NU Online News Service, Nov. 18, 4:10 p.m.EST

WASHINGTON–The National Association of InsuranceCommissioners has won significant changes to legislation creating aFederal Insurance Office, giving state regulators more say in itsoperations.

The new language is contained in a manager's amendment to thebill agreed to Tuesday. It would require the new agency to closelycoordinate with state regulators and would give Congress and thecourts the authority to further limit the agency's authority ininsurance matters.

The changes in the Federal Insurance Office Act of 2009 wereagreed to by the leadership of the House Financial ServicesCommittee.

The bill was scheduled to be marked up tomorrow by the HouseFinancial Services Committee, but insurance industry sources saidbecause of objections the process could be delayed.

The proposed NAIC alterations to the legislation apparentlyupset supporters of a stronger federal role in regulation ofinsurance. These include the American Council of Life Insurers; theAmerican Insurance Association; the Reinsurance Association ofAmerica; and the Financial Services Roundtable.

The changes the NAIC negotiated in the bill would mandate closercooperation between the states and the FIO on narrow internationalagreements; ensure that international agreements don't preemptstate prudential regulation of U.S. insurers; limit the scope ofagreements to recognizing a level of supervision consistent withstate protections; add congressional involvement and consultation;and add judicial review on preemptive determinations made by theproposed agency.

It also restates state authority to regulate the "business ofinsurance."

Roger Sevigny, NAIC's president and New Hampshire's insurancecommissioner, said, "The recent amendments strike an appropriatebalance among the needs of consumers, state regulators and federalnegotiators by preserving important state and market regulationwhile allowing for agreements with equivalent regulatorysystems."

"While the NAIC continues to oppose a federal functionalregulator for insurance or misguided attempts to further empowerthe FIO, the bill as currently drafted is an appropriately narrowand targeted improvement to our system of supervision," Mr. Sevignyconcluded.