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The U.S. House Financial Service Subcommittee held Part III of its hearing on insurance regulation recently. The previous hearings were held in October 2007 and focused on the need for insurance regulatory reform. The purpose of the hearing was to consider a variety of state and federal proposals on insurance reform. Currently, there are two pending bills in Congress, H.R. 3200 and S. 40, titled the “National Insurance Act of 2007.” These bills would create an optional federal charter (OFC) and establish the Office of National Insurance (ONI).
David Nason, assistant secretary for Financial Institutions, Department of the Treasury, outlined the recently released “Blueprint for a Modernized Financial Regulatory Structure” that was released by the Treasury Department March 31. The blueprint was created after a year-long effort working toward the modernization of all sectors of the financial services industry. Nason said: “A number of reform proposals have been considered over the years to modernize the U.S. system of insurance regulation: total federal preemption, dual federal/state systems under an optional federal charter approach, mandating national standards on the state-based system, and harmonizing and making more uniform regulation among the states. In the Treasury Department’s view, the establishment of a dual federal/state system with an OFC provides the best opportunity for the establishment of a modern and comprehensive system of regulation.”
Alastair Shore, senior vice president and chief underwriter of CUNA Mutual Group, presented on behalf of the American Council of Life Insurance and the American Insurance Association. Shore focused on his trade associations’ support of the Optional Federal Charter. According to Shore, “The National Insurance Act is a strong consumer protection bill, which focuses on a robust centralized system that emphasizes safety, soundness and consistent market regulation. The consumer protections are reinforced through separate consumer affairs and insurance fraud divisions and a new federal ombudsman. Together, these regulatory powers will create a presence that can more quickly respond to consumers than the current, fragmented regulatory system.”
Other panel members presented testimony on behalf of the National Association of Insurance Commissioners, the Self-Insurance Institute of America, the Independent Insurance Agents and Brokers of America and the Interstate Insurance Product Regulation Commission.
To view the National Insurance Act, visit the Automotive Service Association’s legislative Web site, www.TakingTheHill.com. The bills can be found under the “Track Legislation” button in the left navigation menu or by clicking the large red “Track Current Legislation” button in the right column of the home page. To view the blueprint, visit the “Press Center” and click on “References and Bills.”