Rep. Melissa Bean Says Federal Insurance Bill Imminent

Rep. Melissa Bean, D-Ill., announced that she and Rep. Ed Royce, R-Calif., will co-sponsor a bill under the name of the National Insurance Modernization Act (NIMA) within several weeks, at the 2009 Insurance Reform Summit presented by Networks Financial Institute at Indiana State University on March 4, according to a Networks Financial Institute Press Release. Bean said that the new bill, a modified version of what was known as the National Insurance Act in the 109th and 110th Congress, is undergoing "fine tuning," as the sponsors finalize discussion on key elements, such as whether a federal charter would be optional or mandatory for insurers large enough to pose systemic risk to the financial services industry.

Bean previewed some of the bill's new measures, such as the state-by-state placement of a physical branch of a new regulator known as the Office of National Insurance (ONI). The bill also proposes a systemic risk regulator with authority to oversee insurance firms defined as "systemically important." Bean acknowledged that the concept of "systemic risk" remains undefined.

Bean asserted that the NIMA would foster new product innovation and improve the ability for insurance firms to bring new products to market in a timely manner. She said that the bill would facilitate and enhance free-market pricing and provide the industry with "a national voice to speak on national issues." Also speaking at the 2009 Insurance Reform Summit was Rep. Spencer Bachus, R-Ala., ranking minority member of the House Financial Services Committee. Bachus spoke in favor of an incremental approach to insurance regulatory reform, while acknowledging that the states have done a good job of ensuring that carriers remain well-capitalized, with adequate reserves. "In a global economy, it's very hard to get products out and maintain a sensible, efficient system," he asserted.

Bachus said he will co-sponsor H.R. 1065, the Non-Admitted and Reinsurance Reform Act, due to be introduced by Reps. Dennis Moore, D-Kan., and Scott Garrett, R-N.J.

On the day of the 2009 Insurance Reform Summit, Insurance & Technology learned that COFIR (The Coalition Organized for the Future of Insurance Regulation) sent out an e-mail appeal to unnamed addressees to join the National Association of Attorneys General and the National Governors Association (NGA) in opposition of the creation of an optional federal charter (OFC) for insurance. Arguing that tampering with a state-based system that had "encouraged a healthy insurance industry in an otherwise unhealthy economy," the communiqu said changing the system was a mistake and cited statements in support of COFIR's position.

Forty state attorneys general signed onto a Dec. 15, 2008 statement saying, "[OFC] goes far beyond the states' efforts, however, by creating a system that would not only severely harm the state system of insurance regulation but also create an additional federal bureaucracy, all without consumer or constituent demand for such a creation. The optional federal charter legislation would bifurcate insurance regulation and result in a tangle of federal and state directives that would promote ambiguity and confusion in the marketplace, as well as allow companies to opt out of state insurance regulatory oversight and evade important state consumer protections."

The e-mail also quoted a Feb. 20, 2009 statement signed by Governor Ed Rendel (D-Pa.) and Governor James Douglas (R-Vt.), respectively chairman and vice chairman of the NGA, saying, "States often lead the way with regard to reform and innovation and this is true of insurance regulation. Unlike banking and securities, insurance is a fundamentally different financial product because it involves unique consumer protection issues linked to local conditions."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio