NU Online News Service, May 11, 10:45 a.m. EDT,Washington--Ohio's HouseInsurance Committee yesterday passed a resolution asking the U.SCongress not to enact legislation imposing federal standards oninsurance regulation.

The panel's action yesterday comes as an embarrassment to theirhome state congressman, Rep. Mike Oxley, R-Ohio, who chairs theHouse Financial Services Committee, which is crafting thelegislation known as the State Modernization and RegulatoryTransparency Act (SMART).

The panel voted 14-1 to ask the state Legislature to pass thesame resolution and send it to the leadership of both parties ofthe U.S. Congress.

Rep. Oxley was not available yesterday to comment, according toa committee aide. But a veteran industry lobbyist, Joel Wood of theConference of Insurance Agents and Brokers, called the resolution"misguided."

Mr. Wood said the vote was unlikely to have any impact on thecongressional committee's decision whether to act or not act onSMART.

Rep. Oxley and Rep. Richard Baker, R-La., chairman of thepanel's key Capital Markets Subcommittee, are on track to release anew draft of the bill sometime this summer, according to industrylobbyists.

It is unclear what the full Ohio Legislature will do with thedraft resolution, but it would appear to give Rep. Oxley pause,given that even a representative from his own district, DerrickSeaver, representing Minter in Rep. Oxley's 4th District, is asponsor of the resolution.

The committee is currently working with industry trade groupsand the National Association of Insurance Commissioners (NAIC),asking for input title by title, in hopes of creating a consensuson the bill. A letter prepared by the staff of the NAIC providing adetailed critique of the bill was apparently forwarded to thecommittee staffers late last month, but has not yet becomeavailable.

The resolution states that, "State Legislatures are moreresponsive to the needs of their constituents and moreknowledgeable regarding the market conditions in their own statesand the necessary insurance products and regulations to meet thosemarket conditions."

According to the resolution, premium levies in Ohio totaled $404million in 2003, and it contended that the proposed federal law"would undermine state sovereignty, threaten the power of statelegislatures, governors, insurance commissioners and attorneysgeneral to oversee, regulate and investigate the insurance industry..."

It also said the SMART bill would "limit the states' ability toprotect the interests of their constituents ..."

Defending Reps. Oxley and Baker's efforts, Mr. Wood said that"state legislators want to preserve turf should not come as asurprise to anybody."

But he said the Ohio panel is "very, very misguided if theythink that the proposed SMART Act is destructive to state insuranceregulation--precisely the opposite is true."

Mr. Wood said that, "Ohio's former insurance director, andformer president of the NAIC, Lee Covington, agrees with Mike Oxleyon this point. He understands insurance regulation and thechallenges facing it, and he understands that there are simply manyareas of state-by-state insurance law that are totally atcross-purposes with the national and international nature of theinsurance marketplace.

"The paradox is that there are many players who think that theSMART Act doesn't go nearly far enough--that Congress should enactfederal regulation to supplant state regulation," Mr. Woodsaid.

In addition to the Ohio action, New York State Senator WilliamJ. Larkin, R-New Windsor, with the support of the NationalConference of Insurance Legislators (NCOIL) has sent Mr. Oxley'scommittee a detailed critique of SMART, suggesting it would crippleinsurance regulation by taking revenues from the states that theycurrently use for staff to oversee the industry.