D.C. Combines Insurance, Banking, Operations

William P. White, director, captive insurance, told National Underwriter that the move "goes back to wanting to create an environment where D.C. can become more of a financial services center."

He added that D.C. is "not trying to displace anyone, we are just trying to pull together some resources that are already in the infrastructure right here in D.C."

The effort, he noted is being stimulated partly by captives. "This ties in with my overall philosophy," he said, "which is that captives are one of the mechanisms that are part of the alternative risk transfer market."

Officials said the expected benefits of the merger include creating a comprehensive approach to regulating financial services, products and transactions, many of which have banking, insurance and securities features. The goal is to better protect the citizens of the District of Columbia and enhance the city's economic development potential by having a single regulator for both traditional and non-traditional financial products.

"The structure of the financial services industry is changing rapidly," Mr. Mirel said. "To properly regulate the industry we need a consolidated regulatory agency, just as they have in leading financial countries such as Great Britain, Germany and Japan.

By merging the two agencies, he said, "the District will demonstrate that it is ready and able to regulate modern financial services organizations."

In 1999, Congress enacted the Gramm-Leach-Bliley law, which tears down the wall of separation between banking and insurance that has existed since the 1930s. Over time, this is expected to change the nature of financial services businesses, as new products are introduced that are not exactly insurance, not quite banking, not entirely investments, but a blend of each, according to the department.