Legislation aimed at creating a national insurance office has a new name, but the same proponent seeking to establish a federal insurance regulator.

Paul Kanjorski

Rep. Paul Kanjorski (D-Pa.) released a discussion draft of HR 2609, originally dubbed the Insurance Information Act of 2009 when it was released in May. The new draft, called the Federal Insurance Office Act of 2009, is similar to the bill Kanjorski introduced in April 2008, which died in Congress.

The intent of Kanjorski’s bills, to create the national office, is backed by the Obama Administration and included in its financial services regulatory reform, which has taken a back seat to health care reform.

“For several years, including in this Congress, I have worked to advance bipartisan legislation to address this issue, and I am pleased that the administration also understands the need for this office and welcome the refinements they suggested to my bill,” Kanjorski said in a statement.

Testifying before Kanjorski’s House Financial Services Committee Oct. 6, the National Association of Insurance Commissioners said the proposed Office of National Insurance (ONI) should connect state regulators rather than “displace or diminish” their work.

The Federal Insurance Office Act calls for the creation of an office within the U.S. Treasury to “provide national policymakers with access to the information and resources needed to respond to crises, mitigate systemic risks, and help ensure a well functioning financial system,” according to Kanjorski.

“Insurance plays a vital role in the smooth and efficient functioning of our economy, but the credit crisis highlighted the lack of expertise within the federal government regarding the industry, especially during the collapse of American International Group and last year’s turmoil in the bond insurance markets,” the congressman said in a statement announcing the revamped bill.

The proposed legislation would also provide a unified voice on insurance matters for the United States in global deliberations, Kanjorski’s office said.

“A formal federal interface is appropriate, but the current ONI proposal strays too far from past legislation that included important safeguards against preemption of state laws and consumer protections,” said NAIC CEO Therese Vaughan.

She cautioned that while increasing insurance knowledge at the federal level, the proposed bill also could encroach on state regulatory authority, specifically in the area of federal preemption of state law.

Similar to the first draft of the bill released in May, Kanjorski’s proposed Federal Insurance Office would collect and analyze data on insurance; establish federal policy on international insurance matters; and ensure that state insurance laws remain consistent with federal policy in coordinating international trade agreements, according to the bill.

One difference in the bill is that the original text called for a report to Congress every two years where the latest iteration calls for a document to be submitted annually beginning Sept. 30, 2011, on actions taken by the new office.

The announcement by Kanjorski, chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, came with the introduction of two other bills aimed at tackling financial reform: one seeking better investment protection and another to register private fund investment advisors.

“Today, we take another step forward in overhauling the regulatory structure of the financial services industry,” Kanjorski said in a statement.  “With these three bills we will address many of the shortcomings and loopholes laid bare by the current financial crisis.”