House Panel Holds Second Hearing on Allowing Insurers To Choose Federal Rather Than State Regulation

A House Financial Services subcommittee yesterday held the second in a three-part series of hearings exploring whether insurance companies should have the option to be regulated by the federal government instead of states, the Washington Post reports. The insurance industry is divided over such a switch, with those in favor saying that a uniform set of regulations would improve on what some have called the current "patchwork of state regulations." Those opposed to federal oversight say that "insurance is a uniquely regional or local commodity that is best overseen by regional regulators." Rep. Michael Oxley (R-Ohio), chair of the House Financial Services Committee, said that lawmakers are "just beginning to search out a consensus on what reforms might be achievable." In December, Sen. Charles Schumer (D-N.Y.) introduced a bill that would model a system for the insurance industry after the banking industry's dual federal-state regulatory system, giving insurers the option to choose between state and federal oversight. Rep. John LaFalce (D-N.Y.) in February introduced a competing measure that would give insurers the option of federal regulation but would keep brokers and agents under state oversight. Neither bill has "picked up key support needed to move it forward" (Spinner, Washington Post, 6/12).