The Bush administration intends for any Office of Insurance Information created inside the U.S. Treasury Department to have a narrow scope.
David Nason, assistant secretary for financial institutions in the U.S. Treasury Department, made that point Wednesday at an insurance regulation seminar sponsored by the American Enterprise Institute, Washington.
Members of the capital markets subcommittee were voting around the same time to approve an OII bill, H.R. 5840.
The Bush administration is “very encouraged that Congress is taking up the [OII] idea,” Nason said.
The OII bill “should not be viewed as starting creation of an [optional federal charter] mechanism within Treasury, or dealing with the broader issues that we talked about in an OFC,” Nason said. “The OII is a limited vehicle. The authorities we think it should have should be quite limited.”
The first priority of an OII would be dealing with global issues, especially those pertaining to the European Union’s new Solvency-II framework for insurance regulation, Nason predicted.
An OII would not “supplant the Office of the U.S. Trade Representative or the Commerce Department,” Nason said.
But the Bush administration would want the OII to provide advice, Nason said.
“In insurance, we don’t have someone who can give us an opinion as to whether a different foreign regulatory scheme is equivalent to ours,” he said.
Nason also talked about efforts to give insurers the option of choosing to be regulated by the traditional state-run system or by a new federal insurance regulatory agency.
An OFC system is not “achievable in the very short run,” Nason said. But, “in the intermediate term, it is something that we can think about…. In the view of Treasury officials, the OFC offers the best opportunity to establish a modern and comprehensive system of insurance regulation.”
At this point, the administration is not trying to get health insurance into an OFC system, Nason said.
Treasury officials spent “a fairly long time discussing it,” Nason reported. But “the only pieces of legislation that deal with the optional federal charter have long since taken health insurance off the table because of the differences associated with that business, the complexities over how it is regulated, and even the committees that have jurisdiction over it.”
At this point, Nason said, debate about what an OFC system should include is focusing on whether to include property-casualty insurers.
“The industry is fracturing a little bit,” Nason said.
The Bush administration believes keeping both life insurers and property-casualty insurers in the system is important, “but we recognize that there are tensions and differences associated with how those businesses are regulated,” Nason said.