NU Online News Service, March 16, 3:34 p.m. EDT

WASHINGTON–Sen. Chris Dodd, Conn., chairman of the Senate Banking Committee, announced that the committee will start work Monday on financial services legislation that would impose federal regulation on large insurers.

Representatives of insurance trade groups said they will urge changes to the current bill. Dodd introduced his bill yesterday. He said he hopes to be able to send it to the Senate floor by March 26, when the Senate leaves for a 10-day Easter recess.

Republican members of the committee pledged to work with Dodd to come up with a bipartisan bill they could support, but cautioned that they want the committee to act deliberately when considering the measure.

In a statement yesterday, Sen. Richard Shelby, R-Ala., said "Republicans want to reach a bipartisan agreement with Chairman Dodd on substantive financial reform that protects taxpayers, strengthens our economy, and preserves the competitiveness of our financial markets."

But, he also said, "This bill is 1,336 pages long. Forcing the Banking Committee to vote on this proposal in a single week is unrealistic and undercuts the potential for bipartisan agreement. Strong reform should not fear scrutiny."

Insurance agent organizations said they generally supported the bill, but voiced some concerns. Two other trade groups praised provisions of the bill that will provide state-based modernization and uniformity on regulation of the surplus lines and reinsurance industries.

Officials of the Consumer Federation of America said they supported provisions in the bill strengthening government regulation of ratings agencies.

The American Insurance Association and the Property Casualty Insurers Association of America objected to provisions imposing a whole new layer of regulation by the Federal Reserve Board and a Council of Regulators on insurers the agencies deem pose a systemic risk to the system.

A provision of the legislation would require insurers with assets of more than $50 billion to contribute to a fund that would be used to help wind down troubled financial services companies.

A coalition to fight regulation of large insurers has been formed that includes Allstate, Ace, CNA, Travelers, Chubb Corp., USAA, Berkley Corp., Liberty Mutual, Nationwide Insurance, State Farm and Zurich.

In a statement, David Sampson, president and CEO of PCI, said "proposed duplicative regulation for the property casualty industry would only add red tape, kill more jobs and ultimately hurt our customers."

Leigh Ann Pusey, AIA CEO said the provisions at issue "penalize insurers for the mistakes of riskier financial firms."
She added that the bill, "is not the appropriate public policy response. The property-casualty industry didn't cause the financial crisis and hasn't benefited from the bailout."

Charles Symington, senior vice president of government affairs for the Independent Insurance Agents and Brokers of America, said the trade group said that his group is concerned that among the wide-ranging provisions in the bill there is language that could "inadvertently subject insurance agents to mandatory data requests from the federal government."

Surplus lines and reinsurance provisions contained in the bill are effectively the language contained in S.B. 1363 and H.R. 2571, "the Nonadmitted and Reinsurance Reform Act."

The bill has already passed the House three times, most recently on September 9, 2009, without a single vote against it.

"We are pleased to see the NRRA provisions included in the regulatory reform legislation on which Sen. Dodd and other Senate Banking Committee members so diligently worked," said Marshall Kath, president of the National Association of Professional Surplus Lines Offices.

Added Nicole Allen, vice president, industry affairs, of the Council of Insurance Agents and Brokers, "We're very happy and thankful that Senate Banking Chairman Dodd has included surplus lines reform in his financial regulation overhaul legislation."

Barbara Roper, CFA director of investor protection, said CFA "supports reforms to simultaneously strengthen SEC regulatory oversight of rating agencies, increase accountability for ratings agencies by making them liable for conducting adequate investigations to support a reliable rating, enhance transparency of ratings, and, perhaps most important of all, reduce regulatory reliance on ratings."