NU Online News Service

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WASHINGTON--Four trade groups representing largeinsurers have sent a letter to the House Financial ServicesCommittee opposing changes to legislation creating a FederalInsurance Office.

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The letter from officials of the American Council of LifeInsurers, the American Insurers Association, the Financial ServicesRoundtable and the Reinsurance Association of America was sent asthe committee prepares to vote tomorrow on the bill, H.R. 2609, theFederal Insurance Office Act of 2009.

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The provisions objected to severely limit the authority of theproposed office, which is to be located within the TreasuryDepartment.

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At the same time, officials of the four trade groups said thatwhile concerned about the language, they still support creation ofthe office.

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The changes putting limits on the new entity's authority werenegotiated by Rep. Paul Kanjorski, D-Pa., chairman of the CapitalMarkets Subcommittee of the House FSC panel, in order to secure thesupport of the National Association of Insurance Commissioners forthe bill.

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Several other trade associations--including the IndependentInsurance Agents and Brokers of America, the National Associationof Mutual Insurance Companies, and the Property Casualty InsurersAssociation of America--participated in the talks that resulted inthe changes and support the new language.

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The compromise language would limit the Treasury Department'sauthority to preempt state insurance regulations even if the staterule conflicts with an international trade agreement.

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It also contains a savings clause that prevents preemption ofstate insurance measures governing capital or solvency of aninsurer even if no solvency-related regulatory gap is created.

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Top NAIC officials sent a letter Nov. 17 obtained by theNational Underwriter that indicates their organization will supportcreation of such an office if a manager's amendment sustaining theauthority of state regulators on prudential matters is included ina final bill.

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But in a letter to key members of the committee today, officialsof the trade groups opposed the revised language negotiated bycommittee leaders with the NAIC.

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The legislation proposed in October, the letter said, like theTreasury proposal from this past summer, "provided meaningful andeffective international authority that was supported by appropriateand tempered preemption."

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That authority "is substantially weakened by the anticipatedamendment," the letter said. "Should the Committee pass thelegislation in that form, it would represent a missed opportunityand force this question to be dealt with again by Congress in theimmediate future."

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