Congress is now officially in recess for the month of August and Washington is catching its collective breath. NAMIC wanted to take this opportunity to alert you to where a number of our issues currently stand in DC – and where they are headed this fall.
As you know, the number one priority for NAMIC remains financial services regulatory reform. This issue was also at one point Washington’s top priority.
However, the political landscape has changed significantly. The economic situation has slowly begun to stabilize and the administration’s political priorities have shifted to other major issues – namely, healthcare and energy legislation. This has caused the entire legislative agenda to reshuffle and financial services regulatory reform has been moved back until at least the fall and more likely, the spring.
While financial services regulatory reform generally – and insurance regulatory reform specifically – have fallen back on the legislative schedule, there remain important issues that will be tackled early on when Congress returns in September.
Chairman of the House Financial Services Committee Barney Frank, D-Mass., has indicated that he will move on legislation that would create the Consumer Financial Protection Agency (CFPA). The CFPA would oversee all consumer protection regulation with regard to consumer financial products and services with the stated goal of protecting people against harmful financial products such as predatory mortgages.
For many months, NAMIC has been aggressively urging both the administration and Congress against the inclusion of property/casualty insurance products in any new federal financial consumer protection agency. These efforts have largely been successful as the legislation contains a general exclusion of insurance, with the exception of mortgage, title, and credit insurance. NAMIC’s position is that no types of property/casualty insurance should be included within the CFPA mandate – including mortgage, title, and credit insurance – and we are working to have those lines of insurance excluded as well.
Once consumer protections are addressed, Congress is likely to turn to crafting legislation that addresses systemic risk before possibly turning to administration proposals for insurance regulation. While the administration did not call for the creation of a federal regulator for property/casualty insurers, some concerns remain.
Included within the administration’s comprehensive blueprint for financial services reform is the creation of an Office of National Insurance (ONI) to “monitor all aspects of the insurance industry.” While there is no firm definition of how the ONI will operate or the extent of its powers – and there has been no legislation introduced to create the ONI – there are fears about how much authority this office will hold and the nature of its relationship with state-based regulators.
The proposal closely resembles Rep. Paul Kanjorski’s, D-Penn., concept of an Office of Insurance Information (OII) which is supported by NAMIC and its partners opposed to a federal insurance regulator. However, there are two fundamental differences between the ONI and OII. First, the ONI is granted broad subpoena power to gather data. Second, the ONI is granted unrestricted preemption power over states in the interests of international agreements. NAMIC believes these are potentially dangerous powers that could create an unlevel regulatory playing field and will continue to urge the administration to consider simply replacing the ONI with the OII – a concept that has been vetted and supported by most of the property/casualty insurance industry.
On the other side of Capitol Hill, the financial services regulatory reform debate in the Senate has been quieter, but not ignored. Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., has held several hearings – two specifically focused on insurance – but has not moved any legislation as his attention has been distracted by his key role in the healthcare reform debate. He has indicated that he will try to begin work on a financial services reform package in the fall although most believe that any real action will not happen until next spring.
While financial services regulatory reform is front and center, it is by no means the only issue NAMIC has been working on during this busy legislative session:
When Congress returns to Washington after the Labor Day weekend it will have a very full plate. The House and Senate must reconcile multiple versions of healthcare reform legislation in an increasingly partisan political environment, consider cap-and-trade legislation, and all the while address the remaining annual appropriations bills.
During this busy time, NAMIC staff will continue to keep a close eye on what is sure to be a changing political situation in Washington and keep you informed on our efforts to ensure that the interests of the property/casualty insurance industry are protected.
Direct questions to NAMIC Senior Vice President - Federal and Political Affairs Jimi Grande.