House May Back-Burner Regulatory Reform

They denied that comments by the leadership of the National Conference of State Legislators that the role of the federal government in insurance regulation should be limited to such national issues as terrorism and catastrophe insurance is slowing down action on the bill.

Under the current plan, the SMART bill will be introduced late this month, and an informational hearing will be held on it by the Capital Markets Subcommittee before Congress recesses by mid-October to campaign. Instead, the panel will deal with TRIA and legislation imposing greater controls on sales of life insurance at military bases.

(It was learned at press time that a TRIA extension bill, including a provision adding group life to the programs portfolio, will be marked up by the full committee on Sept. 29.)

Charles Symington, senior vice president of federal government affairs at the Independent Insurance Agents & Brokers of America in Alexandria, Va., said that the "Big I continues to work closely with Chairmen Oxley and Baker on the SMART legislation and will do everything possible to assist them in their desire to move the bill forward."

"What we are seeing is that some are criticizing the legislation because it goes too far, and others because it does not go far enough," said Mr. Symington, adding that "the Big I thinks the chairmen have struck the right balance. We, like most organizations, have expressed our support for the legislation. We feel that this support proves that the legislation is a pragmatic middle-ground proposal."

Joel Wood, chief lobbyist for the Council of Insurance Agents and Brokers in Washington, said the industry is not disappointed that no markup of the SMART bill will be held this year.

"I think Reps. Oxley and Baker are on track to move a bill through Congress, or at least the House, next year," Mr. Wood said. "No one labored under the impression that a bill could be enacted this year." He added, "I am extremely comfortable that both Mr. Oxley and Mr. Baker have produced a bill that provides an excellent start at modernizing the industry, and that this is the only politically viable opportunity for meaningful reform in the next few years."

The TRIA extension will be dealt with by the committee through a bill introduced recently by Reps. Richard Baker, R-La., chair of the Capitol Markets panel, and Pete Sessions, R-Texas. Rep. Baker and Rep. Mike Oxley, R-Ohio, who chairs the full committee, are the current sponsors of the SMART bill.

One option regarding action on TRIA being contemplated by the congressional leadership calls for it to be added to the 9/11 Commission Report legislation considered must-do by the leadership, either during the current session or in a lame duck session following the election. Legislation extending TRIA has also been introduced in the Senate by Sens. Robert Bennett, R-Utah, and Chris Dodd, D-Conn.

Regarding SMART, NCOILs response was keyed to the quarterly meeting of the National Association of Insurance Commissioners last week in Alaska. In a letter sent to Reps. Oxley and Baker, signed by its president, Steve Geller, NCOIL said it "cannot support" the SMART Act because "it could undermine the role of state legislatures in the development of insurance public policy and undermine the authority of state insurance commissioners."

In general, Mr. Geller said, NCOIL cannot support any federal legislation that would encroach upon the states authority to develop insurance public policy. "Federal intervention in the regulation of insurance would cast aside the insurance public policy expertise of state legislatures and state insurance regulators in favor of an untested and inflexible system," NCOIL said.

Consumer groups are also critical. The Washington-based Consumer Federation of America, in a letter to Reps. Oxley and Baker also timed to the NAIC quarterly meeting in Alaska, complained that: "Rather than increase insurance consumer protections for individuals and small businesses while spurring states to increase the uniformity of insurance regulation, this sweeping proposal would override important state consumer protection laws, sanction anticompetitive practices by insurance companies and incite state regulators into a race to the bottom to further weaken insurance oversight."

The letter, signed by J. Robert Hunter, former Texas insurance commissioner and CFAs director of insurance, called SMART "quite simply one of the most grievously flawed and one-sided pieces of legislation that we have ever seen; a veritable wish list of items requested by insurers with absolutely no protections offered for consumers."

Reproduced from National Underwriter Edition, September 16, 2004. Copyright 2004 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.