Posted on 02 Dec 2009
A Federal Insurance Office to provide policymakers with information about the insurance industry was approved by a key committee on Wednesday. In an attempt to mitigate future systemic risk, the House Financial Services Committee approved the creation of the office, in part, in response to the collapse of American International Group Inc. (AIG) and turmoil last year in the bond insurance markets.
The office, to be run by the U.S. Treasury Department, would provide information to Congress on insurance matters, as well as work on global insurance initiatives.
Former Treasury Secretary Henry Paulson sought the office in April 2008, calling it one step in ensuring a situation similar to the AIG bailout does not happen in the future. Using Paulson’s blueprint, Kanjorski proposed the Federal Insurance Office Act of 2009 (HR 2069).
The American Council of Life Insurers (ACLI) said it is concerned about the Treasury Department taking on the mission.
“The Treasury Department needs to develop expertise on a $5 trillion industry that affects the lives of tens-of-millions of Americans. In the aftermath of the financial crisis, it is important to eliminate the knowledge gap within the federal government,” said Frank Keating, president and CEO of ACLI, in a statement.
“It is also important to enhance the ability of the federal government to negotiate international insurance agreements with foreign countries,” Keating said.
Keating pointed out that life insurers are “major participants in the global financial marketplace. The American government needs to understand this industry; how it provides financial and retirement security to the American people and how it interacts with other financial service industries.”
Other proposals before Congress seeking to eliminate or restrict state-based insurance regulation have yet to be acted on.
The federal insurance office bill requires approval from the full House, as well as the Senate and President Barack Obama, before becoming law.