The new office would, among other things, "monitor all aspects of the insurance industry including identifying issues or gaps in the regulation of insurance that could contribute to a systemic crisis in the insurance industry or the United States financial system.” The office, which would be headed by a director appointed by the Treasury secretary, could recommend to the Federal Reserve that that it designate an insurer and its affiliates as a Tier 1 financial holding company subject to heightened regulation.
The office would oversee the federal terrorism insurance backstop program, coordinate and establish federal policy “on prudential aspects of international insurance matters” and consult with state regulators. The office would have a limited ability to pre-empt state regulation under certain circumstances, but it would have no authority over state laws affecting rates, underwriting or sales practices. The office would also have the power to subpoena information from insurers.
As part of its international duties, the office would represent the United States in the International Assn. of Insurance Supervisors. The measure also would give the Treasury secretary power “to negotiate and enter into international insurance agreements on prudential matters on behalf of the United States.”
The office would have no jurisdiction over health insurance.
Chairman Kanjorski introduced his bipartisan bill this year and in the previous Congress to create a federal insurance office within the Department of the Treasury to provide advice and expertise on insurance regulation to the Administration and to Congress. He has strongly advocated to move the legislation forward. The Administration, today, backed the Kanjorski plan and detailed additional responsibilities for the Office of National Insurance regarding systemic risk.
"I am pleased to see that the Administration also understands the serious need for an insurance office at the federal level, as I detailed in my Insurance Information Act," said Chairman Kanjorski. "The language from my bill provided the basis for the Administration's proposed Office of National Insurance which would fill a gap in the federal government's knowledge base on financial activities. For several years, including in this Congress, I have worked to advance bipartisan legislation to address this issue and strongly advocated for creating such an office. With the Administration's strong support, I now expect that this needed and sensible reform proposal will become law."
Chairman Kanjorski added, "The current economic crisis, including the meltdown of the American International Group (AIG), has poignantly shown that an office to provide a knowledge center within the federal government on insurance is urgently needed. While other sectors of the financial services industry have some sort of representation at the federal level, insurance is left out, causing gaping holes in the oversight of the industry. The Office of National Insurance would help to fill those regulatory gaps and assist Congress and the federal government in making better decisions regarding national and international insurance policy. I look forward to working with the Administration to move this legislation forward."