In general, Mr. Wolin added, the new Federal Insurance Office will monitor the insurance industry to look for problems or gaps in insurance regulation that can contribute to a systemic crisis in the insurance industry or the financial system, gather data and information on the industry and insurers, and coordinate policy in the insurance sector.

The administration's views of its broad authority for insurance under the Dodd-Frank law appear to conflict with the views of industry officials.

In letters regarding specific provisions of the law–for example, the "Volcker Rule" and creation of the Financial Stability Oversight Council–industry trade groups and individual institutions are advancing the view that they are already regulated and any attempts by the federal government to monitor their activities will be intrusive and illegal dual regulation.

(The Volcker provision seeks to impose stronger federal oversight on financial services companies that engage in proprietary trading and enter into joint ventures with hedge funds and private equity funds. See related article on page 6 of the Nov. 15 edition.)

Mr. Wolin discussed the issue by saying the law does not provide the Federal Insurance Office with general supervisory or regulatory authority over the business of insurance.

"The states remain the functional regulators," he said.

But through the FIO, "the federal government will work toward modernizing and improving our system of insurance regulation," he said.

He said that with the FIO, the Treasury Department "is now better able to work with other nations to increase international cooperation on insurance regulation, enhancing our collective efforts in addressing risks posed to the financial system."

He added that FIO is in the process of becoming a member of the International Association of Insurance Supervisors, where it will represent the United States.

"The Secretary of the Treasury, together with the United States Trade Representative, is now empowered to negotiate certain international agreements regarding prudential insurance measures, and the FIO will assist the Secretary," he said.

"We anticipate that the FIO will be actively involved, for example, in working with the representatives of other countries on reinsurance collateral and U.S. equivalence under Solvency II," he said.