Rep. Paul Kanjorski, D-Pa., introduced legislation yesterday that would create a federal insurance adviser within the Treasury Department to provide advice and expertise on insurance regulation to the administration and to Congress.
While insurance is regulated at a state level and would remain so under the proposal, Kanjorski said it is necessary to build knowledge of insurance policy within the federal government. The office would provide advice on most insurers, including financial guarantors, with the exception of health insurance companies, according to a summary of the legislation.
"Shortly after Sept. 11, it became very clear to me that the federal government lacks the expertise it needs on insurance policy," Kanjorski said in a statement. "Our experiences after Hurricane Katrina and the ongoing problems in the bond insurance marketplace have only reinforced my views. The Office of Insurance Information would provide an effective way to help Congress and the federal government make better decisions regarding national and international insurance policy."
Four members of the House Financial Services Committee, Reps. Deborah Pryce, R-Ohio, Edward Royce, R-Calif., Melissa Bean, D-Ill., and Dennis Moore, D-Kan.,, cosponsored the bill. Specifically, it would require the office 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, according the summary.
Kanjorski's proposal comes as federal lawmakers are considering whether to provide an optional federal charter for insurers that would replace the existing patchwork of regulations created by 56 separate state and territorial jurisdictions.
Supporters of a separate bill pending in the House that would create a federal charter said yesterday that they welcome the legislation and see the information office as one of the first steps towards creating a federal entity with supervision over the insurance industry, as was proposed in the blueprint for modernizing financial services regulation that was recently unveiled by Treasury Secretary Henry Paulson. Among other things, the blueprint calls for a federal insurance regulator.
"This is an official recognition that Treasury has a policy stake in how insurance is regulated, and coming so closely on the heels of Secretary Paulson's [blueprint], I don't see how you can consider it anything other than those first steps down the path towards a more comprehensive review of how we regulate insurance in this county," said Kevin McKechnie, executive director of the American Bankers Insurance Association, an affiliate of the American Bankers Association. "There is greater federal supervision of insurance in the works, and this is the appropriate way to study it."