States Agree To Some Federal Regulation
State insurance commissioners testified before Congress saying they were willing to support an Office of Insurance Information(OII). The proposed legislation would be called the Insurance Information Act of 2008 and would give the OII, which operate under the Treasury Department, the power to establish federal guidelines over international insurance policy.
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.”
State regulators still believe that regulatory powers should be left in their hands as they are better suited to protect consumers. The recent troubles in the credit markets have re-ignited the debate between federal and state governments concerning oversight for the financial services sector including insurance.
Some officials in the federal government have been openly critical of the current state regulatory system calling it cumbersome and inefficient, that it restricts global opportunities for the nations’s insurance companies. State regulators fired backed quickly, blaming the recent financial meltdown on years of deregulation instituted by the federal government.
The OII would give the it’s international counterparts a single office to enter agreements into, without having to interact with fifty different state insurance commissioners. How this will work in reality remains to be seen. It could be quite disconcerting to foreign governments, if a single dissenting state government could have to the power to nullify an international insurance agreement.
