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Administration's ONI Bill Has More Preemptions Than Kanjorski's

Legislation creating an Office of National Insurance (ONI) within the Treasury Department gives the proposed agency stronger authority to preempt state regulation than that proposed...
July 29, 2009

Legislation creating an Office of National Insurance (ONI) within the Treasury Department gives the proposed agency stronger authority to preempt state regulation than that proposed in similar legislation introduced in April by Rep. Paul Kanjorski (D-Pa.), chairman of the Capital Markets Subcommittee of the House Financial Services Committee. The Treasury plan does not include federal regulatory authority, leaving insurance regulation to the states. But it does grant ONI subpoena power for data collection and grants the office power to oversee the terrorism insurance program.

Unlike Kanjorski's bill to create the similar Office of Insurance Information, the Administration's proposal has no provision allowing the Secretary of the Treasury to stay preemptions. Also, it does not provide Congress with the power to nullify a preemption determination. In addition, a provision allowing the federal government to negotiate foreign treaties without congressional approval is causing concern.

The National Association of Mutual Insurance Companies (NAMIC) and the Property Casualty Insurers of America (PCI) expressed opposition to the treasury proposal while the Council of Insurance Agents and Brokers (CIAB) endorsed it.

What It Means to Agents:  PIA is heartened that the Treasury proposal does not provide for federal regulation of insurance, but its restrictions on the preemption of state insurance regulations have been weakened considerably. Much of the good work that had been done to improve Rep. Kanjorski's proposal has been undone.

PIA National President Kenneth R. Auerbach, Esq. has noted, "While we would like to believe the proposed ONI will not be used to advance federal insurance regulation, we have serious reservations about creating a federal bureaucracy for insurance which could be used to begin to build a structure for full federal regulation of insurance."