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Author Topic: Bush Blueprint for Regulatory Reform Includes a Federal Insurance Regulator  (Read 2857 times)
 
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auditor1
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« on: March 31, 2008, 08:32:07 PM »

Today, Treasury Secretary Henry Paulsen announced the Bush Administration's Blueprint for Regulatory Reform.  You can find the link to this story on AuditBible's News Alerts page, or just click You must login to view links.
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to read the Insurance Journal's article which begins:
Quote
Insurance industry groups are lining up quickly with responses to the Bush administration's proposed overhaul of the way the government regulates the nation's financial services industries, including insurance.

The sweeping regulatory reform proposal announced by Treasury Secretary Henry M. Paulson calls for insurance companies to be given the option of federal instead of state regulation, along with the creation of a powerful national insurance regulator and a system of national licensing of producers.


The Insurance Journal gives a run down of the organizations supporting and opposing the plan, and also posts a video of the announcement (the audio is distorted only for the first 30-40 seconds).  Download a copy of the 212-page plan, a 7-page summary, as well as Secretary Paulsen's speech at the website of You must login to view links.
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the U.S. Department of the Treasury
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According to the blueprint:
Quote
Legislation creating a federal regulatory structure would reestablish the federal government's role in regulating the insurance industry by reclaiming a portion of its delegation of insurance regulation to the states, thereby creating a dual federal-state regulatory structure. Such federal regulatory structure legislation should provide for a system of federal chartering, licensing, regulation, and supervision for insurers, reinsurers, and insurance producers (i.e., agents and brokers).


At the end of a list of several Optional Federal Charters proposed in the plan is the proposal for an OFC for Insurance:
Quote
Insurance presents a clear need for regulatory modernization. States have been the primary regulator for insurance for over 135 years. While a completely state-based regulatory system for insurance may have been appropriate at one time, insurance market changes have put increasing strains on the system.

A state-based regulatory system is quite burdensome. It allows price controls to create market distortions. It can hinder development of national products and can directly impact the competitiveness of US insurers. There have been numerous attempts to modernize the regulatory structure for insurance. At this time, it seems clear that the way forward is to give insurers the ability to elect for federal regulation. Therefore, in the Blueprint we recommend the establishment of a federal insurance regulatory structure to provide for the creation of an Optional Federal Charter for insurance companies, similar to the current dual-chartering system for banking. This system would be built on a proven model and we recommend, as in the banking sector, that this federal agency be housed within the Treasury Department. This is the most effective way to address these issues and we outline the critical elements to this legislation.


Paulsen assures that not all facets of the plan will not be implemented in the near future, stating: 
Quote
Our first and most urgent priority is working through this capital market turmoil and housing downturn, and that will be our priority until this situation is resolved. With few exceptions, the recommendations in this Blueprint should not and will not be implemented until after the present market difficulties are past.
« Last Edit: May 26, 2008, 11:43:26 PM by auditor1 » Logged
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