Washington, D.C. — In advance of an expected final vote on financial reform legislation, Consumer Watchdog urged the U.S. Senate to fix provisions that would deregulate insurance oversight by giving the Treasury Department the ability to override state protections on behalf of foreign insurance firms, including laws requiring insurers to hold enough money to pay all claims.
 
“Insurance consumers shouldn’t be collateral damage in the fight to reform Wall Street. We urge the Senate not to make insurance deregulation the unforseen legacy of the financial re-regulation bill,” said Carmen Balber, Washington Director for Consumer Watchdog.
 
The bill would grant the Treasury Department broad new authority to set insurance policy through international agreements, with no consultation with Congress or the states, and use those agreements to unilaterally preempt state laws on behalf of foreign insurance firms seeking to avoid rules on capital, solvency, and other prudential measures. The current language could even subject state insurance laws to preemption under the broadly deregulatory terms of existing trade agreements, said Consumer Watchdog.
 
Senator Merkley has proposed an amendment that is backed by consumer groups, state insurance regulators, and property-casualty insurers, that would continue to grant the Treasury Department new authority to enter into insurance agreements on behalf of the United States in the international arena, but adds important safeguards to ensure that existing insurance solvency and other rules are not deregulated.
 
White House Communications Director Dan Pfeiffer blogged earlier this month that: “Insurance is regulated by the states, not the federal government – and this bill doesn’t change that.”
 
“A Senate fix is necessary to preserve states’ ability to protect insurance consumers, and to meet White House assurances that state oversight of insurance will not be harmed,” said Balber.
 
Download a letter outlining consumer groups’ opposition to state insurance deregulation at: http://www.consumerwatchdog.org/resources/ONI_ConsumerGroups_4-22-10.pdf

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