Official Emphasizes Limits On OII

“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.