The Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises held a hearing June 10 to discuss the creation of a federal Office of Insurance Information (OII). House Resolution 5840, the Insurance Information Act of 2008, was introduced April 17 by Rep. Paul E. Kanjorski, D-Pa., subcommittee chairman, along with four other members of the House Financial Services Committee. The purpose of the hearing was to gather information from insurance industry stakeholders regarding the creation of such an office.
Jeremiah O. Norton, deputy assistant secretary of the U.S. Department of Treasury, outlined the need for insurance regulatory modernization and discussed the U.S. Treasury Department’s Blueprint for a Modernized Financial Regulatory Structure. In the Blueprint, the Treasury calls for the establishment of an optional federal charter (OFC) for insurance and the establishment of an Office of Insurance Oversight within the U.S. Department of Treasury.
“The Office of Insurance Oversight would focus immediately on key areas of federal interest by serving as an adviser to the secretary of the treasury on major domestic and international insurance regulatory issues," Norton said. "The office would also be provided with authority to address international regulatory issues.
Though the Treasury does have some concerns with the creation of the Office of Insurance Information, it welcomes the introduction of H.R. 5840. Norton explained that the bill would “create an office within the Treasury very similar to that recommended in the Blueprint,” and that the department will continue to work with the subcommittee as the legislation moves forward.
Neal Wolin, president and chief operating officer of Property Casualty Operations for The Hartford Financial Services Group, also presented testimony. Wolin expressed his support on behalf of the American Insurance Association (AIA) for H.R. 5840 and the establishment of the OII. According to Wolin, this would “create an insurance expert who serves as the principal federal adviser on domestic and international policy issues for all lines of insurance but health. In one stroke, we would answer the call for a single national voice on these important matters. Equally important, the bill would give the federal government the authority it needs to engage with its counterparts around the globe on international insurance matters, with targeted authority to back up any formal commitments made by the United States.”
Voicing some concerns about the legislation was David A. Sampson, president and CEO of the Property Casualty Insurers Association of America. Sampson believes the legislation needs additional clarity and should avoid overregulation.
“The draft bill would, for the first time, give this potential federal entity pre-emptive authority over state insurance laws as an administrative process, rather than as a legislative one,” Sampson said. “This could create an uncertainty in the industry about the regulatory environment in which we operate.”
Other panel members presented testimony on behalf of the National Association of Insurance Commissioners, the National Conference of Insurance Legislators, the American Council of Life Insurers and the Reinsurance Association of America.
The Office of Insurance Information would be organized within the Department of the Treasury to provide expertise on insurance policy to the administration and to Congress. Within the OII, the legislation proposes an advisory group of up to 13 members including representatives of the administration, the National Association of Insurance Commissioners and other representatives of the insurance industry that the secretary of the treasury deems appropriate.
To view the text of H.R. 5840, visit www.TakingTheHill.com. The bill can be found by clicking on “Track Current Legislation” under “Key Bills in Congress.”
