DATE: APRIL 17, 2008
TO: NCOIL LEGISLATORS
FROM: MIKE HUMPHREYS
NCOIL STATE-FEDERAL RELATIONS DIRECTOR
RE: KANJORSKI INTRODUCES BILL TO CREATE FEDERAL INSURANCE OFFICE
Attached are:
· an April 17 Section-by-Section Analysis of H.R. 5840
· an April 16 National Underwriter article entitled Kanjorski Says Bill is Ready to Create U.S. Insurance Agency
As we reported after yesterday’s Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises hearing, Chairman Paul Kanjorski (D-PA) this afternoon introduced H.R. 5840, the Insurance Information Act of 2008. The bill proposes creating an Office of Insurance Information (OII) within the Department of Treasury—similar to the Office of Insurance Oversight that was envisioned by the Treasury’s Blueprint.
In introducing H.R. 5840 with four (4) cosponsors, Chairman Kanjorski said “Shortly after September 11, it became very clear to me that the federal government lacks the expertise it needs on insurance policy. Our experiences after Hurricane Katrina and the ongoing problems in the bond insurance marketplace have only reinforced my views.”
Office of Insurance Information
In addition to creating an OII, H.R. 5840 would amend the duties of the Secretary of the Treasury to include “advis[ing] the President and the Congress on domestic policy issues in connection with all lines of insurance except health insurance.”
The OII would be headed by a Deputy Assistant Secretary and would have the authority to:
· collect, analyze, and disseminate publicly available insurance data
· establish federal policy on international insurance matters
· ensure that state insurance laws are consistent with federal policy in coordinating international trade agreements
· advise the Secretary on domestic and international insurance policy issues
Each Congress, the OII would be required to report to the House Committee on Financial Services and the Senate Banking, Housing, and Urban Affairs Committee regarding the state of the insurance industry and any preemptive actions taken by the Office.
State Preemptions
H.R. 5840 would allow for the preemption of any state law or regulation that is inconsistent with federal policy on international insurance matters. It does, however, afford states the right to appeal any determination of inconsistency.
H.R. 5840 also explicitly states that “nothing in this section may be construed to establish any general supervisory or regulatory authority of the Office [of Insurance Information] or the Department of the Treasury over any insurer.”
Advisory Group
H.R. 5840 would create an Advisory Group to inform and advise the Treasury Secretary and OII regarding international policy issues and any conflicts with state laws. The Advisory Group would be comprised of no more than nine (9) members, including representatives of the National Association of Insurance Commissioners (NAIC), the Department of Commerce, and the Office of the United States Trade Representative.
Commentary
H.R. 5840 comes as no surprise given the Chairman’s remarks during yesterday’s hearing and his recent comments regarding the need for federal insurance expertise. While the legislation would establish a federal insurance office via an OII—which certainly creates a slippery slope towards an optional federal charter—it is interesting to note that the Chairman expressed hesitancy yesterday at the idea of creating a new federal insurance bureaucracy, i.e. an OFC or other federal mechanism. On its face, the legislation appears to be an effort by the chairman to:
· create a federal office to retain and disseminate insurance information, thus, bringing a certain insurance awareness or expertise to the federal government
· create a central U.S. voice for international insurance issues
Though likely well intended, two of the four cosponsors—Congressman Ed Royce (R-CA) and Congresswoman Melissa Bean (D-IL)—are the sole sponsors of the House OFC proposal.
Concerns remaining include, among others:
· the scope of the federal government’s authority over international insurance issues
· the lack of clarity in enforcement of federal policy
· the role of the states in relation to federal policy
· the lack of attention to consumer protections
· the lack of a state legislative presence
Please feel free to contact me at 202-220-3014 or at should you have any questions.