NU Online News Service
WASHINGTON–The National Association of Insurance Commissioners has won significant changes to legislation creating a Federal Insurance Office, giving state regulators more say in its operations.
The new language is contained in a manager's amendment to the bill agreed to Tuesday. It would require the new agency to closely coordinate with state regulators and would give Congress and the courts the authority to further limit the agency's authority in insurance matters.
The changes in the Federal Insurance Office Act of 2009 were agreed to by the leadership of the House Financial Services Committee.
The bill was scheduled to be marked up tomorrow by the House Financial Services Committee, but insurance industry sources said because of objections the process could be delayed.
The proposed NAIC alterations to the legislation apparently upset supporters of a stronger federal role in regulation of insurance. These include the American Council of Life Insurers; the American Insurance Association; the Reinsurance Association of America; and the Financial Services Roundtable.
The changes the NAIC negotiated in the bill would mandate closer cooperation between the states and the FIO on narrow international agreements; ensure that international agreements don't preempt state prudential regulation of U.S. insurers; limit the scope of agreements to recognizing a level of supervision consistent with state protections; add congressional involvement and consultation; and add judicial review on preemptive determinations made by the proposed agency.
It also restates state authority to regulate the "business of insurance."
Roger Sevigny, NAIC's president and New Hampshire's insurance commissioner, said, "The recent amendments strike an appropriate balance among the needs of consumers, state regulators and federal negotiators by preserving important state and market regulation while allowing for agreements with equivalent regulatory systems."
"While the NAIC continues to oppose a federal functional regulator for insurance or misguided attempts to further empower the FIO, the bill as currently drafted is an appropriately narrow and targeted improvement to our system of supervision," Sevigny concluded.
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