WASHINGTON – (RealEstateRama) — The House passed legislation on Wednesday that would enhance congressional oversight of international deliberations relating to insurance standards by a vote of 239-170.
Sponsored by Housing and Insurance Subcommittee Chairman Blaine Luetkemeyer (R-MO), the Transparent Insurance Standards Act directs federal regulators to solicit public comments, consult with state officials, and report to Congress before adopting international capital standards or other requirements for U.S. insurance companies.
This bill was earlier passed out of the House Financial Services Committee by a vote of 34-25 on June 16, 2016.
Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following statement on the House floor today in support of the bill, H.R. 5143:
H.R. 5143 enhances Congress’s constitutional oversight of international deliberations relating to insurance standards. This is legislation which is about accountability, transparency and oversight.
More specifically, the legislation establishes a series of requirements to be met before the Federal Insurance Office or the Federal Reserve may agree to, accept, establish, enter into or consent to the adoption of a final international insurance standard. Permit me to go into greater detail. First, the Federal Insurance Office and the Fed must publish any proposed final standard and allow for public comment. A public comment is critical to our negotiating posture, Mr. Speaker. And in so doing, the involved agencies must provide a joint analysis of the impact the standard will have on consumers and the U.S. insurance markets. Before agreeing to any international standard relating to capital, the Fed is required to first promulgate its domestic capital standard rule.
The bill makes similar requirements for negotiations concerning insurance covered agreements. The legislation sets negotiating objectives for U.S. parties and also mandates that the Federal Insurance Office and the Fed report and testify before Congress twice annually. Finally, H.R. 5143 ensures that the Independent Member with Insurance Expertise, who sits on the Financial Stability Oversight Council known as FSOC, is permitted to assist the FSOC in international discussions and attend meetings of international bodies where insurance standards are discussed.
Mr. Speaker, for almost 150 years, U.S. insurance companies of every type including property-casualty, life, reinsurance, health, and auto all have been primarily regulated by our states. Congress and the states have occasionally reviewed the effectiveness of this state-based regulation system and coordinated efforts to achieve greater regulatory uniformity.
In 1945, Congress passed the McCarran-Ferguson Act, which confirmed the states’ regulatory authority over insurance except where federal law expressly provides otherwise.
Mr. Speaker this all changed with the passage of the Dodd-Frank Act in 2010. Dodd-Frank changed the insurance landscape and further enlarged the federal government’s role in the insurance industry by creating a federal office specifically tasked with insurance matters. Dodd-Frank established a Federal Insurance Office (FIO) at Treasury and charged its director with representing the interests of U.S. insurers during the negotiations of international agreements. Among other things H.R. 5143 seeks to prevent any federal overreach and establishes essential guardrails for the federal government when discussing international insurance issues abroad.
This bill is not intended to bring the international negotiations to any type of halt. Team USA has experienced victories at the International Association of Insurance Supervisors and has kept Congress informed of its intent to negotiate the first of what could be many covered agreements. However, we should not underestimate the importance of these conversations or the implications they have on insurers and the American consumers, because they need to be heard, they need to be represented. As the leader of a Missouri-based, midsize insurance company has told our committee, Mr. Speaker, “We worry about the potential negative impacts any international agreement could have on the domestic marketplace or the state-based regulatory system that has served consumer and insurance needs for more than a century.” He added, “Congress should conduct strong oversight in this area in order to protect domestic insurance markets, companies, and especially their policy holders.”
Strong oversight and transparency are indeed absolutely essential and that’s what we get with this bill.
It’s imperative, simply imperative, that our states, the Executive Branch and Congress, work cooperatively to signify to the International Association of Insurance Supervisors, the Financial Stability Board and to foreign governments, that we will only lend our name to standards and agreements that benefit U.S. consumers. The bill we are considering today will assuredly lead us to this goal.
Again, H.R. 5143 provides greater transparency, it allows for a stronger Team USA in negotiations, it sends a signal to foreign governments and international organizations that the U.S. again will lead and not be led into bad agreements. With the greater congressional oversight the bill provides, we can ensure that any deal that is reached will be a fair deal and a good deal for the American people.
Again, I want to thank my colleague, the gentleman from Missouri, Mr. Luetkemeyer, for his leadership on bringing an excellent bill to the House floor.