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By Brandon Ross
April 29 — The Treasury Department and Federal Reserve would be required to consult with Congress and state insurance regulators before putting the U.S. stamp of approval on any international insurance standards, under legislation introduced today.
The Transparent Insurance Standards Act of 2016 (not yet numbered) was introduced as the Treasury, Federal Reserve and state regulators represented by the National Association of Insurance Commissioners are in the midst of negotiating international insurance regulatory standards with the European Union and others.
The bill is designed to address concerns of many insurance industry players and state regulators about potentially applying EU-style standards to U.S. insurers.
The bill, introduced by Rep. Blaine Luetkemeyer (R-Mo.), chairman of the House Financial Service Committee's Housing and Insurance Subcommittee, was greeted favorably by industry.
“This important legislation provides clear direction by Congress for the representation of the U.S. state-based regulatory system in international fora,” Nat Wienecke, senior vice president, federal government relations, for the Property Casualty Insurers Association of America (PCI) said in a statement. “Any international deliberations should represent the views of the primary regulators and this legislation ensures the views of the state regulators are paramount in current and future international negotiations.”
Proposals for global standards put forth by the International Association of Insurance Supervisors (IAIS)—a group in which the U.S. takes part—have drawn criticism from industry, regulators and some lawmakers. They have said that EU-style insurance regulations, in accordance with the bloc's Solvency II rules, rely on a centralized method of governance, in contrast to the state-based insurance regulatory system in the U.S.
“A one-size-fits-all standard conceived in the minds of European banking regulators could potentially undermine state insurance laws that have protected policyholders for more than 150 years,” Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies (NAMIC), said in a statement.
Under the bill, before agreeing to anything at the IAIS the Treasury and the Fed would have to complete a range of requirements, including:
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