DATE: FEBRUARY 6, 2009



DATE:               FEBRUARY 6, 2009

TO:                   NCOIL LEGISLATORS

FROM:              MIKE HUMPHREYS, NCOIL

RE:                   INSURANCE PROMINENT ON HOUSE FINANCIAL SERVICES COMMITTEE AGENDA FOR 111TH CONGRESS

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A copy of the Oversight Plan of the Committee on Financial Services for the One Hundred Eleventh Congress is available here.    

BACKGROUND

Rules of the House of Representatives for the 111th Congress require each Standing Committee to adopt an oversight plan for the 111th Congress.  The Oversight plan generally lays out issues the Committee will consider and, in some cases, suggests action items.  The plan does not prevent a Committee from addressing additional issues. 

COMMENTARY

The Oversight Plan indicates that the Committee will again be heavily invested in insurance issues this year and next.  Interest ranges from an overhaul of the financial regulatory system—including insurance—to the operation of state guaranty funds and mortgage originator and insurance producer licensing. 

The Committee will begin this year by reviewing systemic risk and outlining the authorities of a proposed systemic risk regulator.  We anticipate that a broad draft will be released before the Group of Twenty (G20) meets in April to discuss financial regulation, among other things. 

NCOIL will review the Committee’s agenda and NCOIL policy positions during the NCOIL Spring Meeting in Washington, DC, later this month.  NCOIL has previously taken a stand on several of the proposals, including natural catastrophe insurance, credit scoring, an Office of Insurance Information (OII), and indexed-annuity regulation, among others. 

OVERSIGHT PLAN

The twenty-two page plan includes more than 100 subjects that the Committee—and its various Subcommittees—may attend to in 2009 and 2010.  Issues of interest to NCOIL are bulleted below with italics indicating specific items that the Committee intends to address.

Four overarching issues include (in alphabetical order):

• Insurance Information.  The Committee will review “ways to increase the federal knowledge base on insurance issues, including establishing an Office of Insurance Information.”

• Insurance Regulatory Modernization.  The Committee will again consider several of the incremental proposals from the 110th Congress—including risk retention legislation—and will evaluate “new policy alternatives for modernizing insurance regulation.”

• Reforming Oversight of Financial Services.  The Committee will assess the current regulatory system and work to establish a “more efficient oversight structure that will include a systemic risk regulator,” which would also address risks posed by insurers.     

• Troubled Asset Relief Program (TARP).  The Committee will continue to examine implementation of the TARP program, specifically reviewing insurer attempts to access TARP funds.

Additional issues include (in alphabetical order):

• Accounting.  The Committee will review the work of the Financial Accounting Standards Board (FASB), efforts to achieve international accounting standards, and the effect of mark-to-market rules.

• Agent and Broker Licensing Reform.  The Committee will again consider legislation to authorize a National Association of Registered Agents and Brokers (NARAB).

• Credit Scoring and Insurance.  The Committee will continue to investigate the use of credit scoring to underwrite personal lines policies—including by a review of an upcoming Federal Trade Commission report addressing homeowners insurance.

• Derivatives and Credit Default Swaps (CDS).  The Committee will review derivative and CDS transactions, including their relation to systemic risk, and efforts to create clearing platforms to limit that risk.

• Financial Guaranty Insurance.  The Committee will continue its review of the bond insurance industry and will explore “the possibility of Federal participation in the municipal bond insurance or reinsurance marketplace.”

• Guaranty Funds.  The Committee “will monitor the effectiveness of these systems to protect policyholders in the event of an insurer’s insolvency.” 

• Insurance Investments.  The Committee will monitor the health of insurance companies—in light of the recent NAIC Capital & Surplus Relief Proposal—and will explore certain state investment pools used for community projects.

• International Developments.  The Committee will monitor international insurance regulation and “explore how the current state-by-state insurance regulatory system fits into increasingly evolving global insurance.”

• Mortgage Broker Licensing and Oversight.  “The Committee will monitor implementation of the S.A.F.E. Mortgage Licensing Act of 2008 which established a mortgage originator licensing system and registry to better protect homebuyers.”

• National Flood Insurance Program (NFIP).  The Committee will consider long-term reauthorization of the NFIP and is committed to comprehensive reform.  It will review “NFIP participation, rate setting, loss mitigation, claims handling, and rate subsidization for repetitive loss properties and second homes,” and will include the NFIP in any discussion of natural catastrophe insurance.

• Natural Catastrophe Insurance.  The Committee will review availability and affordability issues regarding natural catastrophe insurance, and whether individuals and governments understand their coverage options and the risks of being uninsured.  The Committee may consider creating a study commission, and will “insist that any comprehensive approach to natural catastrophe insurance include aggressive loss mitigation and responsible land management provisions.”

• Payday Lending.  “The Committee will review practices by the payday lending industry, with a particular emphasis on marketing, consumer disclosures, interest rates and fees charged.”

• Rating Agency Reform.  The Committee will examine credit rating agency compensation, conflicts of interest, accountability, and “methodology for rating tax-exempt municipal bonds.”

• Reinsurance.  The Committee will “explore alternate systems of national reinsurance regulation” and will “identify legislative approaches designed to foster reinsurance availability without sacrificing necessary consumer protections.”

• Retirement Products.  The Committee will review the recent Security and Exchange Commission (SEC) Rule 151(A) regarding the regulation of equity-indexed annuities.

• Surplus Lines and Reinsurance.  The Committee will again consider the Nonadmitted and Reinsurance Reform Act—legislation that has passed the House nearly unanimously in the 109th and 110th Congress.

• Terrorism Risk Insurance.  The Committee will monitor the Terrorism Risk Insurance Program—which was reauthorized through 2014 in the 110th Congress—paying particular attention to the program’s failure to cover nuclear, chemical, biological and radiological events, and any lessons that could apply to broader insurance reform. 

Feel free to contact me by reply e-mail or at 202-220-3014 should you have any questions.

 

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