Senator Thinks of WC Federalization
The Federalization of Workers Comp the Senator was think so.I have been told by many in the insurance industry how I was so far off the mark in coining the phrase the Federalization of Insurance including Workers Compensation. As you read this please remember that the House has already passed a bill creating the Federal Insurance Office. (FIO)
I read a great article in the National Underwriter that Sen. Ben Nelson, D-Neb., is withholding support of financial services regulation. He fears it could unnecessarily regulate insurers. He said he is not backing the bill in its current form believing that certain provisions could regulate insurers on matters unrelated to the financial crisis.
For insurers, the Senate bill creates an Office of National Insurance (ONI), makes systemically risky insurers subject to federal oversight and contains provisions similar to the House financial services reform bill that would modernize and streamline the surplus lines and reinsurance industry by facilitating regulation of such insurers by the state they are domiciled in.
Under the bill, federal oversight, in addition to current state oversight, would be applied to non-bank financial companies that are determined by a two thirds majority vote of the Financial Stability Oversight Council to be subject to prudential supervision by the Board of Governors of the Federal Reserve System.
Under the bill, the Office of National Insurance created would have limited powers, such as authority to seek information from state regulators about the health of the industry and particular insurers. The ONI would also have the authority to recommend to systemic risk regulators that a particular institution is insolvent or needs stronger oversight.
The bill would also require that a person with expertise in insurance issues be appointed to the Council by the president.
Is this not the House and Senate agreeing on federalizing the oversight of the insurance industry? If I am not correct, please email me and let me know.
A quick thought – what would be a systematically risky insurance company – all insurance involves an element of a possibly proportionally high risk. Would the National Flood Insurance Program not be a very risky program?
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