Lawmakers already have drafted a letter calling for the incoming Treasury secretary to use existing authority to create an Office of Insurance Information.
A version obtained by National Underwriter is dated Jan. 14 and signed by Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif.
Bean and Royce were the primary sponsors of a bill introduced in the last Congress that would given insurers the option of choosing between a traditional state charter and a federal charter.
The drafters of the letter write that they want to encourage the new Treasury secretary to either “create an office within Treasury or assign a high level Treasury appointee to an insurance portfolio to fill a void on insurance oversight and expertise at the federal level.”
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“The apparent risk of a systemic shock to the broader economy was the reason behind the government’s intervention to prevent the collapse of [American International Group Inc., New York],” the drafters of the letter write.
“We all share the belief that we must take steps to ensure that a similar situation does not occur in the future and we believe that an important first step ought to be the establishment of an office within Treasury which would have a knowledge-base and understanding of insurance operations,” the drafters write.
Creating an OII at Treasury also could help prevent a repeat of the kinds of problems that hit the monoline mortgage insurers and “resulted in a tightened credit market for insurers and significant losses by banks and other financial institutions,” the drafters of the letter write.
Supporters of a federal role in insurance regulation now appear to be calling for the creation of an OII and, separately, working to include an optional federal charter provision in broad regulatory restructuring efforts, according to sources close to the drafters of the letter and to industry lobbyists.
The Financial Services Roundtable, Washington, believes sending the OII draft letter would be a “key first step” in getting the ball rolling toward a stronger federal presence in insurance regulation.
But a federal charter for insurance must follow, according to Scott Talbott, an FSR senior vice president.
The American Council of Life Insurers, Washington, also is emphasizing the need to do more than create an OII.
“We support the establishment of an OII,” says ACLI spokesman Jack Dolan. “With globalization and deeper federal involvement in financial services, among other things, the need for federal involvement in insurance regulation is clear.”