House Bill Might Impose CRA Mandates
Washington
Rep. John J. LaFalce, D-N.Y., the ranking Democrat on the House Financial Services Committee, is expected to introduce an optional federal chartering bill that could impose community reinvestment requirements on U.S.-chartered insurers.
The bill, which is tentatively entitled the "Insurance Industry Modernization Act," appears to closely resemble a similar proposal that was introduced in the Senate by Sen. Charles Schumer, D-N.Y.
The LaFalce bill would establish an Office of National Insurers within the Treasury Department to issue federal charters to insurers, which would be exempt from most state regulation.
The ONI would be empowered to issue regulations affecting nationally-chartered insurers, examine their solvency and enforce solvency standards, enforce market conduct standards, and investigate insurance fraud.
In addition, nationally-chartered insurers would lose their antitrust immunity under the McCarran-Ferguson Act.
However, according to a draft obtained by the National Underwriter, nationally-chartered insurers would still have to pay state premium taxes.
Also like the Schumer bill, the LaFalce bill would require nationally-chartered insurers to participate in "qualified" state guaranty associations–one that follows guidelines established by the Kansas City, Mo.-based National Association of Insurance Commissioners.
The bill would establish separate national guaranty corporations for property-casualty insurance and life insurance that would cover non-qualified states.
However, according to a preliminary analysis of the draft by one industry attorney, who asked not to be identified, the LaFalce bill would impose community reinvestment requirements on federally-chartered insurers, which is in contrast to the Schumer bill, which has no CRA language. This means that insurers would be required to invest a portion of their assets in certain designated areas.
It is unclear whether the CRA language will be in the final draft that Rep. LaFalce formally introduces.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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