WASHINGTON BUREAU – Obama administration financial services reform proposals may focus more on banks than on insurers.
Lobbyists talked about that possibility here today at a briefing organized by the Risk and Insurance Management Society Inc., New York.
Speakers at the event included Libby Baney, an advisor in the Washington office of B&D Consulting; Kevin McKechnie, executive director of the American Bankers Insurance Association, Washington; and Tracey Laws, general counsel of the Reinsurance Association of America, Washington.
The White House will unveil the administration’s principles for financial services reform June 17, and Treasury Secretary Timothy Geithner will provide a detailed explanation of the administration’s principles a day later, in testimony before the House Financial Services Committee, the lobbyists said.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, has told lobbyists that he believes the administration’s financial services regulatory reform proposals are likely to focus on banks, not insurance, the RIMS speakers said.
But the principles will call for insurers to be subject to a systemic regulator, and for giving an agency authority to deal with troubled insurers and other troubled non-bank financial services providers, the lobbyists said.
Democrats have a large majority in the House, and the House probably will pass financial services reform legislation piecemeal, before Congress leaves for the August recess, the lobbyists predicted.
In the Senate, where Democrats face more turbulence, and lawmakers are focusing on health care and energy legislation, the pace of activity seems to be slowing, the lobbyists said. The lobbyists are expecting the Senate to delay action on financial services reform and deal with regulatory reform issues in one omnibus package.
Reinsurance Bill Could Advance
The House plans to consider at least one insurance bill, H.R. 2571, the Nonadmitted and Reinsurance Reform Act, using expedited procedures by the end of June.
H.R. 2571, similar to a bill that passed in the House in 2007, would change the laws governing the surplus lines and reinsurance industries. The bill would:
- Establish national standards for how states regulate the surplus lines market and reinsurance.
- Create a uniform system of surplus lines premium tax allocation and remittance.
- Establish one-state compliance on multistate surplus lines risks.
- Allow for direct access to the surplus lines market for sophisticated commercial purchasers.
An H.R. 2571 companion bill has not yet been introduced in the Senate, but Sens. Evan Bayh, D-Ind., Bill Nelson, D-Fla., and Mel Martinez, R-Fla., have agreed to be primary sponsors of a companion bill, Baney said.
After the bill is introduced in the Senate and passes in the House, the Senate may hold a hearing on it, Baney said.
The bill has broad support from insurers and members of Congress, and the National Association of Insurance Commissioners, Kansas City, Mo., has acknowledged the need for reform, Laws said.
For reinsurers, Laws said, one of the most important provisions is one that would limit the authority of state regulators to exercise “extraterritorial jurisdiction” over reinsurers based in their state in cases in which those reinsurers engage in transactions outside the state.