You are here:HomeIssuesProtecting State Insurance Regulation 2009PIA Advocates Consistency on Preemptions in H.R. 2609

PIA Advocates Consistency on Preemptions in H.R. 2609

WASHINGTON, October 26, 2009 - The National Association of Professional Insurance Agents (PIA) said today that the House Financial Services Committee could be...
October 26, 2009

WASHINGTON, October 26, 2009  - The National Association of Professional Insurance Agents (PIA) said today that the House Financial Services Committee could be poised to take opposite positions on the same issue in the space of one week.

On October 21, the Financial Services Committee approved a key amendment to a financial regulatory reform bill offered by Reps. Mel Watt (D-N.C.) and Dennis Moore (D-Kan.) that would make national banks and federally chartered savings associations subject to a broad range of state consumer protection and financial services laws.

Under the amendment, the Office of the Comptroller of the Currency (OCC) could find a state law preempted, but only on the basis of "substantial evidence" that a particular provision "prevents or significantly interferes with" a national bank's exercise of a power "explicitly" granted by Congress. The amendment places restrictions on the OCC's decade-long practice of declaring state insurance laws null and void, based solely on its own interpretation of federal law, and makes clear that federal regulators may not routinely interfere with the states.

On October 27, the Financial Services Committee is scheduled to hold a mark-up of the Federal Insurance Office Act of 2009 (H.R. 2609). As drafted, the bill permits a Federal Insurance Office (FIO), created within the Treasury Department and led by an unconfirmed appointee of the Treasury Secretary, to override existing law without meaningful dialogue with the states.

"The Financial Services Committee made the right decision last week when it placed restrictions on the OCC's rampant and unaccountable preemptions of state laws," said PIA National Executive Vice President & CEO Leonard C. Brevik. He said the committee can achieve consistency with its previous position by including the same preemption standards in H.R. 2609.

"We are hopeful that the members of the Financial Services Committee will continue to move forward by extending the same kind of restrictions it correctly placed on preemptions of state law under the regulatory reform bill to H.R. 2609," Brevik said. "Tuesday's mark-up provides an excellent opportunity to achieve such legislative consistency."

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

"As supporters of state regulation of insurance and opponents of federal regulation, PIA would prefer that no federal insurance regulatory apparatus be created," Brevik added. "State regulation of insurance performed well during our nation's recent economic crisis, while federal regulation in banking and securities failed. Congress should not permit wholesale preemption of such success."

"The same strong preemption standards should be applied in both bills," he said.

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance, but specialize in coverage of automobiles, homes and businesses. PIA members are Local Agents Serving Main Street America(SM). PIA's web address is www.pianet.com.