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NARAB Movement Cheered
July 18, 2008Washington — The House Financial Services Capital Markets Subcommittee has passed H.R. 5611, the NARAB Reform Act, to the full committee. The act, introduced by Reps. David Scott (D-Ga.) and Geoff Davis (R-Ky.), is intended to reform nonresident agent licensing.
Supporters of the legislation say it will ease nonresident insurance agent and broker licensing while preserving the rights of states to supervise and discipline insurance agents and brokers.
“The most serious regulatory challenges facing our members are the redundant, costly and contradictory requirements that arise when they seek licenses on a multi-state basis,” says Robert Rusbuldt, president & CEO of the Independent Insurance Agents & Brokers of America. “The NARAB Reform Act solves these problems through targeted reform and modernization of nonresident agent and broker licensing without affecting resident licensing.”
The legislation modifies the original NARAB provisions of the Gramm-Leach-Bliley Act to immediately establish NARAB as a private, non-profit entity managed by a board composed of insurance regulators and marketplace representatives. The NARAB board created by this legislation would not be part of, or report to, any federal agency, and would not have any federal regulatory power.
Source: Independent Insurance Agents & Brokers of America
Report Says NFIP Under Funded
July 18, 2008Washington — The National Flood Insurance Program owes the Treasury $17 billion, according a new report from the U.S. Government Accountability Office (GAO). Moreover, the report contends that program is ill equipped to meet losses in the event of a future catastrophe.
The report places the blame for the program’s plight on the Federal Emergency Management Association (FEMA), which administers the program. GAO accuses FEMA of being too lax with record keeping and in its oversight of contractors. “Lack of monitoring records, inconsistent applications of procedures and lack of coordination have diminished the effectiveness of monitoring of NFIP-related contracts,” the report states.
Source: Government Accountability Office
Insurance Information Act Presses On
July 14, 2008Washington — The creation of a federal Office of Insurance Information (OII) is much closer to reality after a vote this week in a House subcommittee. The Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises sent H.R. 5840, the Office of Insurance Information Act to full committee.
As expected, the move is garnering mixed action. Proponents of the bill, who view it as necessity to harmonize U.S. regulations with international standards, are praising it.
Marc Racicot, president, American Insurance Association says the vote is “a recognition that an immediate need exists for federal expertise regarding the important national and international insurance trends in today’s rapidly changing and globalized marketplace. This office will help the U.S. Treasury analyze the important societal role that insurance plays in the domestic economy and will provide urgently needed leadership by the U.S. in international insurance regulatory policy making and agreements.”
Conversely, opponents of the legislation, such as the National Conference of Insurance Legislators, say the bill is a backdoor attempt to establish a federal charter and will undermine consumer protection and state insurance laws.
Sources: American Insurance Association, National Conference of Insurance Legislators
Expanded Role for Risk Retention Groups Elicits Concern
July 14, 2008Washington – Legislation allowing risk retention groups (RRGs) and risk purchasing groups to provide property insurance has passed a House subcommittee.
The House Financial Services’ Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises passed H.R. 5792, the Increasing Insurance Coverage Options for Consumers Act of 2008, which would expand the Liability Risk Retention Act. The law currently allows RRGs to cover all types of commercial liability risks except workers’ compensation.
However, insurers warned the legislation could create an unfair competitive environment.
“Admitted carriers are subject to the myriad of state regulations,” says Jimi Grande, VP of government and political affairs for the National Association of Mutual Insurance Companies. (NAMIC). “Allowing RRGs, which enjoy a lesser degree of regulation, to provide additional coverages that are readily available in the marketplace would provide a competitive advantage over traditional, conventionally formed insurers.”
Yet, Grande says NAMIC agrees that RRGs have had a small but important effect on the availability and affordability of commercial liability insurance for certain groups.
“The expansion of the RRGs into broader commercial insurance, including liabilities owed to individual consumers, is problematic, and we do not believe such an expansion should be approved at this time,” Grande says.
Source: National Association of Mutual Insurance Companies
NCOIL Seeks Allies in Insurance Act Fight
July 7, 2008Washington — Seeking to blunt H.R. 5840, the Insurance Information Act of 2008, the National Conference of Insurance Legislators (NCOIL) wrote letters to state governors and attorneys general, urging their involvement in a dialogue with federal lawmakers. The letters follow in the wake of a U.S. House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises hearing. NCOIL says passage of the act would preempt state insurance laws and endanger consumer protections.
“As strong advocates of states rights, we transmitted these letters to caution our state-level government colleagues about this impending federal threat,” NCOIL President Brian Kennedy wrote. “As state officials, we cannot shy away from a dialogue with federal leaders about a proposal that could undo much of our hard work. State statutes and regulations—not federal intervention—have fostered the vibrant insurance marketplace that exists today. We owe it to our constituents—who have never asked for a federal insurance regulator—to protect what we have done well, and that is regulate the insurance market.”
Kennedy echoed concerns expressed by state legislators and other officials that H.R. 5840 could potentially lead to optional federal chartering. “How can the bill’s sponsors say that H.R. 5840 is not the first step towards an OFC when members of the Subcommittee—proponents of an OFC—are claiming bragging rights to that very fact?”
Source: NCOIL
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