U.S. House Financial Services Committee Passes Federal Insurance Office Act

H.R. 2609, also known as the “Federal Insurance Office Act,” unanimously passed the United States House Financial Services Committee today, December 2, 2009.

If ultimately passed into law, the bill’s creation of a Federal Insurance Office would be expected to provide national policymakers with access to the information and resources needed to respond to crises, mitigate systemic risks and oversee a well-functioning financial system.

Taking into account the state-by-state nature of the nation’s insurance industry, the bill also would provide a centralized voice on insurance matters for the United States in global deliberations by having the proposed Federal Insurance Office and the United States Trade Representative share the authority to enter into, and negotiate agreements with foreign entities.

A Committee press release on the development is reprinted below.

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U.S. House Financial Services Committee Passes Federal Insurance Office Act

Final Financial Services Regulatory Reform Bill Passes Unanimously

Washington, DC – Today, the House Financial Services Committee passed by a unanimous voice vote H.R. 2609, the Federal Insurance Office Act, introduced by Congressman Paul E. Kanjorski (D-PA), Chairman of the Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

“Today, the Financial Services Committee completed its initial work to reform the regulatory structure of the financial services industry by passing my Federal Insurance Office Act,” said Chairman Kanjorski.  “I have been working on this bipartisan bill since 2008, and I am pleased that the new Administration recognizes the importance of ensuring that the federal government has a knowledge base on insurance.  With the improvements made to the bill today through amendments, we can now continue to move this important bill and the other regulatory reform bills through the legislative process.  I am eager to pass these bills in the House.”

Chairman Kanjorski introduced bipartisan legislation earlier this year and in the last Congress to create a federal insurance office, which was included in President Obama’s proposals for financial services regulatory reform.  Congresswoman Judy Biggert (R-IL), Ranking Member of the House Financial Services Subcommittee on Oversight and Investigations, joined as an original co-sponsor of the 2009 bill when it was first introduced. 

A summary of the Federal Insurance Office Act follows:

Federal Insurance Office Act

• Federal Insurance Expertise. Insurance plays a vital role in the smooth and efficient functioning of our economy, but the credit crisis highlighted the lack of expertise within the federal government regarding the industry, especially during the collapse of American International Group, also known as AIG, and last year’s turmoil in the bond insurance markets. A Federal Insurance Office will provide national policymakers with access to the information and resources needed to respond to crises, mitigate systemic risks, and help ensure a well functioning financial system.
• International Coordination. Although America’s insurance markets still operate on a state-by-state basis, today’s financial markets are global. The Federal Insurance Office will therefore provide a unified voice on insurance matters for the United States in global deliberations. The Federal Insurance Office and the United States Trade Representative will share the authority to enter into and negotiate agreements with foreign entities.
• Promote Financial System Stability. Insurance accounts for 10 percent of the assets of the financial system and employs almost 40 percent of the employees in the financial services industry. Having a strong knowledge base at the Federal level of government will be instrumental in helping to promote stability in our financial system.

Click here to view the Federal Insurance Office Act.

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