DEPARTMENT OF TREASURY ANNOUNCES THE WHITE HOUSE'S PROPOSALS FOR FINANCIAL REGULATORY REFORM WHICH HAVE A SIGNIFICANT IMPACT ON THE REGULATION OF INSURANCE
On June 17, 2009, the Department of the Treasury announced a summary of legislative proposals outlining the Obama Administration's sweeping reform of the financial services industry. Of importance to the Insurance industry, the proposal describes the establishment of a new administrative agency, the Office of National Insurance within Treasury. The Office of National insurance would be tasked with developing a "modern regulatory framework for insurance." The Treasury's six principles of insurance regulation are:
1. Effective systemic risk regulation with respect to insurance;
3. Meaningful and consistent consumer protection for insurance products and practices;
4. Increased national uniformity either through a federal charter or effective state action;
5. Improve and broaden the regulation of insurance companies and affiliates on a consolidated basis, including those affiliates outside of the traditional insurance business; and
6. International coordination.
While many of the Administration's proposals are consistent with prior proposals by segments of the insurance industry, others seem to substantially extend the reach of federal regulatory authority.
The Administration has expressed the ambitious desire to enact the legislative proposals set forth by the Department of the Treasury by the end of 2009. We expect vigorous debate in Congress over the coming months.