NU Online News Service, Dec.1, 4:15 p.m. EST
WASHINGTON--Four trade groups representing large insurers have sent a letter to the House Financial Services Committee opposing changes to legislation creating a Federal Insurance Office.
The letter from officials of the American Council of Life Insurers, the American Insurers Association, the Financial Services Roundtable and the Reinsurance Association of America was sent as the committee prepares to vote tomorrow on the bill, H.R. 2609, the Federal Insurance Office Act of 2009.
The provisions objected to severely limit the authority of the proposed office, which is to be located within the Treasury Department.
At the same time, officials of the four trade groups said that while concerned about the language, they still support creation of the office.
The changes putting limits on the new entity's authority were negotiated by Rep. Paul Kanjorski, D-Pa., chairman of the Capital Markets Subcommittee of the House FSC panel, in order to secure the support of the National Association of Insurance Commissioners for the bill.
Several other trade associations--including the Independent Insurance Agents and Brokers of America, the National Association of Mutual Insurance Companies, and the Property Casualty Insurers Association of America--participated in the talks that resulted in the changes and support the new language.
The compromise language would limit the Treasury Department's authority to preempt state insurance regulations even if the state rule conflicts with an international trade agreement.
It also contains a savings clause that prevents preemption of state insurance measures governing capital or solvency of an insurer even if no solvency-related regulatory gap is created.
Top NAIC officials sent a letter Nov. 17 obtained by the National Underwriter that indicates their organization will support creation of such an office if a manager's amendment sustaining the authority of state regulators on prudential matters is included in a final bill.
But in a letter to key members of the committee today, officials of the trade groups opposed the revised language negotiated by committee leaders with the NAIC.
The legislation proposed in October, the letter said, like the Treasury proposal from this past summer, "provided meaningful and effective international authority that was supported by appropriate and tempered preemption."
That authority "is substantially weakened by the anticipated amendment," the letter said. "Should the Committee pass the legislation in that form, it would represent a missed opportunity and force this question to be dealt with again by Congress in the immediate future."