Several members of the House of Representatives urged newly sworn-in Treasury Secretary Timothy Geithner to increase federal oversight of the insurance industry in a letter last week.
The letter’s six authors – Rep. Melissa Bean (D-Ill.), Rep. John Campbell (R-Calif,), Rep. Andre Carson (D-Ind.), Rep. Michael Castel (R-Del.), Rep. Dennis Moore (R-Kan.), Rep. Ed Royce (R-Calif.) and Rep. John Adler (D-New Jersey) – urged Geithner to create an office within the Treasury or install someone “to fill a void on insurance oversight and expertise at the federal level.”
“We strongly believe that this would be a valuable – and indeed necessary – interim step which would provide policymakers with insight into issues surrounding the insurance market as reform is contemplated,” the letter stated.
Last year, a bill was introduced in the House of Representatives that would create such an office. H.B. 5840, which would establish a federal Office of Insurance Information (OII) within the Department of the Treasury, was introduced in the House of Representatives in April 2008 but has yet to pass the house. Per the bill, the OII would provide legislators with expertise and guidance on insurance issues and recommend how the government should respond to insurance issues. A subcommittee recommended passage of the bill in July (click HERE to read more).
The insurance industry has been divided over the issue of federal oversight. After the letter was sent, the American Insurance Association’s (AIA) incoming president, Leigh Ann Pusey, commended the letter writers.
“It’s critical for Treasury and other public policy leaders to develop and institutionalize an insurance expertise at the federal level,” Pusey said. “Congress will soon debate the scope of federal regulation and whether to apply that oversight to insurers. That debate is certain to focus on the need to monitor systemic risk on a national basis. An OII would be a tremendously valuable tool for helping to inform that debate.”
However, members of the National Association of Professional Insurance Agents (PIA), the National Conference of Insurance Legislators (NCOIL) and others have come out against federal legislation, pointing to the downfall of federally regulated banks last fall as reason to leave the regulation of insurers up to states (click HERE to read more).
The six letter writers, however, believe the fall of another giant in 2008, insurer AIG, illustrates the need for federal oversight.
“We all share the belief that we must take steps to ensure that a similar situation does not occur in the future and we believe that an important first step ought to be the establishment of an office within Treasury which would have a knowledge base and understanding of insurance operations,” the letter stated.
