Ending weeks of anticipation, Representatives Melissa Bean (D-IL) and Ed Royce (R-CA) on April 2, 2009, introduced their 121-page National Insurance Consumer Protection Act, H.R. 1880. The Act would establish a federal insurance regulator, permit interested insurers, agencies and producers to seek a national charter, and validate Charlie Richardson’s decision in 1999 to move to our office in the nation’s capital. You’ll eventually want to read the bill for yourself, but here are some important details that will let your co-workers know that you didn’t spend your entire spring break reading GQ and Glamour.

  • National Insurance Commissioner. Appointed by the President to a five-year term; subject to the general oversight of the Secretary of the Treasury; granted broad rulemaking powers; may delegate certain powers to one or more lucky self-regulatory organizations. (Let us know if you need help filling out your application.)
  • Office of National Insurance. Established within the Department of Treasury; its Division of Consumer Affairs would have an office in each state and a centralized call center to receive consumer complaints. An Ombudsman would act as a liaison for national insurers, agencies and producers who are adversely affected by the supervisory and regulatory activities of the Office. Sounds ominous.
  • National Charters. National charters would be issued to interested life insurers, property/casualty insurers and reinsurers. (Sorry - title insurers and health insurers would not be eligible.) State insurers determined to be “systemically important” could be required to become nationally chartered, but who knows what that means (beyond AIG). Insurance agencies and producers could also seek a national charter. No charters may be issued until the Commissioner has notified Congress that the Office is operational and that all regulations are in place.
  • Application of State Law. Except as specifically authorized, national insurers, insurance agencies and insurance producers would not be subject to licensing, examination, reporting, regulation or supervision by the states. Say goodbye to those thrilling 50-state surveys.
  • Material Transactions. Mergers, acquisitions, demutualizations, asset transfers and other life-changing events would all be subject to prior approval by the Commissioner. Fans of bulk reinsurance will want to read the eight largely unintelligible pages devoted to the subject.
  • National Insurance Holding Companies. The Commissioner would have authority to examine holding companies and their subsidiaries and prevent them from engaging in any activity that the Commissioner determines would pose a significant risk to the solvency of a national insurer. The Commissioner would also establish capital, liquidity, dividend, operational and other standards for national insurance holding companies.
  • Supervision Odds and Ends. The Commissioner is directed to issue regulations that would (a) require national insurers, agencies and producers to self-identify and self-correct actual or potential violations of law, and (b) identify the factors the Commissioner will consider in determining whether to bring an enforcement action. Each national insurer would be examined at least every two years, and information submitted to the Commissioner for any purpose would not be construed as waiving any privilege that would otherwise apply to such information. So that’s something.