House Panel Members Urge Geithner to Create Insurance Office

WASHINGTON — A bipartisan group of seven House Financial Services Committee members urged Treasury Secretary-designee Timothy Geithner Friday to administratively create an office within the Treasury Department that will address the lack of insurance oversight and expertise at the federal level.

While the insurance industry is currently regulated at the state level, the office is necessary to build knowledge of insurance policy within the federal government, including municipal bond insurers, the lawmakers said.

Alternatively, they urged Geithner to assign a high-level appointee with an insurance portfolio. Geithner is expected to be confirmed by the full Senate as early as today.

“Events in the insurance sector during the past 12 months have had a significant impact on the broader capital markets and economy,” said the letter, which was signed by Reps. Melissa Bean, D-Minn,. Ed Royce, R-Calif., Dennis Moore, D-Kan., Michael Castle, R-Del., Andre Carson, D-Ind. John Campbell III, R-Calif., and John Adler, D-NJ.

Noting that the government took unprecedented action to prevent the collapse of the insurance giant American International Group, the lawmakers said that “we must take steps to ensure that a similar situation does not occur in the future, and we believe than an important first step ought to be the establishment of an office within Treasury which would have a knowledge base and understanding of insurance operations.”

The idea of an office of insurance information had been bandied about in Washington for months, if not years, and generally in connection with the idea of an optional federal charter for insurers.

Last year, Rep. Paul Kanjorski, D-Pa., chairman of the committee’s capital markets panel, introduced legislation to create a federal insurance adviser within Treasury, though it was never taken up by members.

Kanjorski, who did not sign his colleagues’ letter, sought a wide ranging role for the adviser, which he envisioned would be required to collect and analyze data on insurance, advise the Treasury secretary on major domestic and international policy issues, report to Congress every two years, establish federal policy on international insurance matters, and ensure that state insurance laws remain consistent with federal policy in coordinating international trade agreements. A Kanjorski spokeswoman was not immediately available for comment.

A congressional source said the letter to Geithner calls for a much smaller insurance adviser, whose job would be purely to collect and examine information.

“This is a much more constrained, smaller office,” the source said. For instance, “there’s no preemption of state law. We just see this as, there’s no oversight, there’s no knowledge of insurance in the federal government, and this is something that would be useful,” particularly as Congress and the Obama administration begins to consider regulatory reform in the coming months. 

 

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