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Letter to the Editor
Friday July 18
Insurance Information Act of 2008 Moves Forward
U.S. Rep. Paul E. Kanjorski, D-Pa., chairman of the subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, is sponsoring the Insurance Information Act of 2008 (HR 5840) that would establish an Office of Insurance Information within the Treasury Department. This federal office would provide insight on insurance regulation to Congress and to the White House.To view the bill, visit the Automotive Service Association's (ASA) legislative Web site, www.TakingTheHill.com.
The federal office aims to eliminate competitive disadvantages prevalent amongst U.S. insurance companies and to modernize domestic insurance regulation. Specifically, the office will consolidate the more than 50 state regulators into a united and consistent group to appeal to foreign firms and create global competition in the insurance industry. Kanjorski seeks to have this office establish a federal policy on international insurance matters so that state laws will be uniform with international trade agreements.
Though there is some disagreement on the bill in the industry, the majority of the insurance sector backs the legislation. The American Insurance Association (AIA), which represents most of the powerful insurance companies, endorses the office.
Gov. Mark Racicot, president of AIA, said, “This office will help the U.S. Treasury analyze the important societal role that insurance plays in the domestic economy and will provide urgently needed leadership by the U.S. in international insurance regulatory policy making and agreements.”
Further, some believe that the office is a step toward an optional federal charter, but many who oppose the federal charter advocate Kanjorski’s bill. One such group, the National Association of Mutual Insurance Companies, expresses its opinion in this statement, “An Office of Insurance Information, if properly constructed and contained, could help modernize the insurance regulatory marketplace and reduce inconsistencies and redundancies, while recognizing and respecting the rightful and necessary role of state-based regulation.”
The ASA supports federal regulation of the insurance industry.
“This is a first step toward a much larger debate on insurance reform we will see in the next Congress. In general, consumers and collision repairers will be better protected in a federal regulatory system versus a state system with regard to auto insurance. Previous hearings and this legislation indicate many insurers believe a federal regulatory system is preferable to a state system,” said Bob Redding, ASA’s Washington, D.C., representative.
Opponents, such as the Property Casualty Insurers Association of America, maintain that the federal government will serve as a preemptive authority over state regulators, much like in the banking industry.
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