Eight insurance industry groups are teaming up to oppose efforts by Sen. Jeffrey Merkley to weaken a proposed Office of National Insurance.
Merkley, D-Ore., is calling for the Senate to change S. 3217, the Restoring Financial Stability Act, to narrow the ability of the ONI and its parent, the U.S. Treasury Department, to negotiate international insurance trade agreements without the approval of state insurance regulators.
The Merkley amendment would require the ONI to “navigate a procedural labyrinth” before entering into an international agreement, insurance groups write in a letter sent to the Senate.
The ONI would have to engage in an extensive notification and consultation process with the U.S. Trade Representative, two congressional committees and state insurance commissioners on what is “essentially a regulatory, not a trade, issue,” the groups write.
The Merkley amendment then would subject the ONI decision to an Administrative Procedures Act notice and comment process, the groups write.
The current version of S. 3217 would let the ONI director preempt state insurance laws that the ONI found to be in conflict with international agreements on prudential insurance matters.
The Merkley amendment would subject a preemption decision by the ONI director to a de novo judicial review, “ensuring that the director’s determination of inconsistency between the agreement and state law receives no deference at all,” the insurance groups write.
If the Merkley amendment were adopted, even after the ONI was created, “no regulatory entity would be empowered to deal with important insurance international regulatory issues,” the groups write.
The bill’s current language “provides appropriate due process while still allowing for limited preemption to effectuate these important international insurance agreements,” the groups write.
The letter was signed by officials of the American Insurance Association, the Financial Services Roundtable; the Council of Insurance Agents & Brokers; the American Bankers Insurance Association,; the American Council of Life Insurers,; and the Reinsurance Association of America, all in Washington, along with the Association of Bermuda Insurers & Reinsurers, Hamilton, Bermuda and the Risk and Insurance Management Society Inc., New York.