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House FSC Could Take Up Delayed Federal Insurance Office Act This Week

A committee mark-up of the Federal Insurance Office Act of 2009 (H.R. 2609), which had been scheduled to begin on October 27, was abruptly postponed...
November 2, 2009

A committee mark-up of the Federal Insurance Office Act of 2009 (H.R. 2609), which had been scheduled to begin on October 27, was abruptly postponed last week. The bill would create a federal insurance office within the Treasury Department.

Financial Services Committee Chairman Barney Frank said the delay was ostensibly to work out a jurisdictional issue with the Ways and Means Committee.  He apologized "for not having presided appropriately" and added that he and Rep. Paul Kanjorski (D-Pa.), chairman of the Subcommittee on Capital Markets, would continue to consult with the Ways and Means Committee and the National Association of Insurance Commissioners, [our emphasis added], and expected to mark up the bill "in a short period."

"We very much intend to adopt legislation that will give the office of National Insurance the power to effectuate international agreements," Frank said. "We are not dropping that subject."

The delay in the mark-up came at the end of a 24-hour period which saw a lot of activity regarding H.R. 2609. On October 26, PIA issued a press release pointing out that the lack of limits on preemptions in the bill was in marked contrast to a bill passed by the committee the previous week, which imposed strict limits on preemptions of state insurance laws by federal agencies such as the Office of the Comptroller of the Currency (OCC).

The next morning, the National Conference of Insurance Legislators (NCOIL) issued a press release and letter in opposition to the bill. At mid-day, the National Underwriter had a story on the NCOIL letter and another one by the NAIC, with suggested changes to the bill to narrow the scope of the office and put limits on preemptions. Shortly after that, Rep. Frank announced the delay.

What It Means to Agents:  Last year, PIA opposed a bill to create an Office of Insurance Information (OII) because it vested broad powers in the Treasury Department to preempt state insurance laws and regulations. Our effort was successful when the bill was removed from the consent calendar of the House shortly before adjournment for the year.

Then, the version of OII introduced early this year placed more restrictions on preemptions. But that version was subsequently replaced with the current version, with the restrictions on preemptions stripped out and the scope of an Insurance Information Office broadened into a Federal Insurance Office with a greatly expanded mandate, and with what we believe is insufficient oversight of its activities.

This legislation keeps getting re-written to make it more friendly to federal insurance regulation - and PIA, NCOIL and NAIC are then compelled to either oppose it, or pull it back in the direction of state regulation. At minimum, the latest changes suggested by the NAIC should be incorporated into the bill. However, the best outcome would be for Congress to take no action on this bill.

PIA Advocates Consistency on Preemptions in H.R. 2609 (PIA 10/26/09)

More Details On Federal Insurance Office Legislation (National Underwriter 10/27)

House FSC Approves Amendment Restricting OCC Preemptions (PIA 10/21/09)