Broad Federal Insurance Regulation To Follow?

Recently introduced, H.R. 5840, the Insurance Information Act of 2008 (see H.R. 5840 Text) will create a new Office of Insurance Information to collect and analyze data on insurance, advise the Secretary of the Treasury on foreign and domestic insurance issues, report to Congress every two years, establish federal policy on international insurance matters, and ensure consistency between state and federal insurance laws as well as coordinate international trade agreements.  The bill will also create an advisory group to inform and advise the head of the Office, which will include state regulators, consumer groups, and others in the insurance industry. 

Over all, the insurance industry appears to welcome the creation of the OII as a rational and necessary precursor to any federal action (or inaction) on future federal regulation.  For example, a senior officer of the Council of Insurance Agents & Brokers (quoted in Business Insurance Magazine, April 21, 2008) said, "There are few creative and bold acts of leadership that transform the dynamics of any insurance regulatory issue and that is precisely what has been done."  Leigh Ann Pusey, COO of the American Insurance Ass'n, observed, "We have a need to have someone at the federal level to develop some insurance knowledge and expertise and to help develop policy." 

However, not all industry voices are supportive.  Some see this measure as a first step to unwanted federal control over insurance business.  Justin Roth, senior federal affairs director for the National Ass'n of Mutual Insurance Companies, noted that the OII is the kind of agency advocated in the March 31 blueprint for financial services regulatory reform proposed by the Treasury Department.  "If you go by the Treasury Blueprint, this is step No. 1 toward an [optional national charter].  It is obvious to us that this is step No. 1, and we strongly oppose federal regulation and we have concerns that this will lead to federal regulation."

The bill does seem to point to inevitable federal regulation of some kind.  But which is worse?  Federal insurance regulation or uninformed federal regulation?