WASHINGTON BUREAU — The National Association of Insurance Commissioners has won significant changes in legislation that could create a Federal Insurance Office.
The changes would require the FIO to coordinate its work with the efforts of state insurance regulators, and the changes also would give Congress and the courts the authority to limit the agency’s authority in connection with insurance matters.
The new language is contained in a manager’s amendment to H.R. 2609, the Federal Insurance Office Act of 2009 bill.
House Financial Services Committee leaders approved the amendment Tuesday.
Although the changes in the bill have pleased the NAIC, they appear to have upset supporters of a stronger federal role in insurance regulation.
Groups with concerns about the changes appear to include the American Council of Life Insurers, Washington; the American Insurance Association, Washington; the Reinsurance Association of America, Washington; and the Financial Services Roundtable, Washington.
The Financial Services Committee might mark up the FSIA bill Thursday, but the controversy over the FIO provision changes could lead to a delay.
The changes the NAIC negotiated in the bill would mandate closer cooperation between the states and the FIO on narrow international agreements; ensure that international agreements would not preempt state prudential regulation of U.S. insurers; limit the scope of agreements to recognizing a level of supervision consistent with state protections; add a congressional involvement and consultation provision; and add a provision requiring judicial review of preemptive determinations made by the proposed agency.
The changed language also would restate that states have the authority to regulate the “business of insurance.”
“The recent amendments strike an appropriate balance among the needs of consumers, state regulators and federal negotiators by preserving important state and market regulation while allowing for agreements with equivalent regulatory systems,” Roger Sevigny, NAIC president and New Hampshire insurance commissioner, says in a statement. “While the NAIC continues to oppose a federal functional regulator for insurance or misguided attempts to further empower the FIO, the bill as currently drafted is an appropriately narrow and targeted improvement to our system of supervision.”
For more information about the FIO bill, see the following articles: