Congress continues to review the regulation of the financial services and insurance industry by contemplating the creation of the Office of National Insurance (“ONI”). Rep. Paul Kanjorski (D-Pa.) has released a discussion draft of the “Federal Insurance Office Act of 2009.” This new legislation amends an earlier bill Kanjorski proposed in April 2008, HR 2609. View the bill here.

The proposal would create a national office within the U.S. Treasury, purportedly to provide access to information and resources needed to respond to crises and mitigate certain systemic risks in the industry, as well as provide a unified voice on insurance issues for the United States in the global arena. 

Most interested parties seem to support the creation of a national insurance office, but have concern about its scope, worrying that such an office might impermissibly encroach on state regulatory authority. On October 6, 2009, Therese Vaughan, Ph.D. and CEO of the National Association of Insurance Commissioners (“NAIC”) testified before Congress regarding the NAIC’s support for the creation of a national insurance office “to serve as a resource for the federal government and a conduit for the states. . . .” However, Ms. Vaughan cautioned that a federal insurance office must not displace or diminish state insurance regulation, citing the state solvency system as an example of state insurance regulation which should not be preempted by the ONI. According to Ms. Vaughan, the states’ capital and solvency regulations for insurers undoubtedly helped insurers weather the financial downturn relatively better than other types of financial institutions. View the testimony of Therese Vaughan here.