Sponsors Of U.S. Insurance Regulator Bill List Details

WASHINGTON--U.S. Representatives preparing legislation to create a federal insurance regulator have disclosed that the measure will call for supervision of nationally registered insurers, agencies, and producers.

States would still maintain responsibility for regulating state licensed insurers, agencies and producers even as the act created a national system of regulation and supervision for insurers, agencies, agents and brokers that chose to be nationally registered.

The outline was provided last night at the request of The National Underwriter. Staff for sponsors Rep. Melissa Bean, D-Ill., and Ed Royce, R-Calif said the bill would be introduced in the House when Congress returns from the President's Day recess.

Titled the "National Insurance Consumer Protection and Regulatory Modernization Act," the bill will allow the market to set rates for personal lines property-casualty insurance lines.

Specifically, the outline says, "national insurers will be able to set rates at actuarially sound prices."

Under the new law, national insurers will be required to follow guidelines set forth by the Office of National Insurance and file their new forms with the Office for review, the outline says. Insurers and agencies will be examined for financial and market conduct, it adds.

It would also give the authority to monitor insurers to a federal risk regulator for the financial services industry, a post that would be created under legislation, expected to be introduced by the end of this month by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee.

The new law would also require federally registered insurance holding companies that have a predominant share of insurance businesses, as determined by the commissioner, as the regulator would be called, to be regulated at the holding company level as an insurance holding company by an Office of National Insurance.

Regarding consumer protections, the new bill will implement the model laws of the National Association of Insurance Commissioners that govern market conduct.

The measure also calls for providing a single telephone number that consumers with complaints or inquiries can call to locate the appropriate federal or state insurance regulator.

It will also mandate that "there is a physical office of the Office of National Insurance in every state either through the Office of the Ombudsman or the Division of Consumer Affairs."

It will also require national insurers and agencies to have a consumer liaison that will work with the Division of Consumer affairs for expeditious handling of consumer complaints.

In disclosing their plans, Ms. Bean and Mr. Royce said that, "In advancing this legislation, we believe we can provide a more effective regulatory regime over insurance that will enhance consumer protections, ensure our capital markets are protected from systemic threats within the insurance sector, and address many of the problems that have resulted from the fragmented state-based system."

Under the proposed law, states would still be able to assess premium taxes on nationally chartered entities, the authors of the bill state in their outline.

In addition, nationally chartered entities would still be subject to state unclaimed property and escheat laws, participating in assigned risk plans, mandatory residual market mechanisms, and state laws requiring compulsory coverage of workers' compensation and vehicle insurance.

The proposed law will maintain "that if a state guaranty association does not provide policyholders a level of protection equivalent to the NAIC Model standards, a national guaranty corporation would be created for national insurers," the outline says.

(Arthur Postal can be contacted a apostal@nuco.com or 202728-0506)