The Obama administration is proposing the creation of a new office within the Treasury Department to coordinate policy in the state-regulated insurance sector, according to a near-final draft of the plan.
The office would be charged with gathering information about the insurance sector and negotiating international agreements, according to the draft. It would also be empowered to consult with the Federal Reserve and the Federal Deposit Insurance Corp. on insurance matters if a failing insurer needs to be resolved by the government. Legislative action would be required to establish the new office.
The proposed insurance office is a far cry from the federal regulation of the industry that some insurers had been seeking. Large property and casualty firms and life insurers have pushed for years to have an optional federal charter but have been met with stiff opposition from smaller firms and insurance agents.
The divide was on display at a recent meeting between administration officials and representatives from the insurance industry, where the lack of unity on the issue of regulation and the tension between competing interests appeared to take government officials off guard, according to at least two people present.
''While the administration believes regulatory arbitrage is a thing of the past, they also seem to understand that a drastic overhaul of insurance regulation is unnecessary and unwise, and that we should instead look to bring more efficiency and uniformity to the market, while maintaining consumer protections, which is also the perspective of independent agents and brokers,'' said Charles E. Symington, Jr., senior vice president at the Independent Insurance Agents & Brokers of America.
Treasury will support proposals to revamp the current system of insurance regulation, the draft said.
Write to Jessica Holzer at jessica.holzer@dowjones.com and Michael R. Crittenden at michael.crittenden@dowjones.com
