Still questioning the need for a federal regulator of insurance amid strong state-based oversight, the National Association of Insurance Commissioners is praising lawmakers for amendments to a bill establishing a Federal Insurance Office.

In a letter to four members of the House Financial Services Committee, the association representing the nation’s insurance regulators expressed their support for a series of recent changes to the Federal Insurance Office Act (HR 2609).

The bill, introduced earlier this year by Reps. Paul E. Kanjorski (D-Pa.) and Judy Biggert (R-Ill.), would establish the office within the Treasury Department. The new office would collect insurance data to advise the Treasury on domestic and international policy issues and create federal policies related to international insurance. Congress would also get a report from the new office every two years regarding the industry.

Among the amendments to the proposed bill approved by the House Financial Services Committee Nov. 17 are: close coordination between the states and the federal office on narrow international agreements; a clear retention of state authority over the insurance industry; ensuring that international agreements do not preempt state regulation of U.S. insurers; and limiting the scope of such agreements recognizing a level of supervision consistent with state protections.

Roger Sevigny

“These changes …strike an appropriate balance among the needs of consumers, state regulators and federal negotiators by preserving important state and market regulation while allowing for agreements with equivalent regulatory systems,” said Roger Sevigny, NAIC president and co-author of the letter. “While the NAIC continues to oppose a federal functional regulator for insurance or misguided attempts to further empower the FIO, the bill as currently drafted is an appropriately narrow and targeted improvement to our system of supervision.”

Sevigny, who serves as New Hampshire’s insurance commissioner, reiterated the group’s support for state-based regulation as well.

“State regulation of insurance has worked extremely well for consumers during the financial crisis, protecting policyholders and prohibiting insurers from engaging in the activities that have crippled the financial sector,” he wrote.

The letter was sent to House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.), committee ranking minority member Spencer Bachus (R-Ala.), as well as Kanjorski and Biggert, who head the subcommittee on capital markets, insurance and government sponsored enterprises.