Obama proposes US nationwide insurance regulator

The US Treasury is proposing for a regulator for the US insurance industry

Barack Obama has proposed that there will be a US nationwide insurance regulator, called the Office of National Insurance.

In a White Paper released on Wednesday, the US Treasury will propose the insurance office to “Enhance oversight of the insurance sector” and “promote national co-ordination within the insurance sector”.

The insurance industry has been rocked by the collapse of AIG, the world's biggest insurer, and the problems of several others, including giant The Hartford, which recently had to take out over $3bn in bailout money.

“Our legislation will propose the establishment of the Office of National Insurance within Treasury to gather information, develop expertise, negotiate international
agreements, and coordinate policy in the insurance sector.” the Treasury said in the paper.

The Treasury said six principles will underline the ONI’s existence, including everything from effective systemic risk regulation to improving and broadening  the regulation of insurance companies and affiliates on a consolidated basis, including those affiliates outside of the traditional insurance business and international coordination. 

“In 2008, the insurance industry had $5.7trn in assets, compared with $15.8trjin the banking sector.  There are 2.3m jobs in the insurance industry, making up almost a third of all financial sector jobs,” the White Paper explained. “For over 135 years, insurance has primarily been regulated by the states, which has led to a lack of uniformity and reduced competition across state and international boundaries, resulting in inefficiency, reduced product innovation, and higher costs to consumers.”

The Paper added: “Beyond a few specific areas where the federal government has a statutory responsibility, such as employee benefits, terrorism risk insurance, flood insurance, or anti-money laundering, there is no standing federal entity that is accountable for
understanding and monitoring the insurance industry.  Given the importance of a healthy insurance industry to the well functioning of our economy, it is important that we establish a federal Office of National Insurance (ONI) within Treasury, and that we develop a modern regulatory framework for insurance.”


The ONI, which will be responsible for monitoring all aspects of the insurance industry, will also represent the USA on issues relating to insurance.


“ONI will be empowered to work with other nations and within the International Association of Insurance Supervisors to better represent American interests, have the authority to enter into international agreements, and increase international cooperation on insurance regulation,” the White Paper explained.

To read the paper click on this link.