Friday Reps. Denny Heck (WA-10) and Ted Budd (NC-13) introduced the bipartisan International Insurance Standards Act in the House. The bill preserves and protects America’s unique but highly successful system of state-based regulation of insurance.
In the U.S., the primary regulators of insurance companies are state insurance commissioners. Their regulation has enabled the development of a robust and innovative insurance market, and entities regulated by state insurance commissioners weathered the global financial crisis far more easily than entities with primary federal regulators. However, state-based regulation presents a challenge when it comes to international negotiations on financial regulations, where national governments typically take the lead role.
This bill would require that when insurance regulation is being discussed, the U.S. must have its primary insurance regulators (state insurance commissioners) at the negotiating table. The bill also would restrict what the U.S. negotiators can agree to: any international agreement on insurance regulation would have to reflect and protect the existing U.S. system of state-based insurance regulation; and U.S. negotiators would be prohibited from supporting or agreeing to any international regulatory pacts or standards that are inconsistent with U.S. federal and state insurance laws and regulations. This would include proposals developed by the International Association of Insurance Supervisors (IAIS), the body that sets global standards for insurance regulation.
“The U.S. state-based system for insurance regulation has protected American consumers for more than 150 years,” said Heck. “We need to continue to protect our state-based system, and ensure that when international agreements cover insurance, they also involve our primary insurance regulators, and that is the states. We must work to preserve America’s proven insurance model and protect our industry from imprudent regulatory standards that could disrupt our marketplace. I thank my colleague Representative Ted Budd for joining with me in sponsoring this important bill.”
“The U.S. state-based system of insurance regulation has long been the gold standard for protecting consumers,” said Budd. “And with half of U.S. states representing roughly half of the top 50 insurance marketplaces in the world, acknowledging the equivalence of our regulatory system should be prioritized in any discussions for an international capital standard agreement. Our bipartisan legislation is timely for a number of reasons, but I’d like to highlight again a point I made in an op-ed from earlier this month. The European Insurance and Occupational Authority are already taking a victory lap in their recent annual report, presuming that the European system will be made the global standard instead of America’s. Given that the European model, Solvency II, is completely different than the U.S. regulatory system that protects consumers and ensures a vibrant American insurance industry, that’s quite a victory for our European friends.
“For that reason, we are introducing this bill now because it’s vital that Members of Congress apply pressure to our representatives at this upcoming meeting and remind them to stand up and forcefully oppose any deal that excludes formal recognition of the U.S. regulation system. I’d like to thank Representative Denny Heck for his consistent leadership on this issue and am glad to be introducing this bipartisan legislation with him.”
This legislation passed the House twice last year, with nearly unanimous support.