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State Legislators to Congress: Don't Create an Office of National Insurance

State insurance legislators are again urging their colleagues in Congress not to create an Office of National Insurance (ONI). The Senate is preparing to consider...
April 28, 2010

State insurance legislators are again urging their colleagues in Congress not to create an Office of National Insurance (ONI). The Senate is preparing to consider major financial services reform in the form of the Restoring American Financial Stability Act of 2010 (S. 3217). A cloture motion to allow debate on the bill is set for Senate action late Monday April 26.

Within S. 3217 is a provision to create an Office of National Insurance (ONI) at the Treasury Department - an office that would preempt state law and eventually threaten successful state insurance oversight. In a letter to Congress, the National Conference of State Legislators (NCOIL)  points out that S. 3217 creates an ONI with broadly-drawn authority [that] could lead to mission creep."

NCOIL said as now drafted, the ONI's "power to recommend which insurers should be supervised by the Federal Reserve, to preempt state laws that it finds inconsistent with International Insurance Agreements on Prudential Matters, and its ability to 'perform such other related duties and authorities as may be assigned to the Office by the [Treasury] Secretary,' pave a broad pathway to needless federal oversight."

NCOIL also questions the bill's charge that the ONI evaluate and recommend to Congress the best ways to modernize the insurance system. "Spurred by optional federal charter (OFC) advocates, such a report might recommend that the ONI manage federal insurance chartering," the state legislators said. "This sort of study should be done on an objective basis, with input from all related state officials."

What It Means to Agents: PIA has consistently and vehemently opposed efforts to enact federal regulation of insurance, or to transfer insurance regulation from the states to the federal government. This is another in a long series of attempts by advocates of federal regulation to achieve their goal. PIA agrees with NCOIL: the section of S. 3217 that creates an Office of National Insurance should be removed from the bill.

NCOIL Letter Regarding ONI Language in S 3217 (NCOIL 4/22/10)