WASHINGTON–The House Financial Services Committee will take acloser look at a number of insurance regulatory issues over thenext several weeks, beginning with a hearing on municipal bondissues set for Wednesday, a committee staff member said.

Speaking at the Legislative/Regulatory Conference of the SelfInsured Institute of America in Washington today, Kathleen Mellody,counsel to the House Financial Services Subcommittee on CapitalMarkets, Insurance and Government Sponsored Enterprises, said thatbond insurance is “a new topic for many of us here in Washington,”but added that the “ricochet effect” of troubled bond insurers onthe economy in general is a concern for lawmakers.

The insurers, whose most risk-free business is municipal bonds,have been in difficulties because of their involvement withderivative investments from the subprime mortgage lendingmarket.

Ms. Mellody said the committee will take up two other issues inaddition to bond insurance. She mentioned changes to thelegislation enabling risk retention groups (RRGS) and a continueddiscussion of insurance regulation, with hearings in mid-April.

Rep. Dennis Moore, D-Kan., told the SIIA on Wednesday that hewas working to craft legislation adjusting the Risk Retention Act.The law, which was enacted in 1986, currently limits RRGs toproviding liability coverage as corporations or limited liabilityassociations that function as captive insurance companies formember owners that are licensed as insurance companies or charteredas captives.

Rep. Moore's legislation would allow RRGs to offer otherproperty coverage, and Ms. Mellody said the committee would waitfor Rep. Moore to finish crafting the bill and that hearings arecurrently being scheduled for mid-April.

At roughly the same time, Ms. Mellody said the committee willbegin taking a deeper look at the insurance regulatory system andthe “number of proposals” that have been proposed to fix it,including an optional federal charter proposed by some industrygroups and proposals from the National Association of InsuranceCommissioners.

The Capital Markets Subcommittee, which is chaired by Rep. PaulKanjorski, D-Penn., began looking into insurance reforms last fall.Ms. Mellody noted that the fall hearings were intended to examinethe issues of regulation, rather than the possible fixes.

“Now we're going to turn this year to the possible solutions,”she added. The hearings will initially include all of theregulatory reform proposals, but she said it was expected thatfurther hearings would narrow the field to those that committeemembers take interest in.

Extending the National Flood Insurance Program is also a toppriority, Ms. Mellody said, although for the moment there isnothing the committee can do on the issue. The House passed itsversion of NFIP legislation last year, but the bill has not beenvoted on by the Senate. Once that occurs, she said House and Senatemembers will meet to work out the differences in the two bills.