Property and Casualty Regulation Included in New Federal Bill
Congress continues to focus on insurance regulation.
With Tim Geithner, secretary of the U.S. Treasury, continuing to refer to comprehensive regulatory reform - and both U.S. Senate Banking Committee Chairman Chris Dodd, D-Conn., and Ranking Minority Member Richard Shelby, R-Ala., referring to federal insurance regulation as an option that should be considered - Capitol Hill is increasing its interest in the federal regulation of the insurance industry.
The Treasury Department has assisted banks, Wall Street firms and now is offering aid to life insurers. Many members of Congress are concerned that the regulatory focus has been on banks and solely AIG. Insurance companies are a natural "next move" for policymakers.
On April 2, 2009, Reps. Melissa Bean, D-Ill., and Ed Royce, R-Calif., introduced H.R. 1880, the National Insurance Consumer Protection Act. Although, like some previous bills, the legislation allows insurers to opt into a federal regulatory versus state regulatory system, H.R. 1880 also includes property and casualty insurance. In addition, the bill establishes a systemic risk regulator. This regulator shall make corrective action recommendations to the commissioner of the Office of National Insurance at the U.S. Department of Treasury or to the state commissioner to take action to mitigate or avoid actions taken by an insurer or affiliate that would have serious adverse effects on the economic conditions and financial stability. An important note for repairers is that the national insurance commissioner can determine that an insurer is systemically important and require the insurer to be nationally chartered.
The National Insurance Consumer Protection Act will:
• Establish a parallel, national system of regulation and supervision for insurers, insurance agencies and insurance producers (agents and brokers), similar to the dual banking system.
• Establish an independent Office of National Insurance within the Department of Treasury, headed by a commissioner with a five-year term.
• Authorize the commissioner to issue charters for insurers for life insurance, property and casualty, reinsurance.
• Authorize the chartering and licensing of national insurance agencies and the licensing of national insurance producers.
• Require state insurance commissioners to share information with a systemic risk regulator.
• Establish a Coordinating National Council for Financial Regulators based on an expanded version of the President's Working Group for Capital Markets.
• Establish a comprehensive set of supervisory and regulatory powers for the commissioner.
• Establish enforcement powers for the commissioner patterned after those available to the federal banking agencies.
• Establish a Division of Consumer Affairs.
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