Posted on 09 Oct 2009
The National Association of Mutual Insurance Companies (NAMIC) continues to have serious concerns over a draft outlining the creation of a new federal insurance office that was the subject of a House Financial Services Committee hearing Tuesday.
“We share the concerns expressed by members on both sides of the aisle with the scope and authority of the proposed office,” said Jimi Grande, senior vice president of federal affairs for NAMIC.
"Any measure that could be used to set different standards for different companies runs the risk of distorting the market and ultimately harming consumers. NAMIC believes that an Office of Insurance Information as proposed by the original bill would provide the federal government with the information it needs without affecting the market or establishing a de facto federal insurance regulator.”
NAMIC supports the original proposal for an Office of Insurance Information, which would provide information and international coordination while recognizing the primacy of state regulation and protecting confidential information. The office that would be created under the discussion draft, however, would have broader authority to reach agreements with foreign insurance companies that pre-empt state laws and regulations, potentially allowing those companies to operate under different standards than domestic insurance companies.
NAMIC submitted testimony to the committee outlining its concerns regarding the Federal Insurance Office proposal. In addition to pre-emption, the testimony also expressed concern regarding the broad authority the draft would create for data collection and the potential for a perceived mandate for the proposed office to name an insurance company as systemically significant. Additionally, the creation of an office under the new draft could be seen as a move towards the establishment of a federal insurance regulator.
“We applaud Rep. Kanjorski for stating his intent that the proposed office not be regulatory in nature,” Grande said. “But like one of the original bill’s sponsors, Rep. Judy Biggert, R-Ill., we’re concerned that this is moving away from a bipartisan approach to an over-reaching regulatory office disguised as an informational depository. The original legislation enjoyed broad support from lawmakers and the industry, while support for the new office draft seems confined to those who favor federal regulation of insurance.”