Group Of 16 Democrats Calls For Modernizing Insurance Regs

WASHINGTON--A group of 16 House Democrats released a new plan for financial services reform legislation that calls for "modernizing the regulation and oversight of the insurance industry."

Under the so-called "new Democrats" plan, the plank for insurance includes a call for legislation that ensures that the federal government has "adequate information" about insurance industry operations and activities, and allows for a "consolidated U.S. position in international trade discussions."

The document also calls for a new system that provides for "robust" consumer and investor protection.

The document was released today by a group that includes Rep. Melissa Bean, D-Ill., a member of the House Financial Services Committee, and other members who are or have served on the House Financial Services Committee.

Ms. Bean will be the co-sponsor of a version of legislation calling for creation for an optional federal charter for insurers expected to be introduced shortly.

The proposal also calls for creating a systemic risk regulator with authority to "monitor systemically important institutions and their counterparties to mitigate the risk of systemic collapse."

It also proposes to reduce "redundant regulatory structures in exchange for robust regulatory oversight."

Leigh Ann Pusey, president of the American Insurance Association, reacted to the proposal saying the AIA is "encouraged by the proactive stance the New [Democrats] have taken to protect U.S. consumers by advancing principles to modernize our nation's financial regulatory structure."

Ms. Pusey said that "there is an urgent need to develop insurance expertise at the federal level to both understand the critical role insurance plays in our financial markets and economy, and to deal on equal terms with other financial institution regulators at the federal level and abroad."

She added that, "We must also have smarter, more effective regulation that overcomes inherent limitations of the state-based insurance regulatory system. The best way to achieve these goals is by establishing a federal insurance regulator."