial services reform “blueprint” released by Treasury March 31. (See NU, April 7.)
The blueprint called for creating an interim insurance office within Treasury that would focus on gathering information about the insurance industry and coordinating with state regulators on “pressing” insurance regulatory issues.
Specifically, such “pressing” matters would include international regulatory issues, such as reinsurance collateral, according to the Treasury blueprint. The interim federal regulator would also “serve as an advisor to the Secretary of Treasury on major domestic and international policy issues,” the blueprint said.
In comments to National Underwriter during a break in the hearing, Eric Dinallo, New York insurance superintendent who testified on behalf of the National Association of Insurance Commissioners, said state regulators “should be proud of 100 years of exceptional work,” adding that insurance has seen “little of the blowups you see in other areas of financial services.”
Dinallo said the industry has done very well in the key areas of solvency and consumer protection, but acknowledged that it’s a “clunky” system and is in need of reform.
“To that end,” he said, “the NAIC is open to a partnership that involves the federal government” and would help move towards uniformity on issues such as producer licensing and product registration.
However, he expressed concern regarding the two bills, one creating NARAB that was introduced in the House last month and Kanjorski’s legislation creating an interim federal office.
On the legislation creating the second version of NARAB, he said the concern was the level of industry involvement in the overseeing of the board, and that states needed to be able to refuse licenses to agents if they have had prior issues in their past.