An insurer representing the Property Casualty Insurers of America (PCI) raised questions today about the latest draft of a federal bill to establish a federal office of insurance.
Janice Abraham, president and CEO of United Educators Insurance, in testimony to the House Financial Services Committee, told lawmakers that the current system of regulating the home, auto and busienss insurance industry is “working well” and urged them to avoid duplication and over-regulation.
“In the past five years, our insurance companies have weathered hurricanes Katrina, Rita and Ike in addition to handling their regular claims without having to ask for a government bailout,” Abraham said. “We’re not broke, we didn’t cause the current financial crisis, and we don’t need a duplicative system of federal oversight that may ultimately increase costs for consumers.”
The redrafted bill under consideration today before the Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee is being sponsored by Rep. Paul Kanjorski , D-Pa., chair of the subcommittee.
PCI has not taken a position on a Federal Insurance Office (FIO), but PCI said insurers do have concerns with the current proposal, including:
- There are “virtually no limits in the bill on the types or volume of information the FIO may demand, although PCI does appreciate that the new version drops the explicit grant of subpoena authority from the previous Office of National Insurance (ONI) proposal.
- The proposed FIO is not required to look to the state insurance regulators or other public sources to obtain information again leading to the possibility of duplicative reporting.
- The FIO may exclude small insurers from its mandatory reporting requirements, but the exclusion is discretionary and undefined.
- The FIO proposal dropped critical due process protections that are standard administrative procedures.
- The scope of the FIO goes “far beyond the previously proposed Office of Insurance Information (OII) bill, with the potential to lead to mission creep and greater duplicative and costly oversight.” Specifically, PCI noted, the new proposal would have the new office monitor all aspects of the industry and to have any additional related authorities that the Secretary of the Treasury wants to give it.
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