WASHINGTON–State legislators and an agents' group are voicing vehement opposition to legislation that would create a federal insurance “information office” within the Treasury Department.

At the same time, a contrary view was offered by officials of a different agents group and an insurers' trade organization.

Comments supporting the new legislation followed a statement by the President of the National Conference of Insurance Legislators, Rhode Island State Rep. Brian Kennedy, D-Hopkinton, voicing “concern” with the Insurance Information Act of 2008 (H.R. 5840).

The bill in question was introduced last week by the chairman of the Capital Markets Subcommittee of the House Financial Services Committee, Rep. Paul Kanjorski, D-Pa.

The concept of the bill was proposed in the Treasury's March 31 release of a Blueprint for a Modernized Financial Regulatory Structure recommending that Congress immediately establish an Office of Insurance Oversight.

At the time the blueprint was unveiled, Rep. Kennedy, as president of NCOIL, voiced opposition to the Blueprint's recommendations as it dealt with insurance regulation.

In his most recent statement, Rep. Kennedy said that by creating a new federal insurance office, Congress would in effect be preempting long-established state structures.

“NCOIL questions what the future would hold for successful state mechanisms–including the National Insurance Producer Registry and the National Association of Insurance Commissioners (NAIC) accreditation program for financial solvency–after a federal insurance office is established in Washington, D.C.,” Rep. Kennedy said.

He added that, “None of my constituents has ever called, e-mailed or even verbally communicated to me that the insurance industry is broken and that the best approach to reform is an Office of Insurance Information. Congress should think carefully before wielding a big stick approach to solving a problem that merely needs tinkering.”

But Joel Wood, senior vice president, government affairs, of the CIAB, disagreed.

“It's very difficult to say the states are getting the job done when state legislators place so little value on the efforts by the NAIC to achieve consensus – the kind of consensus that might otherwise avert a federal role,” he said.

He cited recent data indicating that of the six model laws passed by the National Association of Insurance Commissioners over the past two years, three of them have failed to be enacted anywhere, and one has been enacted only in a single state, as illustrating problems with state regulation.

He said that NCOIL “would have more credibility on this subject if it had a track record of following through on enactment of model laws where the commissioners have struggled to achieve harmony,” adding that “the facts are abysmal on this front.”

“Reasonable people can disagree about the need for, and scope of, federal intervention in insurance regulation,” added Mr. Wood. He said that CIAB officials, while disagreeing with the NAIC, “greatly respect the work the commissioners are trying to do.”

Voicing a view similar to that of NCOIL, the National Association of Professional Insurance Agents also said it opposes the Insurance Information Act.

“This bill is yet another piece of legislation that is designed to advance federal regulation of insurance, which PIA adamantly opposes,” said Len Brevik, PIA executive vice president and chief executive officer.

“Far from being benign as its title suggests, the Office of Insurance Information would have broad authority to preempt state laws and set national insurance policy,” Mr. Brevik said. “It is, in fact, a federal insurance regulatory agency.”

He said, “calling it an 'information office' is a misnomer.” Mr. Brevik added the bill sets up a dual system of regulation that is not optional.

But Blain Rethmeier, senior vice president for public affairs for the American Insurance Association, said the “The PIA's concerns about “regulation by decree,” are overblown.

Mr. Rethmeier said that, “Unlike the state insurance regulators, who can regulate by decree via issuance of regulations, H.R. 5840 would only provide a very narrow window to the Secretary of Treasury to enforce international agreements. “

He said that anyone “actually familiar” with the long history of Treasury and the U.S. Trade Representative in negotiating favorable international agreements for U.S. financial service providers “would welcome this authority.”

Mr. Rethmeier said that the long list of free trade agreements, Bilateral Investment Treaties and tax agreements negotiated by the U.S. government “demonstrate a very measured, prudent approach with the unwavering goal of helping U.S. financial companies remain competitive internationally.”

Special Reports /

Kanjorski Bill Draws Fire

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