UPDATE 2-Obama to urge U.S. insurance office, not regulator
by: Kevin Drawbaugh and Patrick Rucker
published: Jun 16, 2009
The Obama administration will call for a new U.S. Treasury Department office on insurance but won't propose federal regulation of the industry in the sweeping financial reform plan it will unveil on Wednesday.
The Office of National Insurance, as proposed, would monitor all aspects of the industry and flag any risks that could contribute to a future financial crisis, according to a document obtained by Reuters.
It could recommend to the Federal Reserve that large insurers be subjected to strict capital and risk rules that would apply to large financial holding companies under other aspects of the Obama plan.
And it would attempt to coordinate industry policy, but it would stop short of being a direct regulator, according to the document.
The nation's 6,000 insurers are now regulated by state and territorial governments. The industry has been divided for years about changing this. Large life insurers and some large property-casualty firms favor creating an optional federal charter.
