Rep. Edward Royce, R-Calif., says he plans to introduce a House version of optional federal charter legislation this fall–but the move comes amid several indications that the Democratic leadership in the House Financial Services Committee is balking at supporting any bill that would allow for deregulation of personal lines.
First, at a fundraiser on Sept. 12–the same day Rep. Royce confirmed his plans to introduce his bill–Rep. Barney Frank, D-Mass., ranking minority member of the panel, told industry lobbyists he would not support rate deregulation for personal lines.
At the same time, it was learned Rep. Frank Kanjorski, D-Pa.–second in line to Rep. Frank, and the likely chairman of the key Capital Markets Subcommittee if the Democrats take control of the House–had declined to join Rep. Royce as a primary co-sponsor of the bill.
Rep. Kanjorski, through his staff, declined to comment, but the change was disclosed in a memo circulated to its members by the American Council of Life Insurers–a prime supporter of the OFC. Industry officials believe Rep. Kanjorski is backing off because of Rep. Frank's concerns about Democrats being too out front on OFC–especially as it might impact personal lines rate deregulation.
However, a property-casualty lobbyist cautioned this development does not doom hope that within several years an OFC charter for commercial lines might be approved. "Neither Rep. Kanjorski nor Rep. Frank has indicated to our knowledge any concern about commercial p-c," the lobbyist said.
Rep. Royce disclosed his plans at the American Bankers Insurance Association annual conference in Washington, D.C. His OFC bill will be based on the version proposed in the Senate by Sens. John Sununu, R-N.H., and Tim Johnson, D-S.D., and would include both life insurance and p-c lines, he said.
A day earlier, during an ABIA panel discussion, an aide to Sen. Sununu discussed the importance of Congress examining the OFC issue. Jamie Burnett, legislative director for Sen. Sununu, noted the time Congress is spending discussing insurance issues–including terrorism coverage, the National Flood Insurance Program and catastrophe coverage.
Citing the fact that Congress will have to deal with the NFIP program this year and whether to extend TRIA before it sunsets on Dec. 31, 2007, Mr. Burnett said "Congress should be more proactive in looking at insurance."
He explained that, "while nationally and globally there is no crisis in insurance," the lack of the need for immediate legislation "gives us a window to look at reform at a more leisurely pace." Otherwise, Mr. Burnett said, "when you deal with an issue during a crisis, you have to deal with unintended consequences."
He was supported by another panelist, Rep. Shirley Bowler, R-La., who noted that during a recent session, "I saw the Louisiana State Legislature beating up on the insurance industry," even though the industry had to deal with an unprecedented crisis in Hurricane Katrina.
In his comments on Sept. 12, Rep. Royce said his "enthusiasm" for creating a federal insurance regulatory system is "partly a result of me being from California," where he said he served in the state legislature with current California Insurance Commissioner John Garamendi during the 1980s.
Rep. Royce said that he and Mr. Garamendi "couldn't be farther apart" on the issue of state versus federal insurance regulation, charging that the industry "has suffered from years of Sacramento's overregulation."
Worries about just such overregulation, he added, are "what caused the Founding Fathers to abandon the Articles of Confederation" and establish the commerce clause in the U.S. Constitution. "It makes no sense to have a balkanized insurance regulatory system," he said. "The United States is one marketplace."
No big quote mark
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