WASHINGTON BUREAU — The conference committee responsible for ironing out differences between the House and Senate versions of H.R. 4173 is struggling to define the authority of a proposed Federal Insurance Office.
The committee is putting off final action on the insurance section of the bill, Title V, until conferees come up with a solution.
The proposed FIO would be part of the U.S. Treasury Department. The conflict has to do with the amount of authority the FIO would have to declare that international rules trump state insurance laws when U.S. trade negotiators are negotiating two-country trade agreements.
“The issue is being worked out with staff and a members’ working group,” a member of the conference committee said as the conferees regrouped to work through additional titles today.
Insurance industry lobbyists now doubt that the conferees can complete work on Title V this week. The current plan is for the conferees to agree on a final bill by June 28, at the latest. The House and the Senate would have the rest of the week to pass a final bill, and then put a bill on President Obama’s desk by Independence Day.
The National Association of Insurance Commissioners, Kansas City, Mo., says it strongly supports the House version of the FIO provisions, which would require judicial review of any FIO decisions to preempt state insurance laws.
NAIC President Jane Cline, the West Virginia insurance commissioner, says she also supports the House language relating to the types of “covered” trade agreements that could lead to preemptions of state insurance laws. “The Senate proposal is not a mere technical change,” Cline says.
The Senate language “directly affects the scope of a new, untested office’s power to preempt the state insurance regulatory framework,” Cline says.
Many groups representing insurers and reinsurers say they want conferees to give the FIO and its parent, the Treasury Department, strong authority to impose uniform compliance and capital standards.
The American Council of Life Insurers, Washington, and other insurer groups have written to the conferees to urge them to pass the Senate version of the FIO preemption provisions. The Senate version allows the proposed FIO to “exercise narrow preemption” of state insurance measures to implement international regulatory agreements on prudential insurance matters “under clearly defined circumstances and with appropriate due process,” the insurer groups say in the letter.
“There is a savings provision setting forth specific state insurance measures that cannot be preempted, ensuring important consumer protections remain intact,” the groups say. “It is important to note that both the insurance title in the conference base text and the House offering for the insurance title provide for meaningful due process before an international agreement may be entered into and a preemption decision may be enforced.”
The House proposal to require automatic judicial review of FIO state-law preemption decisions “could inadvertently hinder” the FIO’s director’s limited powers, the groups say.
The Senate conferees moved Tuesday to accept several FIO details from the House version of H.R. 4173 Title V. The conferees agreed, for example, to add the U.S. Trade Representative, the House Ways and Means Committee and the Senate Finance Committee to the list of entities that would help “negotiate, finalize and enforce”‘ international insurance agreements.