State insurance commissioners told Congress that they could live with a proposed federal office of insurance information, particularly to target international issues, provided it does not preempt state consumer and solvency safeguards.
On behalf of the National Association of Insurance Commissioners (NAIC), Illinois Insurance Director Michael T. McRaith testified recently before the U.S. House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises about H.R. 5840, the Insurance Information Act of 2008.
H.R. 5840 would establish the Office of Insurance Information (OII) within the U.S. Department of the Treasury to provide advice on insurance regulation to the Administration and to Congress.
The state officials’ support came with conditions.
“We support H.R. 5840, subject to some important clarifications. This conditional support hinges on the proposal not changing in ways detrimental to insurance consumers,” McRaith said. “We look forward to continuing our constructive and substantive discussions to produce a measure that will garner our full support.”
State insurance regulators support the bill’s objectives of allowing a federal agency to work with state insurance regulators to receive and analyze industry data; and establishing a central point of contact in the federal government for foreign governments regarding international insurance matters.
“While state insurance regulators wholeheartedly support and actively engage in efforts to help U.S. insurers compete globally, we oppose and caution against any legislation with a broadly preemptive approach,” McRaith said. “State regulators would object to the OII or any other federal entity having the authority to preempt consumer protections and solvency standards adopted by the states.”
McRaith noted that states’ support for the objectives of the OII does not, for example, include support for the notion that the OII could enter into an “agreement” with a foreign government and then, through the terms of that agreement, impose upon all states an industry practice or standard.
“States’ concern about federally negotiated ‘agreements’ is not protectionist in any sense. Rather, state regulators believe that the relative merits of a regulatory practice in another country, or the international commercial needs of an industry participant, should not supersede – or be allowed to supersede – market or solvency protections the states have deemed essential,” he testified.
NAIC President and Kansas Insurance Commissioner Sandy Praeger said decision-makers at the state and federal level should benefit from the insurance knowledge the states have gathered since the NAIC was founded in 1871.
“This bill will ensure that this occurs seamlessly and that state insurance regulators continue to have a seat at the table in critical international negotiations,” she said.
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