Posted on 06 Oct 2009
Congress should create a federal office to collect information about but not supersede state regulation of the insurance industry, several groups representing insurance companies will tell lawmakers Tuesday.
Scheduled to testify at a hearing of the House Financial Services Committee today, witnesses representing some of the largest umbrella groups of insurance firms will tell the panel that any new federal body shouldn't add a layer of unnecessary regulation to the industry.
Their message will be that that a Federal Insurance Office is necessary to collate information about insurance company activities across the country, but not attempt to override state-level insurance regulators.
"Our support for any national insurance office is predicated on the notion that the office be a tool to connect the state regulatory system with the federal regulatory system, and not be an instrument to displace or diminish state insurance regulation," says Theresa Vaughan, chief executive of the National Association of Insurance Commissioners, according to written testimony released by the financial services panel.
The American Insurance Association, a group representing property and casualty insurers, will say to lawmakers that it believes the head of the federal office should be an assistant secretary at the Treasury, and be confirmed by the Senate.
Another group, the American Council of Life Insurers, will say that the Federal Reserve Board should be obliged to consult with the new office whenever its actions could impact insurance firms.
Lawmakers are considering the extent to which an expansion of insurance regulation should form part of a broad rewrite of the financial industry's rulebook.
The majority of regulation of insurance firms occurs at the state level. House Financial Services Chairman Barney Frank, D-Mass., has repeatedly expressed support for an expansion of federal oversight of the industry, although he is unlikely to push too hard for that expansion as part of the current drive to change regulation of the financial sector.