Washington — In something as large and multi-faceted as the insurance industry, a consensus is hard to come by. Yet, when representatives from of all parts of the insurance industry testified before a House subcommittee this week, something vaguely resembling one emerged.
However, this is not to say reviews for H.R. 5840, otherwise known as the Insurance Information Act of 2008, were all positive, as concerns and caveats aplenty emerged during the course of the testimony. The legislation’s intent seems benign enough: to foster greater uniformity among state insurance regulations and thereby help harmonize the regulatory regime in the United States with international standards. To do so, the legislation directs the Secretary of the Treasury to create an Office of Insurance Information (OII) that would advise the President and Congress on domestic and international policy issues regarding all lines of insurance except health insurance.
“The Federal government should have an in-house expert on insurance matters,” said Rep. Paul E. Kanjorski (D-Penn.), who sponsored the legislation, in his opening remarks.
Supporters of the legislation say it will address the lack of uniformity inherent in a federated system and, when enacted, provide a “unified platform” from which to contribute to the development of international standards for insurance regulation. Multi-national insurers contend their international activities have been hamstrung by the lack of a federal regulator in the United States.
“It’s important to have a federal perspective,” Alessandro Iuppa, Zurich's head of government & industry affairs for general insurance and chief government affairs officer—North America, told Insurance Networking News. “A state regulator, no matter how well-intentioned, cannot speak on behalf of the federal government.”
Yet, concerns about state legislators ceding too much power was the crux of much of the criticism of the legislation. “There are concerns with respect to the provisions for preemption of state law,” said David Sampson, president and CEO of Property Casualty Insurers Association of America. “This bill would, for the first time, give this potential federal entity preemptive authority over state insurance laws as an administrative process, rather than as a legislative one.”
Even the National Association of Insurance Commissioners (NAIC), which stands to play a prominent role in an advisory group for the OII, said it would only offer conditional support to the legislation until the issues regarding preemption were clarified. “State regulators would object to the OII or any other Federal entity having the authority to preempt consumer protections and solvency standards adopted by States,” said Michael McRaith, director of insurance for the State of Illinois, testifying on behalf on NAIC.
Source: House Committee on Financial Services
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