The House Financial Services Committee this morning unanimously approved legislation that would create a federal insurance office within the Treasury Department. The legislation is part of a broad financial services regulatory reform package that is scheduled to be voted on next week by the full House of Representatives.
The House Financial Services Committee this morning unanimously approved legislation that would create a federal insurance office within the Treasury Department. The legislation is part of a broad financial services regulatory reform package that is scheduled to be voted on next week by the full House of Representatives.
Under an amendment unanimously approved by the committee, insurance agents and brokerage firms would not be subject to subpoenas for information by the proposed office. Only insurers that underwrite policies would be subject to such subpoenas.
The amendment, which was offered Rep. Paul Kanjorski, D-Pa., chairman of the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, along with Reps. Travis Childers, D-Miss., and Erik Paulsen, R-Minn., was called for by the Independent Insurance Agents and Brokers of America, which represents property-casualty and other insurance agents and brokerage firms.
“It allowed us to be comfortable with the underlying legislation,” said John Prible, vice president of government affairs for the IIABA. The group has fought against creating an optional federal charter for insurance, which is what insurers have called for.
“We had some concerns about the underlying legislation if agents and brokers would have been subject to these mandatory data requests,” Mr. Prible said.
But Bob Hunter, director of insurance for the Consumer Federation of America, questioned whether the amendment may be overly broad. “It could be a problem if [a federal insurance office] couldn't go after a huge broker that was working in 50 states,” he said.
“Marsh & McLennan [Cos. Inc.] is a pretty big agent,” he said, pointing to previous settlements entered into by the firm for bid-rigging. “They really could impact a large number of policies and a large dollar amount of insurance.”
But, Mr. Hunter added that he is not worried about small or regional brokerage firms.
The American Council of Life Insurers issued a release pledging to continue to work with the committee on creating a federal insurance office, which would be empowered to collect information about the industry and serve as a source of information on federal policy that impacts carriers. The office also would be empowered to pre-empt state laws that interfere with international treaties.
“The Treasury Department needs to develop expertise on a $5 trillion industry that affects the lives of tens of millions of Americans,” ACLI president and chief executive Frank Keating said in a release, referring to the life insurance industry.
The National Association of Insurance and Financial Advisors also applauded committee approval of the bill. “There are 14 federal agencies that have a role in regulating insurance, and yet there is no central body of expertise at the federal level to provide advice and counsel [to] the administration and Congress when policies that impact our industry both at home and abroad are considered,” NAIFA president Thomas Currey said in a release.
