WASHINGTON (June 10, 2008) – A carefully developed Office of Insurance Information could be a step toward modernizing the state-based insurance regulatory system, according to the National Association of Mutual Insurance Companies (NAMIC). NAMIC remains committed to a reformed state-based insurance regulatory system, and told Congress a federal advisory office could help streamline and create more uniformity in the system.
“The establishment of an Office of Insurance Information within the Department of Treasury, if accompanied by the strongest confidentiality and privilege protections, limited in scope, coordinated with the advice of a well-balanced advisory panel, with limited preemptive authority and overseen by Congress, could play a vital role in this modernization effort,” said NAMIC in written testimony submitted today.
The House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises is holding a hearing to examine legislation to create a federal insurance advisor. Subcommittee Chairman Paul E. Kanjorski, D-Pa., recently introduced H.R. 5840, the Insurance Information Act of 2008, to create an OII within the Treasury Department. The office would provide advice and expertise on domestic and international insurance policy to the administration and Congress.
“We appreciate Chairman Kanjorski’s openness and willingness to improve and further define the purposes of the OII,” said Carl Parks, NAMIC’s senior vice president for government affairs. “The latest revision of the proposal goes a long way to addressing some of our initial concerns about the scope and authority of the OII and clarifies that the office will never have any regulatory authority. However, while we are encouraged by the significant improvements in the revised proposal, we continue to have concerns including data calls, the composition of the advisory panel, and the preemptive power.”
In its testimony, NAMIC said a well-defined OII without regulatory or supervisory authority could help streamline the state-regulatory system and reduce redundancies and inefficiencies within it. “As we consider the creation of a new office within the federal government dedicated to insurance-related issues, we must carefully balance the benefits of the office with the burdens imposed on insurers and producers and the relationship with other entities.”
Of particular concern to NAMIC is the collection of data, such as annual financial statements and market conduct information. The proposed legislation would authorize, but not require, the OII to collect data from the National Association of Insurance Commissioners, member states, or affiliates, but not other entities.
“The NAIC is not a regulator, and serious and unanswered questions arise in the context of the confidentiality and protection of data collected,” NAMIC wrote. “The NAIC’s ability to maintain confidentiality and enter into agreements to provide for that confidentiality is legally untested.”
Instead, NAMIC urged the subcommittee to consider third-party statistical agents to collect data from insurers. “Statistical agents are licensed and regulated by the states to perform these types of data collection and remittance functions and have a long and trusted relationship as stewards of confidential industry information.”
Another area of concern for NAMIC is the type of information the OII could receive, collect, analyze, or disseminate. “Data held by insurers which could be obtained by the OII is often confidential, private, or sensitive in nature,” NAMIC wrote. “As such, proper protections must be included that will appropriately safeguard the integrity and security of that data.”
The legislation proposes an advisory group within the OII, comprised of up to 13 members, including representatives of the administration, the NAIC, and “such representatives of the insurance industry, consumer groups and other organizations the Secretary of the Treasury deems appropriate.”
NAMIC asked the legislators to clarify the makeup of the advisory panel to include representatives of state regulators, state legislators, and the insurance industry. “The role of the Advisory Group will be important to the success of the OII and it is important that the members be actively involved in the work of the Office and that its membership be representative of all interests involved,” NAMIC wrote. “We look forward to working with Chairman Kanjorski, Ranking Member Pryce, and members of the subcommittee and full committee to achieve our shared goals of a healthy and competitive insurance marketplace.”
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Posted: Tuesday, June 10, 2008 12:00:00 AM. Modified: Tuesday, June 10, 2008 10:50:45 AM.
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