U.S. Could Okay 2 Big Insurance Bills In '08, Says Dodd

Sen. Chris Dodd, D-Conn., the Senate Banking Committee chairman, said Congress might manage to push through legislation this year to reform regulation of surplus insurance lines and create an Office of Insurance Information.

But, since neither the surplus lines nor the Office of Insurance Information bills have been acted on by the committee, a lobbyist source noted that lawmakers, “will only have a couple of weeks to put together such a deal.”

Sen. Dodd made his comments during a hearing on insurance regulation during which he voiced surprise at such industry interest in legislation providing a federal insurance regulatory role.

At the hearing, Republicans Sen. Richard Shelby, Ala., ranking minority member and one of the most powerful members of Congress on insurance issues, and Bob Corker, in his first term from Tennessee, both said they would support an optional federal charter for insurers.

Sen. Shelby voiced his support for an OFC in his opening statement, saying that in the two years since the last hearing on insurance, “developments in our insurance markets, as well as regulatory reforms abroad, have strengthened the case that our insurance regulatory structure is out of date.”

His immediate concerns are developments in the “crumbling” bond insurance market. “Because the financial problems of the bond insurers have impacted not only federally regulated institutions, but also our overall economy, I believe that closer scrutiny of bond insurance regulation by this committee is warranted.”

He also cited insurance company investment in mortgage-back securities, noting that while no insurance company “has yet failed during the turmoil in our credit markets, recent economic history suggests that should never be considered outside the realm of possibilities.”

And, Sen. Mel Martinez, R-Fla., a sponsor of legislation reforming the surplus lines industry, told The National Underwriter outside the hearing that Sen. Dodd’s comments marked the first time he had indicated an interest in moving insurance regulation legislation through the Congress this year. “Yes, I am encouraged,” Sen. Martinez said.

Sen. Dodd noted in his comments that "A few years ago, even the notion of a federal charter would have been meet with vehement opposition. It was the third rail."

But, he again questioned state regulators and representatives for insurance trade groups and consumer organizations about the differences between life and property-casualty insurance, and whether life insurance lent itself more to federal regulation than property-casualty insurance.

“I have always felt a case could be made for an OFC for life, but that you can make a very good case that, when it comes to p-c, there are distinctions in tort law,” Sen. Dodd said.

The House passed H.R. 1065, the Nonadmitted and Reinsurance Reform Act, overwhelmingly in 2007.

Similar legislation was introduced in the Senate by Sen. Martinez and Sen. Bill Nelson, D-Fla., as S. 929 in late February 2007, but it has not yet been acted on in the Senate. The bill also has strong support from Sen. Jack Reed, D-R.I.

Currently, the Insurance Information Act, or H.R. 5840, is awaiting House action. Another bill is awaiting House floor action, the National Association of Registered Agents and Brokers Reform Act, also known as H.R. 5611.

It is unclear whether they will be taken up by the full House before it recesses until early September on Friday.

Both were reported out of the Capital Markets Subcommittee of the House Financial Services Committee July 9.