To much fanfare, if not true suspense, Reps. Melissa Bean (D-IL) and Ed Royce (R-CA) have officially unveiled the National Insurance Consumer Protection Act (NICPA).

The bill bears a strong resemblance to past efforts to federalize insurance regulation, but contains additional measures aimed at mitigating systemic risk.

As expected, NICPA establishes a federal system of regulation and supervision for insurers and producers, and calls for creation of an independent Office of National Insurance (ONI) within the Department of the Treasury. Additionally, the legislation compels insurance commissioners, both state and federal, to share information with a pan-industry “Systemic Risk Regulator.”

“The complexity of the modern financial system of insurance conglomerates and holding companies cannot be adequately overseen by the state-based system, as shown by recent events,” Bean said in a statement. “Insurance reg reform that protects consumers and investors must be included as Congress moves ahead on comprehensive reg reform of the financial services sector.”

Royce amplified the contention that the global financial crisis, and the government’s expensive response to it, underscores the need for a federal presence in insurance.

"Never before has the federal government been so invested in an industry it has no regulatory authority over,” Royce said. “Leaving the business of insurance regulation solely to the various state insurance commissioners while the federal government provides taxpayer-funded assistance is simply irresponsible."

Frank Keating, president and CEO of the American Council of Life Insurers (ACLI) and an outspoken proponent of a federal charter for insurers, hailed the legislation.

“Comprehensive reform of our financial regulatory system, including systemic risk oversight, is a given,” Keating said in statement. “The establishment of a functional insurance regulator at the federal level as envisioned by the Bean-Royce bill is an appropriate and essential adjunct to broader reform efforts.”

Reaction from opponents of a federal charter was equally swift.

“While the bill reintroduced today has a few changes, it is basically the same concept, optional federal chartering and deregulation of strong state consumer protections, which has rightfully been rejected and ignored by previous Congresses,” said Robert Rusbuldt, president and CEO the Independent Insurance Agents & Brokers of America, in a statement. “While it has an appealing title, this latest incarnation of Optional Federal Charter legislation would damage the stable and healthy insurance marketplace to the detriment of consumers.”

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