State Lawmakers Lobby Hard Against U.S. Insurance Office

State lawmakers opposed to the creation of a federal Office of Insurance Information are seeking support from other state government branches, asking governors and state attorneys general to add their voices against federal OII legislation.

“NCOIL does not believe that you or other involved state officials would support a bill that would likely override state insurance laws and their related consumer protections while impacting the healthy insurance marketplace that states have built, as well as potentially lead down the dangerous path to the creation of a federal insurance regulator,” the group’s officers wrote in a letter sent to the governors and attorneys general of all 50 states.

The letter was written in response to the Insurance Information Act, or HR 5840, which was introduced by Rep. Paul Kanjorski, D-Penn., chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.

The legislation would establish an Insurance Information Office within the Treasury Department to provide needed expertise to the federal government on insurance issues and work with the U.S. Trade Representatives in dealing with other countries.

NCOIL officials have expressed strong opposition to the bill, warning that it allows for the preemption of state insurance law and could serve as a precursor to the creation of an optional federal charter for insurance companies, and questioning the prominent role it created for the National Association of Insurance Commissioners as an advisory body to the federal OII.

“As state officials with boots on the ground, we know and serve the needs of our constituents better than any bureaucratic federal office,” the NCOIL officers said in their letter, adding that state lawmakers, governors and attorneys general “work side-by-side to improve insurance regulation in our states and to ensure that companies and consumers benefit from the competitive marketplace we have fostered.”

At a hearing of Rep. Kanjorski’s subcommittee held earlier this month, Illinois Insurance Director Michael McRaith offered the NAIC’s “conditional support” for the bill, provided that its own concerns regarding federal preemption of state laws were taken into account.

State Rep. Brian Kennedy of Rhode Island also testified at that hearing in opposition to the bill, and suggested that NCOIL’s opposition could be softened if state legislators were given a similar role in the advisory body to the proposed OII.

However, NCOIL spokesman Michael Humphreys said today that NCOIL’s concerns go beyond the advisory board to the proposed OII, and that while being given a role there would “to an extent” resolve some problems, “our existing concerns would remain” regarding the federal government’s intrusion on insurance regulation.

NCOIL’s letters to the governors and attorneys general comes on the heels of an effort by the group to reach out to individual NAIC members themselves. Just days after the subcommittee hearing, NCOIL sent a letter to the state insurance commissioners asking them if they agreed with the NAIC’s “conditional support” for the bill.

“NCOIL would like to confirm your continuing support of successful state insurance regulation and your opposition to H.R. 5840 in its current form,” the NCOIL leadership said in the letter. “The position taken by the NAIC—on behalf of all state insurance regulators—and presented to Congress at a June 10 hearing is a dangerous policy to pursue.”

NCOIL said the OII legislation would be among the issues discussed at its summer meeting in July, and would be in the “spotlight” during a planned NAIC-NCOIL dialogue at the meeting.