Congress Gets Flurry Of Insurance Bills

Introduction of several bills before Congress departed for a short recess and recent comments by the Obama administration indicate the stage is set for a contentious, perhaps historic, and probably lengthy, debate on future regulation of the insurance industry.

One of the bills introduced, H.R. 2554, would create a system for streamlined non-resident insurance agent and broker licensing.

Another, H.R. 2571, would modernize and reform regulation of the non-admitted and reinsurance industry, otherwise known as the surplus lines market.

And the third, H.R. 2609, introduced without fanfare, by Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House Financial Services Committee, would create an Office of Insurance Information within the Treasury Department.

All were introduced on May 21, as Congress departed for a brief Memorial Day recess.

Versions of all three bills have passed the House Financial Services Committee, and both the agent and broker legislation and the surplus line bills have passed the House.

The primary difference between the three bills is that the agent and broker bill, which would recreate the National Association of Registered Agents and Brokers, and the surplus bills, would leave the states in total control of insurance regulation, where it has always been.

The OII bill, however, would impose federal regulation on insurance for the first time by giving the federal government specific authority to set federal policy on international insurance matters, among other provisions.

It would also create an office within the Treasury Department that would for the first time give a federal agency the power to collect and analyze data on insurance; advise the Secretary of the Treasury on major domestic and international policy issues; report to Congress every two years; and ensure that state insurance laws remain consistent with federal policy in coordinating international trade agreements.

The bill would also establish an Advisory Group to help inform and advise the head of the Insurance Information Office. Those represented in this group would include state regulators, consumer groups and others parties in the insurance industry.

The bills were introduced as Treasury Secretary Timothy Geithner testified before a House appropriations subcommittee that a broad set of regulatory change proposals should be ready to be unveiled soon by the administration. This could include a new entity with the authority to protect consumers of financial products, he said.

A Treasury spokesman added that the administration has not yet determined whether insurance products would be among the products to come under the umbrella of the new consumer protection entity.

In a statement, Frank Keating, president of the American Council of Life Insurers, which supports legislation creating an optional federal charter for insurance, said Kanjorski’s bill speaks “forcefully about the urgent need for the federal government to develop the expertise and capacity to monitor insurance markets and thus advance the goal of protecting the American economy from threats to the financial system.”

“Life insurance is a $5 trillion industry and affects the lives of more than 75 million American families,” Keating said. “Reform of financial services regulation in the U.S. will be incomplete if the life insurance industry is ignored.”

Eli Lehrer, a senior fellow at the Competitive Enterprise Institute, called the OII bill “simply a commonsense measure.”