Washington, D.C. — The financial reform bill will deregulate state insurance oversight by allowing the Treasury Department to use a new national insurance office to overturn a broad range of state protections, including solvency rules, if the legislation is not amended, warned Consumer Watchdog today. The House-Senate Conference Committee meets to consider the issue on Tuesday.
The group urged adoption of the House version of a national insurance office to ensure state regulators maintain the ability to protect insurance consumers and preserve state solvency laws. The Senate bill would grant the Treasury Secretary unprecedented authority to write new domestic insurance policy in the international arena, behind closed doors, and to use those agreements to override stronger state laws.
“Insurance deregulation shouldn’t be the legacy of financial reform,” said Carmen Balber, Washington Director for Consumer Watchdog. “State oversight kept insurance companies solvent and paying claims as companies across the rest of the financial industry were collapsing. Congress should go to bat to defend these protections, not abandon them to efforts by opportunistic insurers to use the financial overhaul as a vehicle in their long campaign to demolish state insurance regulation.”
The large property-casualty, life insurance and reinsurance companies backing efforts to weaken state insurance regulation have spent $52.8 million lobbying Congress since the beginning of 2009, as reported in the U.S. Senate Lobbying Disclosure Act Database. A chart showing 17 of these companies’ lobbying expenditures, including Allstate, the Association of Life Insurance Companies, and the Association of Bermuda Insurers and Reinsurers, can be downloaded at: http://www.consumerwatchdog.org/resources/InsuranceLobbying.pdf
“The army of lobbyists working behind the scenes should have a harder time maintaining the charade that a rollback of state insurance protections belongs in the financial re-regulation bill in the full light of an open conference committee,” said Balber.
Consumer Watchdog called for additional amendments to the House bill to ensure that state insurance laws are only preempted when they discriminate against foreign insurers, and to give state regulators a voice when Treasury negotiates insurance agreements.
The House improvements on the Senate language include:
– Narrowing the scope of agreements Treasury may negotiate to recognition agreements that acknowledge a foreign jurisdiction’s regulations in a specific area as meeting U.S. policy goals.
– Making Treasury accountable for arbitrary preemption by granting states the right to a substantive judicial review of preemption decisions.
– Ensuring that deregulatory trade agreements can’t be used to preempt insurance laws.
Read consumer groups’ letter to the Conference Committee here: http://www.consumerwatchdog.org/resources/insuranceconference.pdf
– 30 –