On Wednesday, July 22, 2009, the Obama Administration sent draft legislation to Capitol Hill that would create an Office of National Insurance within the Treasury Department. This proposal is just one in a series of legislative drafts being sent to Congress as part of the Administration’s large scale financial regulatory reform efforts (previous proposals discussed here).

The Office of National Insurance is designed to promote national coordination within the insurance sector, and would have the authority to perform the following functions: (1) Monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis in the insurance industry or the United States financial system; (2) recommend to the Board of Governors of the Federal Reserve System that it designate an insurer, including its affiliates, as an entity subject to regulation as a Tier 1 financial holding company; (3) assist the Treasury Secretary in administering the Terrorism Insurance Program; (4) coordinate federal efforts and establish federal policy on prudential aspects of international insurance matters, including representing the United States as appropriate in the International Association of Insurance Supervisors; (5) determine whether state insurance measures are preempted by international insurance agreements on prudential measures; and (6) consult with the states regarding insurance matters of national importance and prudential insurance matters of international importance.

The House Financial Services Committee and the Senate Banking, Housing and Urban Affairs Committee will continue to debate and consider financial regulatory reform efforts, including the proposed Office of National Insurance, when Congress returns from its month-long summer recess in September.