With the Senate’s passage of its version of financial reform late last week, we now await the planned reconciliation process between this Senate version, which was called the “Restoring American Financial Stability Act,” and the House’s “Wall Street Reform and Consumer Protection Act of 2009″ passed in December 2009. A conference committee, comprised of members of both houses, will be charged with the reconciliation duties aimed at achieving elements of reform that will permit a final version to be passed and forwarded for enactment.
Both versions currently call for the establishment of a national insurance office within Treasury. While the House’s version proposes the creation of a Federal Insurance Office (FIO), the Senate’s version would create an Office of National Insurance (ONI) with both charged with monitoring the insurance industry. Additionally, both would apply to all lines of business except health and would have the authority to recommend to the newly created Financial Services Oversight Council that an insurer should be subject to stricter standards, as well as to assist in administering the Terrorism Insurance Program. Last minute efforts in the Senate to adopt the Merkley amendment, which was designed to make the authority of the Office of National Insurance narrower in scope, with limited preemptive power, failed. So, both the ONI and the FIO, as currently provided for, have authority to preempt a state insurance provision. However, this authority is generally restricted to specific situations where there is less favorable treatment of a non-US insurer domiciled in a foreign jurisdiction. Additional restrictions include the non-US insurer being subject to an existing covered international insurance agreement, and prescribed regulatory and notice requirements to achieve the preemption. Expectations in Washington appear to have a goal of a compromise bill version ready by the end of June, leaving time for re-consideration of previously omitted proposals and perhaps even some new ones.
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