House again floats federal insurance regulator

In the latest iteration of a plan that’s been steadily gaining support from both Democrats and Republicans on the Hill, legislation was introduced yesterday that would create a federal insurance regulator.
APR 03, 2009
By  Bloomberg
In the latest iteration of a plan that’s been steadily gaining support from both Democrats and Republicans on the Hill, legislation was introduced yesterday that would create a federal insurance regulator. The National Insurance Consumer Protection Act, introduced by Rep. Melissa Bean, D-Ill., and Rep. Ed Royce, R-Calif., would allow all insurers the option of being regulated by a federal regulator or continue to be regulated by states, as has historically been the case. “The events of 2008 show us that insurance reg reform can no longer be postponed. It is needed now,” Ms. Bean said in a statement. The bill would provide consumer protection while eliminating barriers to industry competitiveness in global markets, she said. “Beyond the inefficiencies created by the fragmented state-based system overseeing insurance, systemic gaps have revealed themselves in recent months,” Mr. Royce said in the statement. “Until these gaps are filled, the threat of another AIG remains,” he said, referring to American International Group Inc. of New York, which was taken over the federal government after the insurance giant ran into financial stress stemming from its sale of credit default swaps. Under the bill, a parallel national system of regulation would be created at the federal level for insurers, insurance agencies and agents, similar to the dual banking system. An Office of National Insurance would be created within the Treasury Department, similar to the Office of the Comptroller of the Currency, with a commissioner appointed by the president for five-year terms subject to Senate approval. Both national and state insurers could convert their charters if approved by the national regulator. Underwriting of both life and property-casualty insurance would be separated, but a holding company could own both national life and property-casualty insurers. State and national insurance regulators would be required to share information with a systemic risk regulator, who could take action to mitigate actions by insurers that might have adverse effects on financial stability. The National Association of Insurance Commissioners in Washington issued a statement opposing the bill. “This is not a reform bill; it is a deregulation bill, aimed at stripping the states of insurance oversight authority and denying consumers of the time-tested protections that regulatory power provides,” NAIC president and New Hampshire insurance commissioner Roger Sevigny said in the statement. The insurance industry has been pushing for an optional federal regulator for several years, arguing that an optional federal charter is needed in order for the industry to operate competitively globally. A federal regulator “is an appropriate and essential adjunct to broader reform efforts,” Frank Keating, chairman and chief executive of the American Council of Life Insurers in Washington, said in a statement. “It will ensure that the resulting overall regulatory system will be seamless and will provide consumers with a safe and stable financial services marketplace,” he said.

Latest News

Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households
Roughly three-fifths of Americans agree on higher taxes for large corporations, higher-income households

Pew survey reveals slight majority consensus on tax rates, but views splinter based on political alignment and income levels.

The Fed's going to cut rates
The Fed's going to cut rates

While the Federal Reserve's decision to hold interest rates steady in March was widely expected, it's the reactions from financial professionals that provide a more nuanced picture of the central bank's approach.

Ontario Pension Fund revamps PE business in light of global risk
Ontario Pension Fund revamps PE business in light of global risk

The pioneering member of Canada's Maple Eight is stepping back from its go-it-alone private equity approach as a drought in deals and Trump's trade war prompt a rethink.

Raymond James, RBC reel in UBS advisors managing over $690M in assets
Raymond James, RBC reel in UBS advisors managing over $690M in assets

The firms' latest additions in Florida and Nevada come as a strategic change at UBS raises risk of advisor defections.

Assetmark debuts new advisor succession planning program
Assetmark debuts new advisor succession planning program

The new program offers opportunities and events structured for rookies, next-gen advisor leaders, and soon-to-exit veterans.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies