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Life Health > Life Insurance

Insurance Trade Negotiation Bill May Split Industry

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Debate over H.R. 4537, an international insurance trade negotiations bill, could shake up the usual insurance community lobbying alliances.

H.R. 4537, the “International Insurance Standards Act of 2017″ bill, would:

  • Require insurance trade deal negotiators to oppose proposals that conflict with U.S. laws.

  • Require trade negotiators to consult with state insurance commissioners and Congress before making insurance deals.

  • Give Congress a process for rejecting international insurance deals.

Members of the House Financial Services Committee approved the bill by a 56-4 vote at a meeting in December.

(Related: Republican Questions Constitutionality of Insurance Regulatory System)

The Congressional Budget Office hinted last week that the bill is still a contender for vote on the House floor, by providing a cost estimate. The CBO predicted that the bill would have no apparent effect on federal government revenue and would lead to about $500,000 per year in additional spending.

Rep. Sean Duffy, R-Wis., introduced H.R. 4537. He has also proposed similar legislation in the past, including H.R. 3762 and H.R. 3861.

Life insurance and property-casualty insurance trade groups team up to support many major insurance bills, but H.R. 4537 could divide groups with bigger, more export-minded members from groups with smaller, U.S.-focused members.

The National Association of Mutual Insurance Companies, a property-casualty group, has provided strong support for Duffy’s international insurance trade deals in the past, and they and many state insurance regulators have objected strongly to how the Federal Insurance Office has represented the United States at the Insurance Association of Insurance Supervisors (IAIS).

The American Insurance Association and the American Council of Life Insurers have expressed concerns about IAIS operations, but they have been more supportive of the negotiations, and of the resulting deals.

R.J. Lehmann, who handles insurance trade policy at the R Street Institute, a libertarian think in Washington, has put out a letter calling for members of Congress to vote against the bill as it is now written.

The current text states that any officials involved in insurance trade negotiations “‘shall use their voice and shall vote to oppose any proposed agreement or standard’ that differs in any way from existing federal law, or even any state law,” Lehmann writes. “The effect of this legislation would be to render insurance a topic permanently off the table in international trade negotiations. It would tie negotiators’ hands from offering any changes in domestic rules as concessions or inducements for opening more of the $4.73 trillion global insurance market to U.S. firms.”

Requiring federal officials to consult with state officials also conflicts with a provision in the U.S. Constitution, Lehmann writes. 

—Read Royce Defends FIO, Questions NAIC’s Credibility on ThinkAdvisor.

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