President Barack Obama announced June 17 the administration’s proposal, “Financial Regulatory Reform: A New Foundation.” As expected, the president’s plan would establish a federal Office of National Insurance (ONI) within the Department of the Treasury, and it would further modernize the American system of insurance to compete within the global market.
The United States is “the only country in the International Association of Insurance Supervisors (IAIS) that is not represented by a federal insurance regulatory entity able to speak with one voice,” according to the proposal.
The proposal states, “The ONI should be responsible for monitoring all aspects of the insurance industry. It should gather information and be responsible for identifying the emergence of any problems or gaps in regulation that could contribute to future crisis. The ONI should also recommend to the Federal Reserve any insurance companies that the office believes should be supervised as Tier 1 Financial Holding Companies (FHC). The ONI should also carry out the government’s existing responsibilities under the Terrorism Risk Insurance Act.”
According to the administration’s proposal, the Department of the Treasury will support the following six principles for insurance regulation:
• effective systemic risk regulation with respect to insurance;
• strong capital standards and an appropriate match between capital allocation and liabilities for all insurance companies;
• meaningful and consistent consumer protection for insurance products and practices;
• increased national uniformity through either a federal charter or effective action by the states;
• improved and broadened regulation of insurance companies and affiliates on a consolidated basis, including those affiliates outside of the traditional insurance business; and
• international coordination.
To view the text of President Obama’s “Financial Regulatory Reform: A New Foundation,” visit ASA’s legislative Web site at www.TakingTheHill.com.
