U.S. Insurance Info Office Notion Hit By 2 Insurance Groups

WASHINGTON--Two insurance groups lobbying against federal regulation of insurance said they have e-mailed members of Congress opposing the creation of an Office of Insurance Information within the Treasury and a third group said it has written President Obama supporting continued state regulation.

The two organizations involved in the e-mail campaign are the Indianapolis-based National Association of Mutual Insurance Companies and the Washington-headquartered Coalition Opposed to a Federal Insurance Regulator.

At the same time, the Independent Insurance Agents and Brokers of America, which supports the notion of a U.S. Office of Insurance Information disclosed it wrote a letter to President Obama with its own views of insurance regulation last week.

The IIABA letter asked the president to ensure that state regulation is preserved in any proposal developed by the administration to reform financial services regulation.

"While in definite need of targeted regulatory reforms to enhance uniformity and efficiency, state regulation of insurance has excelled at these two primary responsibilities, and we want to ensure that this fact is not lost in the overall debate on financial services regulatory reform," the IIABA said in a letter signed by Robert Rusbuldt, president and chief executive officer.

Regarding the OII, the NAMIC and COFIR sent an e-mail to all members of the House and Senate last week saying that "there is no need to ask the Treasury Department to reform a system that already works."

The e-mail followed news that two lawmakers in the House were asking fellow House members to sign onto a letter asking incoming Treasury Secretary Tim Geithner to unilaterally create an Office of Insurance Information within that agency.

The letter was drafted by Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., who have in the past sponsored legislation creating an optional federal charter. The letter is expected to be presented to Secretary-designate Geithner once he is confirmed. His nomination is scheduled to go before the full Senate tonight.

The letter asks Mr. Geithner to establish such an office as one of his first steps after being confirmed.

In response to the Bean-Royce letter, NAMIC and COFIR said in their e-mail to all members of the House and Senate that, "Insurance regulation is an enormously complex matter and there is no need to ask the Treasury Department to unilaterally begin to reform a system that already works.

"State attorneys general and insurance commissioners have done an excellent job protecting consumers and the U.S. economy--this is not the time to potentially disrupt a system that has kept a market healthy and stable," the letter continued.

"We urge you not to sign the letter to Treasury Secretary-designate Timothy Geithner and work with us to continue to maintain the effective state-based insurance regulation system," the NAMIC, COFIR e-mail said.

The IIABA letter signed by Mr. Rusbuldt said the trade group believes any financial services regulatory reform efforts must comport with two basic tenets.

First, the letter said, the administration and Congress "should attempt to fix only those components of the regulatory system that are broken, and second, no actions should be taken that would in any way jeopardize the protection of the consumer."

It noted that the "state-based system of insurance regulation has served both policyholders and the insurance industry well for over 100 years," adding that "state insurance regulators actively monitor insurance entities for potential financial trouble and have many different tools to help insurers navigate adverse market developments."

In addition, the letter said, "the state system utilizes a very effective safety net, the state guaranty fund mechanism, to protect consumers in the rare case of insurer insolvency."

The letter concluded by saying that even the failure of American International Group, "whose collapse emanated from its Financial Products division not its insurance operations, highlights the strength of the insurance regulatory system."

Mr. Rusbuldt argued, "Throughout the collapse and federal rescue of this large financial services holding company, AIG's insurance subsidiaries have been consistently hailed as healthy and stable.

"These state-regulated insurance entities continue to pay claims to consumers, which is the strongest testament yet to the strength of insurance regulatory system," the letter concluded.

The COFIR organization, which was formed last year, said its membership is made up of life, health, property and casualty, mutual insurance companies and trade associations including more than 1,400 companies and 300,000 agents and brokers nationwide.