A top Treasury Department official made clear that establishing an Office of Insurance Information within the Treasury Department is merely an interim step, and that the Bush administration’s “intermediate” priority remains creating a federal charter option for insurers.
David Nason, assistant secretary for financial institutions in the Treasury Department, made his comments at an all-day seminar on the future of insurance regulation sponsored by the American Enterprise Institute, Washington.
In his comments, Mr. Nason said the first priority of the new office would be dealing with global issues, especially those dealing with the European Union’s new Solvency-II, which is seen as putting U.S. insurers at a disadvantage under current conditions in competing globally, as well as on cross-border collateral requirements. He said the inability of state regulators to act uniformly has also created the potential for U.S. insurers to be at a disadvantage in competing internationally.
In answering a question, Mr. Nason said the goal of the new OII would not be to “supplant the Office of the U.S. Trade Representative or the Commerce Department.”
“We want it to play the same role it plays in the securities, commodities and banking area,” he 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.
And, in answering a question as to why health insurance was not included in the areas that would be covered by an optional federal charter, Mr. Nason said that, “To insert health insurance into the OFC debate seemed to be at odds with where the reality was.”
He confided that Treasury officials spent “a fair long time discussing it. That structure is nimble enough to deal with health insurance.” But, he said, the conclusion was that in the “near and medium term, we wanted to deal with issues we could get done quickly.”
And, he explained that “The only pieces of legislation that deal with the OFC 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. It was jettisoned in [the deliberations over] the legislation over all those difficulties.”
Moreover, he said, “As far as the debate over the OFC is pushed, the issue is not over whether it is going to be expanded, but the issue is whether or not it is going to stay with p-c and life, or whether it is going to be moved to just life.”
He conceded that, “The industry is fracturing a little bit. We think it is important that it should stay where it is, p-c and life, but we recognize that there are tensions and differences associated with how those businesses are regulated.”
Mr. Nason spoke just 30 minutes before the Capital Markets Subcommittee approved by voice vote and sent to the House floor, H.R. 5840, a bill that would create an Office of Insurance Information inside the U.S. Treasury Department.
Mr. Nason said he was “encouraged” by the panel’s vote, and added that, given the few legislative days left in this Congress, it would be acceptable if the Senate didn’t act on the legislation and send it to a new president for signature in the next Congress.