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Frank Aide Warns Of Federal Insurance Oversight

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Washington–A top House Financial Services Committee aide has advised state insurance legislators that he believes Congress will pass legislation this year to create a federal regulator for insurance.

The regulator would provide oversight of insurers “certainly at the systemic risk level, and very probably beyond that,” said the aide, Tom Glassic, a counsel to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

He predicted that federal regulation of insurance is unlikely to include an optional federal charter but that “some reform” is likely at the federal level.

Glassic made his comments during a briefing on the committee’s activities at the spring meeting of the National Conference of Insurance Legislators held here. He urged the legislators “to get involved” in the development of a new regulatory scheme for insurance.

He declined to provide specifics, but he mentioned federal regulation of reinsurance as one possibility that may arise out of legislation.

Glassic implied he would support a continued strong state role in regulating insurance activities. “There is no point in not leveraging the current system” in any insurance regulatory scheme that develops, Glassic said, noting that the states “have a pretty effective consumer protection system.”