Insurance Office May Provide Helpful Regulation

A financial reform bill recently passed by the Senate may have consequences for every corner of the economy, from financial institutions and insurers to merchants and consumers.
 
One provision is slated to create an Office of National Insurance, which would serve as part of the Department of the Treasury. The office's duties include monitoring regulatory gaps and advising the Treasury Secretary on responsible international insurance policies. It would also report to the Federal Reserve Board and assist with the Treasury's Terrorism Insurance Program.
 
The ONI would have authority over all types of coverage except health insurance. If necessary, it could call on companies to submit data after coordinating with the appropriate state regulator. Those that do not want to submit data may be issued a subpoena under certain circumstances.
 
Insurance agents and affiliates below a specified size threshold would also be exempt from its jurisdiction.
 
The American Council of Life Insurers supported the provision in a statement, saying that an insurance office could ensure that foreign and domestic insurance and reinsurance companies are treating fairly.
 
"Most importantly, a strong ONI is important for American consumers and companies," the statement said. "U.S. insurers and reinsurance are engaged in global businesses that play a vital role in maintaining the financial health of the U.S."

A centralized office is not only important on an international scale, however, but also on a domestic one. Like many of the efforts outlined in the recent financial reform bill, this provision could protect consumers against some of the deceptive and unfair practices burdening the economy.
 
This type of protection is now more necessary than ever. Many consumers do not have money to spare on many expenses, never mind elevated insurance premiums.
 
These individuals continue to recognize the importance of investing in auto, homeowners and life insurance. Because the prices for such coverage are often decided on the state level, having an ONI in place to consult and pre-empt - if necessary - these decisions could ensure that they are made with the consumer in mind.
 
Many Americans do not support such large-scale government involvement in their finances. Forty-two percent of respondents in a recent survey by GfK Financial Services said they would prefer that the government play a smaller role.
 
Still, such involvement may be necessary. Until financial and insurance industries have largely recovered from the recession, consumers may benefit from increased regulation.