The AAMGA Governmental Affairs Committee has been monitoring a number of developments on Capitol Hill and Washington, DC as they interrelate with all the financial services and insurance industry activities we have seen in the presently unpredictable marketplace.

One of those initiatives is the NARAB II legislation HR 5611 (Click Here for the full text of the Legislation), which passed last night in the House of Representatives under a suspension of the rules on a voice vote. It will now be sent to the Senate. NARAB II is an updated version of a federal proposal from 1999 to establish a national board to oversee agent licensing and CE standards. Under the proposal, any agent or agency can choose to be a member of the National Association of Registered Agents and Brokers and then be held to a single set of licensing and CE standards in every state in which they do business. The initiative would also prescribe and enforce laws and regulations regarding insurance-related consumer protection and unfair trade practices. While NARAB II would not establish a federal regulator; it would create a board consisting of insurance commissioners, carriers and producers, who would set uniform licensing standards.

Another pending Bill is the Insurance Information Act of 2008, HR 5840 (Click Here for the full text of the Legislation) stalled in the House yesterday following other events related to the growing crisis on Wall Street and in the financial and insurance markets. The initiative would direct the Secretary of the Treasury to advise the President and Congress on domestic and international policy issues regarding all lines of insurance except health insurance. It also establishes within the Department of the Treasury the Office of Insurance Information (“OII”), headed by a Deputy Assistant Secretary, to: (1) collect, analyze, and disseminate information and issue reports regarding all lines of insurance except health insurance; (2) establish federal policy on international insurance matters and ensure that state insurance laws are consistent with agreements between the United States and a foreign government or regulatory entity; and (3) advise the Secretary on major domestic and international insurance policy issues. The Bill would extend the authority of the Office to all lines of insurance except health insurance; preempt inconsistent state laws; require the head of the Office to report to specified congressional committees on the financial state and meaningful trends of the insurance industry; and establish the Advisory Group to the Office of Insurance Information.

An article in today’s Congressional Quarterly notes the OII measure was pulled from the floor because Rep. Jackie Speier, D-Calif., objected to it. Speier, one of the primary opponents of the legislation, had not "taken the time to understand" all the changes that had been made to address the concerns of consumer advocates and other groups, according to the article.
Consumer advocates had argued that this week's $85 billion federal bailout of insurer AIG was necessary because the federal government has been lax in its regulation of the financial-services industry. But the House's measure would only weaken federal oversight, they said.

"AIG's stunning collapse and unprecedented bailout was driven largely by the massive failure of financial industry deregulation and the policy of weak federal oversight of the banking system," said California nonprofit Consumer Watchdog in a letter to bill sponsor Paul E. Kanjorski (D-Pa.) Speier claims the Bill was nothing more than a "fig leaf" for an effort to establish a national insurance regulation system and vowed to oppose it. There probably is not enough time this year to move the OII Bill. The legislation is intended to help coordinate state laws with international trade agreements. Proponents say the lack of federal coordination of insurance regulations hinders the entry of foreign firms to the U.S. insurance market, because they must contend with more than 50 regulators at the state level. The Congressional Quarterly article notes the situation also impedes U.S.-based firms from competing abroad, citing Bill proponents.

Opponents of the bill say it is the first step toward creation of an optional federal charter, an issue that divides the insurance industry. Such a charter would allow insurers, agents and brokers operating in more than one state to opt for a federal regulatory and oversight system that would parallel state systems. The insurance industry says the AIG bailout only heightens the need for the bill. Frank Keating, president of the American Council of Life Insurers, called on Treasury Secretary Henry M. Paulson Jr. to immediately create an Office of Insurance Information in the wake of the financial crisis. "The events of the past several days have underscored dramatically the need for efficient and effectively coordinated regulation of the U.S. financial services industry," Keating wrote Wednesday in a letter to Paulson.

These issues and the entire status of our financial and insurance markets will be addressed by a Panel of experts and thought leaders at the AAMGA’s Fall Insurance and Legislative Meeting, November 13-15, 2008 at the JW Marriott Las Vegas Resort in Summerlin, NV. Click Here for more information and registration materials. The interactive Panel includes:

• Stefan Holzberger, A.M. Best Company
• Rep. Greg Wren - Alabama State Legislature
• Darryl Nierenberg, White House and Capitol Hill Lobbyist
• Fred Karlinsky, State Insurance Lobbyist
• Joel Wood, Council of Insurance Agents & Brokers
• Bob Fulwider, Big I

In the meantime, the AAMGA’s Governmental Affairs Committee will continue to monitor developments and keep our members advised. Please contact us in the event you have questions or would like additional information.