You are here:HomeIssuesProtecting State Insurance Regulation 2010PIA Position Wins, Federal Insurance Preemption Limited in House, Senate Agreement

PIA Position Wins, Federal Insurance Preemption Limited in House, Senate Agreement

The ability of a new Federal Insurance Office (FIO) in the Treasury Department to preempt inconsistent state laws when concluding bilateral insurance trade agreements with...
June 30, 2010

The ability of a new Federal Insurance Office (FIO) in the Treasury Department to preempt inconsistent state laws when concluding bilateral insurance trade agreements with foreign countries will be considerably watered down in final financial services reform legislation. The agreement came last week as negotiators for both chambers approved final language on Title V of H.R. 4173, the massive financial services reform bill.

Under the bill, the FIO will have no regulatory authority, but it will have the power to monitor all activities related to the business of insurance except for health insurance and long term care insurance. Under the agreement, the Treasury will share negotiating authority with the U.S. Trade Representative's Office. The FIO will also be required to consult with four congressional committees before the pacts are agreed to and the Treasury Department may be required to defend such agreements in court under the final legislation. Additionally, an individual state's consumer protections must be preserved in any bilateral trade pact. Large insurers and reinsurers wanted the FIO to have greater preemption authority, while smaller insurers and PIA argues for limits on FIO's authority.

"PIA remains concerned with the overall intent of the FIO because this is the first step toward federal regulation," said PIA National Director of Federal Affairs Mike Becker, commenting in the National Underwriter. "However, we are pleased to see that the FIO, in its current state, does preserve state regulation, which is our top priority."

What It Means to Agents: Chalk up another win for agents. While PIA would prefer that no FIO be created, the addition of strict limits on preemption preserves state regulation, which PIA adamantly supports.

Fed Preemption Limited in House, Senate Agreement (National Underwriter 6/24/2010)