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The Obama Administration has sent legislation to Congress that would create an Office of National Insurance (ONI), a proposed department of the Treasury that would “monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry of the U.S. financial system.”
The ONI, which would not regulate health insurance, would create federal policy on international insurance issues and be given the authority to override state insurance regulations.
The ONI would also gather and analyze data from all segments of the insurance industry except the health insurance industry and small insurers. The ONI would also have the authority to subpoena requested data or information from insurers, and the U.S. District Court would uphold such orders.
According to the administration’s proposal, the Department of the Treasury will support the following six principles for insurance regulation:
Effective systemic risk regulation with respect to insurance.
Strong capital standards and an appropriate match between capital allocation and liabilities for all insurance companies.
Meaningful and consistent consumer protection for insurance products and practices.
Increased national uniformity through either a federal charter or effective action by the states.
Improved and broadened regulation of insurance companies and affiliates on a consolidated basis, including those affiliates outside of the traditional insurance business.
The Automotive Service Association (ASA) says the proposed ONI would “modernize” the U.S. insurance industry.
Property-casualty insurers are split over the proposed legislation.
The National Association of Mutual Insurance Companies (NAMIC) and the Property-Casualty Insurers Association of America (PCI) voiced concern over the proposed ONI because they favor continued state insurance regulation. The groups prefer legislation proposed last year that would create an Office of Insurance Information and leave more regulatory power with state governments (click HERE to read more).
“We hope that the administration will consider endorsing the OII, which would meet the stated goals of the administration to create an agency that would gather information, develop expertise, negotiate international agreements, and coordinate policy in the insurance sector,” said Jimi Grande, NAMIC vice president for federal and political affairs.
The Council of Insurance Agents and Brokers and several other insurance advocates support the ONI proposal.
Click HERE to read the legislation.