You are here:HomeIssuesProtecting State Insurance Regulation 2009Revamped Kanjorski ONI Bill Is a Step Backward

Revamped Kanjorski ONI Bill Is a Step Backward

What's the difference between a federal Office of Insurance Information (OII) and an Office of National Insurance (ONI)? Unfortunately, a lot. Last week, Rep. Paul...
October 13, 2009

What's the difference between a federal Office of Insurance Information (OII) and an Office of National Insurance (ONI)? Unfortunately, a lot. Last week, Rep. Paul Kanjorski's (D-Pa.) House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing on a discussion draft he released of the Federal Insurance Office Act of 2009 (no bill number yet). It's a redraft of the Insurance Information Act (H.R. 2609). The new draft contains none of the stronger restrictions on preemptions agents had secured in the previous bill.

Last year, PIA opposed Rep. Kanjorski's first bill to create an Office of Insurance Information, 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 looked better because it placed more restrictions on preemptions.

Unfortunately, the newly revised legislation now under discussion creating an Office of National Insurance (ONI) within the Treasury Department 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.

Much of the good work that had been done to improve Rep. Kanjorski's earlier proposal has been undone in this latest discussion draft. NAIC CEO Dr. Therese M. Vaughan, testifying before Kanjorski's subcommittee last week, emphasized that the office should link the state and federal regulatory systems but not put a damper on state regulation of insurance.

"A formal federal interface is appropriate, but the current ONI proposal strays too far from past legislation that included important safeguards against preemption of state laws and consumer protections,"  said Vaughan. Roger Sevigny, New Hampshire Insurance Commissioner and president of the NAIC, said, "It is critical that the federal government have access to insurance information in order to ensure that the United States is competitive with its foreign counterparts in global negotiations. At the same time, any state-federal regulatory cooperation agreement must leverage the successful state insurance regulatory system and not preempt state law except in extremely narrow circumstances."

What It Means to Agents:  While PIA would prefer that neither an OII nor an ONI be enacted, any such legislation should contain strong restrictions on the preemption of state laws. 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 then be used to begin to build a structure for full federal regulation of insurance.

Rep. Kanjorski's latest draft moves his bill closer to federal regulation. Supporters of state regulation including PIA, the NAIC, NCOIL, NAMIC and others need to -- once again -- move this bill back toward state regulation.

Kanjorski Revamps Bill for Federal Regulator (Insurance & Financial Advisor 10/8/09)