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PIA: Concerns Remain As Federal Insurance Office Act Advances in House

Concerns remain following passage of the Federal Insurance Office Act (FIO) of 2009 (H.R. 2609) by the House Financial Services Committee following a committee mark-up....
December 9, 2009

Concerns remain following passage of the Federal Insurance Office Act (FIO) of 2009 (H.R. 2609) by the House Financial Services Committee following a committee mark-up. The committee approved the bill December 2. Passage of H.R. 2609 is not something that should be cheered by independent insurance agents.

"A death by a thousand cuts is still a death," said PIA National Executive Vice President & CEO Leonard C. Brevik. "For proponents of state regulation of insurance, passage of H.R. 2609 is not a cause for celebration."

"While positive changes to H.R. 2609 were implemented throughout the committee process which made the bill slightly less onerous, PIA nevertheless believes that creating a federal insurance office is a bad idea, not a good one," Brevik said. "It is certainly not something that should be cheered by independent insurance agents."

Changes to the bill to place more restrictions on the ability of the FIO to preempt state insurance laws and regulations were made as the result of lobbying by the National Association of Insurance Commissioners (NAIC). Other changes strengthened language clarifying the FIO would not have regulatory or supervisory authority over the business of insurance.

What It Means to Agents:   PIA's position that the principle of state insurance regulation can be jeopardized simply by creating an FIO was illustrated during the December 2 mark-up on the bill. Supporters of an optional federal charter (OFC) for insurers and producers led by Rep. Melissa Bean (D-Ill.) offered an amendment directing the FIO to conduct a study on federal regulation of insurance. Essentially, the proposed new federal insurance office was being directed to make recommendations to Congress on whether insurance regulation should remain state-based - or if its own authority (and budget) should be expanded. The amendment passed.

There is no way such a study conducted by the FIO can be objective. PIA continues to work with House members to ensure that any assigned study on insurance regulation is done in a non-partisan, unbiased way.

NAIC Supports, NCOIL Opposes Federal Insurance Office Bill