Two national insurance agents groups are commending the Obama Administration for the clarity of language included in new details of its proposed Office of National Insurance, although one of the groups remains vigilant in its call for an optional federal charter.

The White House sent specific language to the U.S. Treasury Department July 22 as part of its regulatory reform package outlining the national office first proposed in June by President Barack Obama.

Included in the nine-page document are details on the new office’s authority, including the ability to hold consultations with states on insurance matters of “national importance and prudential matters of international importance,” according to the text. The office’s scope would extend to all lines of insurance, except health insurance, and it could receive and collect data from insurers, enter into information-sharing agreements and issue reports on all insurance matters, except those involving health insurance.

So called “small insurers,” those deemed by the office to meet a minimum size threshold, are exempt from providing information to the office. Also, the office would ensure confidentiality of data that is normally not released to the public and the office could subpoena information it requests with non-compliance punishable as contempt of court.

The office would only pre-empt state insurance measures on matters that treat non-U.S. insurers domiciled in a foreign jurisdiction less favorably than a U.S.-based insurer and matters inconsistent with the International Insurance Agreement on Prudential Measures.

The proposed legislation would promote consultation with state regulators, “to the extent [the office’s director] determines appropriate,” in carrying out functions of the national office and will not “preempt any state insurance measure that governs any insurer’s rates, premiums, underwriting or sales practices, or state coverage requirements for insurance or to the application of the antitrust laws of any state to the business of insurance.”

David Sampson

David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI), said the organization is appreciative of ongoing efforts regarding systemic risk and the ONI, as first proposed by Rep. Paul Kanjorski (D-Pa.)

“The proposed legislation presents many noteworthy solutions to the challenges inherent in the existing regulatory structure and recognizes the importance of insurance to our nation’s economy as a whole,” Sampson said in a statement. “We agree it is important to have insurance expertise at the federal level, as first proposed by Chairman Kanjorski, so long as fundamental regulation of insurance at the state level is preserved.”

Sampson noted the small company exemption, data confidentiality language and details on leaving regulation to the states as areas of note, adding there are still issues “we look forward to working on with Congress and the Administration to improve, most notably the possibility of entering into international agreements without seeking Congressional approval.”

While also supportive of the ONI initiative, Frank Keating, president and CEO of the American Council of Life Insurers, said his group hopes the office is “the first step toward creation of a modern, efficient insurance regulatory system that includes an optional federal charter (OFC).”

“Life insurance is a national industry and should have the opportunity to function under a national regulator,” Keating said in a statement. “Only a handful of model laws and regulations are adopted as drafted by all jurisdictions. And even when uniform laws are adopted, they are subject to 51 different interpretations and applications by state courts and insurance departments.”

An OFC, Keating contends, would establish “ a uniform, national system for insurers choosing to be federally regulated.”

“Moreover, under the system that ACLI advocates, consumer protections for customers of federally-chartered insurers would meet or exceed the highest standards that currently exist among the states,” he said. “And consumers could count on these protections regardless of where they reside, now or in the future.”