Under the provision currently in the bill, the ONI would be housed in the Treasury Department and would be given the authority to negotiate international trade agreements as well as act as an information-gathering resource for federal regulators and legislators.

Co-sponsors of the Merkley amendment include Sen. Sherrod Brown, D-Ohio; Sen. Barbara Boxer, D-Calif.; Russ Feingold, D-Wisc.; Sen. Olympia Snowe, R-Maine; and Sen. Bernard Sanders, I-Vermont.

It would tighten the standard the Treasury Department can use in preempting state laws when negotiating international trade agreements.

Cincinnati Companies, which supports the amendment, said the provision would prohibit non-U.S. insurers and reinsurers whose own business decisions and business outcomes may result in unfavorable application of facially neutral state insurance laws, from evading application of those laws to their U.S. operations.

The amendment would also require a consideration of the effect of preemption on consumer protections; on the safety and soundness of U.S. insurance markets; and whether the preemption action would create gags and voids in financial or market conduct regulation by the states.

It would also allow the states to appeal the preemption decision to the federal courts.

Moreover, any preemption action would be subject to a notice and comment period under the federal Administrative Procedures Act.

The amendment would also revise the current language in the Restoring Financial Stability Act of 2010, (S. 3217) by transferring authority to conduct a study of how current insurance laws could be updated from the Treasury Department to the Government Accountability Office.

It also revises the mandate of the study that would be conducted to effectively concentrate on how federal preemption authority should be used to improve existing state insurance regulation.

According to a letter sent to members of the Senate by an official of the Cincinnati Companies, the amendment has the support of the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America.

The National Conference of Insurance Legislators, while opposing the creation of ONI, wrote a letter to every member of the Senate saying the new amendment from Sen. Merkley is an improvement over the current draft. "By confining ONI scope to 'covered agreements' rather than 'international insurance agreements on prudential measures' and providing criteria for action, NCOIL believes you have narrowed the broadly drawn authority of the current Senate proposal and weakened the opportunity for feared 'mission creep'."

In doing this, the NCOIL letter added, "you have made what NCOIL has always considered an onerous proposal less onerous."

The eight trade groups opposing the amendment said in their letter that the Merkley amendment "would substantially weaken the Office of National Insurance's power to address international issues that are critical to U.S. companies, and ultimately to U.S. consumers."

Those signing the letter include the American Insurance Association; the Financial Services Roundtable; the Council of Insurance Agents & Brokers; the Association of Bermuda Insurers & Reinsurers; the European Insurance and Reinsurance Federation; the American Bankers Insurance Association; the Risk and Insurance Management Society, Inc.; the American Council of Life Insurers; and the Reinsurance Association of America