Some segments of the insurance industry are taking a stand against a bill they say could lead to an optional federal charter for insurers.
The Insurance Information Act of 2008, or H.R. 5840, would establish an Office of Insurance Information in the Department of the Treasury with the stated goal of clarifying U.S. insurance policy to the rest of the world. But critics contend that by creating a federal office to oversee insurance the bill is attempting to override state regulation.
“The Office of Insurance Information is being used as a ‘cover’ for what is really going on,” according to Ted Beseparis, senior vice president of the Washington, D.C.-based National Association of Professional Insurance Agents, which is actively opposing the bill. “The bill’s backers say, ‘No, this is a limited, narrow bill.’ But when you read the bill it becomes obvious that is not the case. Quite the contrary, H.R. 5840 is broad and expansive. As it is currently written it would allow the Treasury secretary to act as a de facto national insurance czar.”
Susan Nolan, executive director of the National Conference of Insurance Legislators in Washington, DC., said, “I think our legislators are concerned first and foremost with consumer protections that would be lost under the bill. I don’t think there’s anyone who has a problem with Congress having information … [but] the language in the bill is not always reflective of what its sponsors think the bill is supposed to do.”
Supporters of the bill include associations representing large insurers such as the American Council of Life Insurers and the American Insurance Association, both of which support an optional federal charter as a way to streamline the U.S. insurance industry and help it to compete overseas.
Opponents are especially concerned right now since Banking Housing and Urban Affairs Chairman Sen. Chris Dodd, D-Conn., seemed to indicate the Senate would consider the bill as part of a larger legislative package in early September.
“What the sponsors are trying to do is bypass markup in full committee and bring it up straight to the floor in September,” said Mike Humphreys, NCOIL’s director of state-federal relations.
“We feel that something of such a magnitude should not be rushed,” Nolan said.
Beseparis added that as more scrutiny is applied to the bill more people are beginning to question it.
While the Kansas City-based National Association of Insurance Commissioners – which opposed the optional federal charter – has offered some conditional support of the bill, some individual regulators are opposed. On Aug. 13, Sean Dilweg, insurance commissioner of Wisconsin, expressed his concerns in a letter to Congress.
“This proposal, as currently drafted, may have the unintended effect of creating an unaccountable federal process that produces deregulation of the insurance industry to the detriment of consumers. I am also concerned that some supporters of this legislation view it as the forerunner of enactment of a federal insurance regulation scheme that will sweep aside state insurance consumer protection regulations that they oppose.”
